2023-11-14 11:22

BAGHDAD, Nov 14 (Reuters) - Iraqi oil minister said that he is optimistic a deal to resume oil exports could be reached with the Kurdistan Regional Government (KRG) in coming days, Erbil-based Rudaw TV reported on Tuesday. Hayan Abdel-Ghani told Rudaw that KRG production sharing contracts are "not acceptable", saying he proposed to the KRG and foreign oil companies operating in Iraq's semi-autonomous Kurdistan to change current contracts to profit-sharing ones. Abdel-Ghani told Rudaw that the federal constitution precluded production sharing contracts in the region. "This is why we proposed changing the contract formula to profit-sharing contracts". The oil minister said that recent contracts between the federal oil ministry and international energy companies following Iraq's fifth oil and gas bidding rounds were "all based on a profit-sharing formula and not sharing production". https://www.reuters.com/business/energy/iraqi-oil-minister-hopeful-deal-resume-exports-with-krg-can-be-reached-days-2023-11-14/

2023-11-14 11:20

Ottawa, Nov 14 (Reuters) - Canadian Prime Minister Justin Trudeau is sending mixed messages on climate policy, environment experts say, after he diluted his signature carbon tax policy to ease cost-of-living burdens in a region that has been a stronghold for his party. Experts say Trudeau's carbon pricing scheme, known as the carbon tax, works well and cannot be easily replaced. But after he offered a three-year exemption on heating oil to appease voters on the Atlantic coast, the policy is under siege. Provincial leaders across Canada are asking for relief for households using natural gas for heating. Even the left-leaning New Democrats, who support Trudeau's government in parliament and have previously defended the carbon tax, are calling for the exemption. Richard Brooks, climate finance director at environmental campaign group Stand.earth, said Trudeau's government is sending unclear signals on climate. "We'd like to see the Liberals take a clear position that they are going to be climate leaders and use all tools available," Brooke said. Canada is likely to miss its 2030 emissions-reduction target and the government has been criticised for being slow to incentivize clean energy investments. Trudeau's government also bought the Trans Mountain oil pipeline, which is undergoing a major expansion, while allowing Canadian oil and gas production to hit record levels, Brooks added. Analysts said the carbon tax carve-out is another example of inconsistent policy. "It's a slippery slope," said Chris Severson-Baker, executive director of the Pembina Institute think tank. "If (the government) is constantly changing and exempting things, it creates more uncertainty." The Liberal government said a spike in heating oil's price justified targeted relief for rural and low-income households. Canada's opposition Conservative leader Pierre Poilievre has long wanted to "axe" the tax, arguing it is an unfair cost for consumers. Poilievre would clobber Trudeau if an election were held today, polls show. However, a vote is not due until 2025. Shachi Kurl, president of pollster Angus Reid Institute, said the Liberals cannot afford to alienate Atlantic voters and expect to win the next election. Liberals hold three-quarters of the region's parliamentary seats. "Whenever you get into economically uncertain and shaky times at the household level, climate issues always become part of the tension around what takes precedent," Kurl said. CARBON TAX REBATE The carbon tax is intended to discourage use of fossil fuels and accelerate a switch to clean energy, but the recent carve-out underlines how fragile climate policy is in the face of pressing political calculations. Federal Natural Resources Minister Jonathan Wilkinson admitted his government had not properly explained how the carbon price rebate system worked, making it an easy target for Poilievre. "We need to do a better job of ensuring that we are communicating that to Canadians," Wilkinson told Reuters this month. Roughly three quarters of Canadians receive more in rebates than they pay in carbon taxes, but many voters believe they are worse off due to the policy. In September, Bank of Canada governor Tiff Macklem said the carbon tax contributes about 0.15 percentage points to the inflation rate, which was 3.8% that month. If the current price of C$65 a ton were eliminated, it would lower inflation by 0.6 percentage points for one year. Trudeau has promised no more carve-outs, but the fact that there was one already means others could follow, said Robert Asselin, senior vice president of policy at the Business Council of Canada. The Business Council supports carbon pricing because "it provides businesses a predictable framework for investments going forward," Asselin said. "And it's the most efficient way to reduce emissions. That's just basic economics." https://www.reuters.com/world/americas/canada-pm-justin-trudeaus-climate-strategy-questioned-after-carbon-tax-dilution-2023-11-14/

2023-11-14 11:02

A look at the day ahead in U.S. and global markets from Mike Dolan If investors were wondering why Federal Reserve rhetoric remains so doggedly hawkish, the latest U.S. consumer price inflation report on Tuesday will likely explain why. According to consensus forecasts at least, U.S. headline inflation is expected to have retreated sharply again in October back toward midyear lows around 3.3%. A near 15% drop in retail gasoline prices since late September should help see to that. But underlying 'core' inflation is expected to stay stickier at an unchanged annual rate of 4.1% last month and still more than twice the Fed's target. There's been more encouraging news on inflation expectations, however, with the New York Fed's latest survey of household sentiment showing a one-year inflation outlook slipping to 3.6% last month and as low as 2.7% over five years. But the Fed may want to hang tough long enough into a slowing economy to ensure that inflation is squeezed back to its 2% goal. Goldman Sachs, for example, reckons the hard part of the Fed's fight is over but it may not start cutting rates until the fourth quarter of 2024. Futures markets are still more optimistic - seeing the first quarter-point cut fully priced by July and 75 basis points of easing in total in the mix by the end of next year. The worrying state of U.S. small businesses will be seen in the NFIB report for October out later today. Long-term investors think the Fed is just playing a holding game and ultimately the cooling economy will allow it to ease enough to make today's juicy bond yields worth snapping up. Bank of America's latest monthly funds survey shows global asset managers holding their biggest overweight position in bonds since March 2009 - and some 61% think yields will be lower in 12 months' time than they are now. And perhaps the negative tilt on October core inflation going into today's release leaves more room for a positive surprise. Ten-year U.S. Treasury yields hovered just above 4.60%, the dollar index (.DXY) was a touch softer and S&P500 futures were marginally positive ahead of the bell. Although U.S. crude oil prices have backed up again in recent days, they remain 18% below September's peak and year-on-year losses are running at almost 10%. The global demand picture remains hard to parse. The International Energy Agency on Tuesday raised its oil demand growth forecasts for this year and next despite the weakening economic picture. The euro zone economy contracted 0.1% as expected in the third quarter, meantime, raising the prospects of a technical yearend recession and contrasting with the U.S. boom during the same quarter. However, the data wasn't all bad and employment continued to increase in the bloc in Q3. Elsewhere, the focus shifts to California as China's President Xi Jinping starts his first U.S. visit since 2017 ahead of Wednesday's summit with President Joe Biden in San Francisco during the Asia-Pacific Economic Cooperation gathering there this week. The White House said on Monday that Biden and Xi will discuss strengthening communication and managing competition. In the background for XI is the country's ongoing property sector and local debt concerns. Reuters reported on Tuesday that China has ordered its local governments to halt public-private partnership projects identified as "problematic" and replaced a 10% budget spending allowance for these ventures with a vetting mechanism as it tries to curb municipal debt risks. In Japan, the yen continued to stalk 33-year lows set in October last year at 151.94 per dollar - with markets wary of Bank of Japan intervention should it plunge through there. Japan's Finance Minister Shunichi Suzuki said the government would take all necessary steps to respond to currency moves, repeating his mantra that excessive swings were undesirable. In corporate news, Home Depot reports earnings in a big week for U.S. retailers. In deals, Glencore (GLEN.L) sealed a deal for a 77% stake in Canadian miner Teck Resources' (TECKb.TO) steelmaking coal business for $6.93 billion in cash, paving the way for a spin-off of the commodity giant's own coal business. Key developments that should provide more direction to U.S. markets later on Tuesday: * U.S. Oct consumer price inflation, NFIB Oct small business survey * Federal Reserve Vice Chair Philip Jefferson, Cleveland Fed President Loretta Mester and Chicago Fed chief Austan Goolsbee all speak; Fed Vice Chair for Supervision Michael Barr testifies before Senate Committee on Banking, Housing and Urban Affairs; Bank of England Chief Economist Huw Pill speaks * China's President Xi Jinping starts visit to United States * U.S. corporate earnings: Home Depot https://www.reuters.com/markets/us/global-markets-view-usa-2023-11-14/

2023-11-14 10:22

LONDON, Nov 14 (Reuters) - Analysts at investment bank UBS have predicted that emerging market (EM) assets are likely to have a difficult start to 2024 before picking up and finishing the year with better gains than the major developed economies of the world. The Swiss-based bank's outlook published on Tuesday forecast that EM fixed income would return 8-10% next year, EM equities 6-8% and currencies 1-3%, although most of the gains would be "backloaded". "With risk premia now highly compressed, we think even a mild U.S. recession can first see EM  assets pull back," the bank's report said, even if that then prompts the U.S. Federal Reserve to cut its interest rates, which in turn is likely to drive down global borrowing costs. UBS sees "meaningful reductions" in U.S. rates next year and end the year at between 2.50% and 2.75%, which is substantially lower than many major investment banks have predicted. Weaker global growth was "certainly not being priced" by markets, while the bank's in-house EM  risk appetite index had risen towards levels that historically only tended to be surpassed when global Purchasing Manager Index scores were significantly higher. "Most EM assets have been in a state of 'zen' this year despite continued pressure from U.S. yields and China housing," UBS' analysts said. "We expect a better year for EM in '24 as Fed headwinds dissipate and growth differentials cyclically improve, but we don't expect this to be an easy ride." https://www.reuters.com/markets/ubs-predicts-tricky-start-2024-emerging-market-assets-2023-11-14/

2023-11-14 09:59

LONDON, Nov 14 (Reuters) - The pound trod water on Tuesday as traders held their fire ahead of U.S. inflation data that could be key in dictating the near-term direction of the dollar against other currencies. British data earlier in the day showed UK workers' wages grew slightly less quickly in the three months to September, but remained close to their record pace. The figures will likely do little to ease the Bank of England's concerns about inflationary pressures and did nothing to change market-based forecasts for a UK rate cut in June 2024 at the earliest. Most major central banks are widely expected to have wrapped up their campaign to raise interest rates, so the focus has shifted to when the first cuts will materialise. Unlike UK wage data, Tuesday's U.S. inflation report could do more to dictate the near-term outlook for sterling, given that it will shape those expectations and either give the dollar another boost, or knock it back . "There is not enough in this jobs report to see big FX or rates moves and sterling is likely to remain in a narrow trading range, albeit to the firmer side, ahead of the U.S. CPI this afternoon and the UK CPI data tomorrow," MUFG head of research for global markets Derek Halpenny said. Sterling was up 0.1% against the dollar at $1.2284 and flat against the euro at 87.11 pence. The pound has surrendered a lot of this year's gains, but, together with the Swiss franc , is one of only two G10 currencies to still hold in positive territory against the dollar in 2023. Sterling is up around 1.6% so far, while the Swiss franc is up 2.5%. Speculators now hold a modest short position in sterling, having whittled away at the largest long position in nine years over the past few months, according to weekly data from the U.S. financial markets regulator. Wednesday's UK consumer price index (CPI) is expected to show inflation slowed to an annual rate of 4.8% in October - the lowest for two years - from September's 6.7%, while the core rate is forecast to have eased to 5.8% from 6.1%. The BoE has raised interest rates by a record 5.15 percentage points in 22 months. During that time, headline inflation rose to a peak of 11% last October and has gradually declined mostly as increases in energy and food costs have subsided. "Cooler inflation could offset concerns about the hotter-than-forecast wage growth, which is at least trending in the right direction even if slower than expected," City Index market strategist Fiona Cincotta said of Wednesday's CPI report. The pound on Monday showed little reaction to UK Prime Minister Rishi Sunak's reshuffle of his cabinet, which saw the return of former premier David Cameron to the role of foreign minister and the sacking of interior minister Suella Braverman. https://www.reuters.com/markets/currencies/sterling-steady-after-uk-wage-data-us-inflation-focus-2023-11-14/

2023-11-14 08:20

ZURICH, Nov 14 (Reuters) - The Swiss National Bank will monitor the development of inflation closely in the coming weeks ahead of its next meeting in December, Chairman Thomas Jordan said on Tuesday. "We emphasised that price stability may not yet be ensured. Thus, we will not hesitate to tighten monetary policy further if necessary," Jordan said at a central bank conference in Zurich. With inflation rates lower and interest rates higher than they were a year ago, Jordan said it has become considerably more difficult to balance the risk of tightening monetary policy too much against the risk of tightening it too little. "Given the high uncertainty regarding the economic outlook, there is no clearly mapped-out path for monetary policy in the near future," Jordan said. In September the SNB held its policy interest rate unchanged at 1.75%, noting that inflation has ebbed lower in Switzerland, but said a further tightening cannot be ruled out. Swiss inflation was steady at 1.7% in October, marking the firth month in a row when it has stayed within the central bank's target range of 0% to 2%, cementing expectations that SNB will keep its rates unchanged when it reviews policy on Dec. 14. https://www.reuters.com/markets/europe/snb-will-not-hesitate-tighten-monetary-policy-further-chairman-2023-11-14/