2023-11-03 20:07

WASHINGTON, Nov 3 (Reuters) - The Biden administration will award $3.8 billion to help build a long-delayed new railway tunnel between New York City and New Jersey, state officials said Friday. In total, the federal government will fund more than $11 billion of the $17.2 billion Hudson Tunnel Project costs that will repair an existing tunnel and build a new one for passenger railroad Amtrak and state commuter lines between New Jersey and Manhattan, Senate Majority Leader Chuck Schumer said. Any failure of the lines in the current tunnel, which was heavily damaged during 2012's Superstorm Sandy, would hobble commuting in the largest U.S. metropolitan area that produces 10% of the country's economic output. The White House in July had advanced $6.88 billion in funding from the Federal Transit Administration for the project. Schumer, Transportation Secretary Pete Buttigieg and New York Governor Kathy Hochul were among the officials who celebrated the start of construction in New York on the Hudson Tunnel Project. Buttigieg said Friday the Hudson Tunnel project will reduce traveler delays, support 72,000 jobs and generate $19 billion in economic activity. "This is the largest project of its kind in modern American history," Buttigieg said. The project was debated in Washington for over a decade since the New York City-area rail tunnel was damaged when Superstorm Sandy flooded parts of the city. The 112-year-old rail tunnel carries 200,000 passenger trips per day on New Jersey Transit and Amtrak along the Northeast Corridor. In 2010, then-New Jersey Governor Chris Christie pulled state funding for the tunnel. The administration of then-U.S. President Donald Trump and Congressional Democrats sparred over whether the federal government should help fund the tunnel replacement. New Jersey and New York will contribute 30% of the costs and Amtrak is funding $1 billion, Schumer said. The states through the Gateway Program aim to overhaul much of the aging infrastructure in the Northeast Corridor rail line between Newark, New Jersey, and New York City. https://www.reuters.com/world/us/key-new-york-tunnel-project-wins-38-billion-new-us-support-senators-2023-11-03/

2023-11-03 20:06

WASHINGTON, Nov 3 (Reuters) - The U.S. House of Representatives easily passed a bill on Friday to bolster sanctions on Iranian oil in a strong bipartisan vote. The Stop Harboring Iranian Petroleum (SHIP) bill, which passed 342-69, would impose measures on foreign ports and refineries that process petroleum exported from Iran in violation of U.S. sanctions. U.S. lawmakers are debating several pieces of legislation to pressure Iran after the Oct. 7 attacks on Israel by Hamas that killed at least 1,400 people, mostly civilians. Hamas has long been backed by Iran, but Tehran has denied any involvement in the attacks. The bill "sends a clear and strong message to bad actors like China, Russia, and others – do not help Iran avoid sanctions and assist them in their funding of terror, or face the consequences," Representatives Mike Lawler, a Republican, and Jared Moskowitz, a Democrat, said in a release. The bill must be passed by the Senate and signed by President Joe Biden before becoming law. A companion bill in the Senate is sponsored by Republican Senators Marco Rubio and John Kennedy and by Democratic Senators Maggie Hassan and Jacky Rosen. It is unclear how effective the legislation would be if signed into law. While Congress can pass sanctions legislation, such measures often come with national security waivers that allow presidents discretion in applying the law. And China could continue to import the oil despite new sanctions. Despite U.S. sanctions on Iranian oil over its nuclear program, its exports of crude are soaring. Iran says its nuclear program is for peaceful purposes. Iran's crude exports of about 1.5 million barrels per day (bpd) stood at their highest in more than four years, with more than 80% shipped to China, data from consultancies FGE and Vortexa showed in September. https://www.reuters.com/world/us-house-easily-passes-bill-harden-sanctions-iranian-oil-2023-11-03/

2023-11-03 19:36

LONDON, Nov 3 (Reuters) - Next week will have plenty to keep financial market traders and investors busy, including whether the Federal Reserve really has hit peak rates, another possible rate rise in Australia, a batch of European bank earnings and the continuing conflict in Gaza. Here's your week-ahead primer from Marc Jones and Dhara Ranasinghe in London, Kevin Buckland in Tokyo, Tom Westbrook in Singapore and Lewis Krauskopf in New York. 1/GRAND PLANS Having marched interest rates all the way to the top of the hill, investors are now wondering whether the grand old dukes of the central bank world - the Fed, ECB, BoE & co - might soon be marching them down again. Take the ECB -- with euro zone inflation coming down fast and the economy heading for either stagnation or recession money markets now see rate cuts starting in April while for the BoE in Britain it is next August. The U.S. economy still looks impressively robust, but even there cracks are starting to show, if the sharp contraction in manufacturing data is anything to go by. No wonder markets see a 70% chance that the Fed's brutal 20-month tightening cycle is over and that rate cuts could begin as soon as June. That light at the end of the tunnel has meant world stocks (.MIWD00000PUS) have just had their best week of the year so far. So watch closely to see if the top central bankers push back against the cut chatter until inflation is truly tamed. 2/YO-YO YEN FX traders spent months nervously watching the yen inch towards 150 per dollar only to see the Bank of Japan itself shove it well over the line this week with a decidedly tepid plan to dismantle its decade-old stimulus programme. The yen shot straight back up when the markets sensed the Fed might finally have reached peak rates so next week could be an interesting one. While worries about 150 as a trigger have surely been washed away, the risk of BOJ intervention remains very real because both a weak yen and the current prime minister are increasingly unpopular with the Japanese public. And as any top central banker will tell you, the time to intervene in your currency market is just after the tide has turned and the wind is on your back. 3/CHURNING THE EARNINGS The U.S. earnings recovery that investors had been hoping for after a lukewarm first half of the year is so far coming to pass, but a number of major tests are still to come. With over 300 companies now reported, S&P 500 earnings are estimated to be up 5% year-on-year with about 80% of firms coming in with forecast-beating numbers. Heavy hitters next week include eBay (EBAY.O) and D.R. Horton on Tuesday and Walt Disney (DIS.N) and Biogen (BIIB.O) on Wednesday. Later in the month, investors get to size up some of the major U.S. retailers as well as the big winner of this year's AI frenzy, Nvidia (NVDA.O). In Europe it's all about the money and the metal, with UBS on Tuesday, Commerzbank and ABN Amro on Wednesday, steel giant Arcelor Mittal on Thursday and insurance heavyweight Allianz on Friday. 4/ONE MONTH IN Next week marks a month since the deadly attack by Hamas in Israel triggered the worst escalation of the long-running Middle East conflict in decades. Israeli forces have pushed into Gaza City in the north of the Gaza Strip, but are facing resistance from militant hit-and-run attacks from underground tunnels. Gaza health authorities say the Palestinian death toll now exceeds 9,000. For those in the financial markets watching nervously it is a crucial moment. Safe-haven gold has surged almost 10% since the troubles ignited but the initial spike in oil prices, triggered by fears Iran could be drawn into the crisis, has fully subsided and even Israel's shekel has started to bounce. The situation could quickly spiral again, though. An increasing number of countries are calling for a pause in hostilities, Hezbollah is agitating, while U.S. Secretary of State Antony Blinken is visiting Israel, Jordan and other countries in the region in the coming days for a new round of diplomatic talks. 5/RACE DAY RATE HIKE The famous Melbourne Cup horse race runs on Tuesday, but some of the shortest odds are on an Aussie central bank rate hike over in Sydney that day. Following a hotter-than-expected third-quarter inflation print, where the RBA's preferred measure of core inflation rose to 1.2%, markets price a near 60% chance of a quarter point hike. All of the "Big Four" Australian banks forecast a hike, too, including Westpac where newly-installed chief economist Luci Ellis was until recently assistant governor at the RBA. Indeed futures imply a real risk that the 4.1% cash rate could be raised twice to 4.60% and kept there for all of 2024. Three-year and 10-year Australian government bond yields have hit their highest since 2011, though backed off slightly on the Fed's hold. The Australian dollar has also rallied strongly against its New Zealand counterpart as rate expectations diverge. https://www.reuters.com/business/take-five/global-markets-themes-graphic-2023-11-03/

2023-11-03 17:39

LONDON, Nov 3 (Reuters) - Bank of England interest rate-setter Jonathan Haskel said on Friday that Britain's labour market was not functioning as well as it should, which would keep interest rates high. Haskel said the ability of the labour market to match workers with vacancies appeared to have deteriorated. "With an impaired labour market, interest rates would have to remain higher for longer than would otherwise be the case," he said in remarks he released alongside a panel discussion at a economics conference hosted by King's College London. Haskel was one of three members of the BoE's Monetary Policy Committee who voted for a rate hike on Thursday. A majority of six decided to keep Bank Rate on hold. Haskel said some modelling he had done suggested Britain's equilibrium unemployment rate - the rate needed to keep inflation low and stable - had risen as high as 6%. Haskel said in the panel discussion that this estimate was "very much an upper bound" but that he believed the equilibrium unemployment rate was "probably a bit higher" than the BoE's latest, upwardly revised estimate. On Thursday, the BoE revised its estimate of the equilibrium unemployment rate to around 4.5% from 4.25%. Britain's unemployment rate was 4.2% in the three months to the end of August. Haskel said it was not possible to know if unemployment would have to rise above the 5% forecast by the BoE for late 2025 in order to return inflation - currently 6.7% - to its 2% target. https://www.reuters.com/world/uk/uks-faulty-labour-market-means-rates-must-stay-high-boes-haskel-2023-11-03/

2023-11-03 16:30

LONDON, Nov 3 (Reuters) - Well known hedge fund manager Andrew Law's $12.5 billion Caxton Associates has clawed back much of the losses it made earlier this year, benefiting from bets on weakness in bond markets, according to three sources with knowledge of the matter. Caxton Global Investments (CGI), the $8.6 billion flagship fund at Caxton Associates, one of the more secretive hedge funds that use macro economic events to find profitable trades, finished October with a positive monthly performance of about 2%, two of the sources said. They added that the fund had about a negative 2% performance for the year to the end of October. The CGI fund, at the end of June had been down about 8%, added one of the sources. Caxton did not immediately reply to requests for comment made by telephone and email. The CGI fund did well from a view that the Bank of Japan would ease its ultra-loose monetary policy, said two of the sources. They also said short bets that bond prices would fall, as well as bets the U.S. Treasury yield curve would steepen were some of the top earners for the fund. Both the Bank of Japan and Federal Reserve left interest rates unchanged this week. Fed Chair Jerome Powell indicated US policymakers were trying to determine whether financial conditions are already tight enough to control inflation, or whether an economy that continues to outperform expectations may need to be further restrained. The Bank of Japan did, however, tweak its 1% cap on the 10-year bond yield to allow long-term borrowing costs to rise, while lifting its price forecast to project that inflation will exceed its 2% target this year and next. Caxton's CGI fund also profited from the difference between Japanese and U.S. stock prices, the sources said, adding that losses on commodities bets in gold and a yen hedge detracted from performance. Caxton was founded by Bruce Kovner who ran the fund for 28 years before tapping his chief investment officer Law to run it in 2011. https://www.reuters.com/markets/hedge-fund-caxton-wins-bond-rout-claw-back-performance-losses-sources-2023-11-03/

2023-11-03 16:02

LONDON, Nov 3 (Reuters) - Global hedge funds using algorithms to trade stocks endured one of their worst days of the year on Thursday, a Goldman Sachs note on Friday showed, a sign that a sharp rally in shares on hopes that global rate hikes are over caught some off guard. Systematic fund managers, particularly those which had short bets on highly traded stock names, got caught trying to get out of crowded trades and found themselves stuck in losing positions, Goldman Sachs (GS.N) said. A short stock position bets its price will decline. An index of these funds tracked by Goldman Sachs had their "third worst single day this year," the investment bank said in a note to clients. They finished the day down 1.1% but were still up 14% year to date as of Thursday, the note said. Goldman declined to clarify the size of assets under management in the index. Wall Street's three main stock indexes rallied nearly 2% on Thursday on hopes that the U.S. Federal Reserve has reached the end of its interest rate hiking campaign, and a batch of upbeat quarterly financial updates added to the bullish mood. The Fed held interest rates steady on Wednesday as expected and while Chair Jerome Powell left the door open to further tightening, he also acknowledged the impact of a recent surge in bond yields on the economy. The comments, viewed as hints that the central bank is done with its rate hikes, sent longer-dated U.S. Treasury yields tumbling, which supported stocks. The hedge fund strategies Goldman Sachs tracked included "market neutral" hedge funds which try not to hold an overwhelmingly long or short view on the market, as well as "arbitrage" funds, which profit from the difference in company stock prices in related sectors. https://www.reuters.com/markets/hedge-funds-caught-crowded-trades-suffered-thursdays-stock-rally-goldman-sachs-2023-11-03/