2024-07-19 17:00

BRASILIA, July 19 (Reuters) - Brazil has reached agreement for consensus documents to be approved at the G20 finance meetings scheduled for next week in Rio de Janeiro, Mauricio Lyrio, Brazil's ambassador at the G20, said on Friday. Finance leaders from the world's largest economies failed in February to issue a joint statement amid a lack of consensus on geopolitical issues, despite Brazil's efforts to focus on a short text aligning with its priorities of addressing inequality, poverty and climate change. "We will no longer require the inclusion of geopolitical language in ministerial documents," said Lyrio, emphasizing that the agreement was endorsed by all G20 members. According to Lyrio, for each consensus statement produced by the G20 countries, the Brazilian G20 presidency will issue a separate document that will deal with geopolitical issues. Lyrio, Brazil's sherpa at the G20, had said this month that G20 diplomats had agreed to avoid prickly geopolitical issues during their ministerial meetings, preparing for a summit in November. Last year, the G20 summit in New Delhi ended with a leaders declaration that avoided condemning Russia for its war in Ukraine, although it highlighted the suffering the conflict had caused and called on all states not to use force to seize territory. Sign up here. https://www.reuters.com/world/americas/brazil-secures-deal-g20-consensus-documents-ahead-rio-meetings-official-says-2024-07-19/

2024-07-19 15:24

NEW YORK, July 19 (Reuters) - A number of U.S. bond managers at firms in charge of trillions of dollars of assets are steering clear of long-term U.S. government bonds as they expect fiscal worries to spur periodic bouts of volatility. Long-term U.S. Treasury yields, which move inversely to prices, briefly rose on inflationary and fiscal concerns in the aftermath of U.S. President Biden's disastrous TV debate last month and after last weekend's assassination attempt on former President Donald Trump, which increased expectations that Trump could regain the White House. Bond investors sold long-term Treasuries as they fretted about Trump's trade and economic policies that could, over time, boost inflation and U.S. debt levels. Trump's team has said his pro-growth policies would bring down interest rates and shrink deficits. Many market participants believe deficits will keep deteriorating under a second Biden administration as well. While yields subsequently declined on signs of a weakening economy, several bond managers at some of the country's largest asset management companies expect long-term Treasuries to remain vulnerable to price drops as government deficits are expected to widen due to higher spending, including on debt interest payments. Bond fund managers are cautious about adding exposure to long maturities, even though they remain bullish on the asset class because rate cuts by the Federal Reserve are expected to boost the prices of short- to medium-term government bonds, which more directly reflect changes in monetary policy. "Interest rate volatility is likely to remain higher as a result of fiscal and other factors. ... I think a lot of that is a function of this uncertainty around debt and deficit supply," said Chitrang Purani, a fixed income portfolio manager at Capital Group, which manages over $2 trillion in assets. Purani is "underweight" Treasury maturities of 10 years and longer in his portfolios, meaning he is buying less of those bonds, while he is offsetting that position with an overweight on intermediate maturities, he said in an interview. Others in the market have similar views. Sara Devereux, global head of fixed income at Vanguard, which manages over $9 trillion in assets, said she was bracing for "ongoing bouts" of rising fiscal debt premiums, referring to the extra compensation investors require for the risk of holding long-term debt that could lose value if issuance increases. These episodes could be an opportunity to buy long-term bonds on the cheap, she said during a webinar this week. "But we really prefer the middle part of the yield curve, not going all the way out to the 30-year point where some of that term premium is just a little tricky right now," she added. Asset managers' long positions in two-year Treasury futures notes hit an all-time high this month, Commodity Futures Trading Commission data showed. On the other hand, their bullish bets on 10-year note futures are about 10% lower year on year. Investment strategists at BlackRock (BLK.N) , opens new tab, the world's largest money manager with $10.65 trillion in assets, have also recently said they were bearish on long-dated Treasuries as investors will likely ask for more compensation to hold them because of increased supply. The New York Fed's gauge of the premium demanded by investors to hold longer-term government debt turned back positive on July 1, a few days after the Biden-Trump TV debate, for only the third time this year. The Fed is largely expected to start cutting rates as soon as September as economic activity and inflation cool under higher borrowing costs. There is no end in sight for larger deficits, however. The nonpartisan Congressional Budget Office last month raised its cumulative deficit forecast for fiscal 2025-2034 to $22.083 trillion, up $2.067 trillion from its estimate in February. Federal debt held by the public could soar to nearly $48 trillion by 2034 from $26 trillion at the beginning of this year, it said. The next quarterly U.S. Treasury refunding announcement is scheduled for July 29. "There's the economics, there's the supply, and there's the politics, and the supply and the politics are closely related," said Robert Tipp, chief investment strategist and head of global bonds at PGIM Fixed Income, which manages over $800 billion in assets. "It's a good strategic point for fixed income as you're past the rate hikes point of the cycle," said Tipp. "But it's not going to be a quick bull market with a big drop in long-term rates." Sign up here. https://www.reuters.com/markets/rates-bonds/big-us-bond-managers-steer-clear-long-dated-government-debt-2024-07-19/

2024-07-19 13:30

NEW YORK, July 19 (Reuters) - Top U.S. asset manager Vanguard favors high-rated corporate debt over riskier high-yield companies' bonds as it seeks protection against the possibility a sharper-than-anticipated U.S. economic downturn caused by high borrowing costs, it said in a report. After one year since the Federal Reserve last raised interest rates, investors largely expect the U.S. central bank to finally start cutting rates as soon as September as inflation is cooling and the labor market is showing signs of weakness. Vanguard, which manages over $9 trillion in assets, expects the Fed to keep rates on hold for most or all of this year due to continued economic resilience, but is cautious about the prospects of high-yield bonds, for which it plans to keep a lower-than-average allocation over the next few months. "We are approaching a turning point in the economic cycle," the Vanguard active fixed income team said in a third-quarter outlook report seen by Reuters. "The risk we worry about is the potential for 'higher for longer' to become 'higher until something breaks'." Investment grade corporate bonds have seen hefty demand this year as investors searched for higher yields than those provided by safer government bonds. That has compressed investment grade credit spreads, a measure of the premium demanded by bond buyers of corporate debt over government paper. As of Thursday, spreads stood at 93 basis points, according to the ICE BofA US Corporate Index, down from 104 basis points at the end of last year. Those spreads would widen if the economics conditions deteriorate, said Vanguard. However, total returns - which include interest payments and price changes - should be supported by a corresponding decline in interest rates as the Fed eases monetary policy to inject fuel into the economy. "If the broader economy weakens, our more defensive approach should hold up better and provide room to add credit back at more attractive prices," it said. Sign up here. https://www.reuters.com/markets/us/vanguard-favors-high-quality-credit-us-economy-nears-turning-point-2024-07-19/

2024-07-19 13:07

July 19 (Reuters) - Canadian retail sales fell by 0.8% in May from April at C$66.13 billion ($48.23 billion), led by lower sales at food and beverage retailers, Statistics Canada said on Friday. Sales were likely down 0.3% in June, the agency said in a flash estimate. In May, sales were down in eight of nine subsectors, representing 73.1% of retail trade. In volume terms, retail sales decreased 0.7%. (Percent changes) May May Apr(rev) Apr(prev) mo/mo yr/yr mo/mo mo/mo Total -0.8 +1.0 +0.6 +0.7 Excluding autos/parts -1.3 +0.2 +1.7 +1.8 NOTE: All figures are seasonally adjusted. ($1=$1.3712 Canadian) Keywords: CANADA ECONOMY/RETAIL Sign up here. https://www.reuters.com/markets/canada-may-retail-sales-down-08-groceries-seen-down-03-june-2024-07-19/

2024-07-19 12:53

LONDON, July 19 (Reuters) - England's National Health Service (NHS) said a global tech outage on Friday had disrupted the booking of doctors' appointments and patient records, but emergency services had not been affected. The outage, which has been linked to cyber security firm Crowdstrike and its impact on the operation of Microsoft Windows, hit operations in multiple industries around the world, from airlines to banking and broadcasting. NHS England said it was aware of an issue with its EMIS patient and record system following the outage, "which is causing disruption in the majority of GP (family doctor) practices." "The NHS has long standing measures in place to manage the disruption, including using paper patient records and handwritten prescriptions, and the usual phone systems to contact your GP," an NHS spokesperson said. "There is currently no known impact on 999 or emergency services, so people should use these services as they usually would." The Labour Party won a national election earlier this month, and new health minister Wes Streeting has said the NHS is "broken" and ordered an independent investigation into the state of the health service. He is also in talks with junior doctors to end strikes which the previous government said undermined efforts to cut long waiting lists. Adding to the list of issues, the NHS was hit by a cyber attack last month impacting a lab that processes blood test results, disrupting thousands , opens new tab of appointments and operations. A UK government security source said that Friday's global outage was not being treated as a malicious act. NHS England added that patients should attend appointments that had already been booked as usual, but only contact their doctor if it was urgent. Sign up here. https://www.reuters.com/world/uk/englands-health-bookings-system-down-emergency-services-working-nhs-says-2024-07-19/

2024-07-19 12:50

PARIS, July 19 (Reuters) - France's champagne producers on Friday called for a cut in the number of grapes harvested this year after sales of the wine fell more than 15% in the first half of the year as customers tightened their belts due to an uncertain economy. Champagne shipments in the first half of 2024 reached 106.7 million bottles, down 15.2% from a particularly high level recorded over the same period of 2023 and closer to the level in 2019. "The gloomy global geopolitical and economic situation, as well as generalised inflation, is weighing on household consumption. Champagne also continues to suffer the consequences of overstocking by retailers in 2021 and 2022," David Chatillon, chairman of the Champagne Houses lobby, said in a statement issued by the producers association, the Comite Champagne (Champagne Committee). The committee said that this year's harvest in Champagne had suffered from poor weather since the start of the year, including frosts and wet weather which increased mildew fungus attacks in its vineyards. It set a maximum yield of grapes that can be harvested at 10,000 kg per hectare, down from 11,400 kg/ha in 2023. As opposed to other wine production, most champagne bottles are a mix between several vintages, using stocks from previous years. These stocks are replenished during good years and can compensate for poor harvests. It is not the first time that the region has suffered severe losses due to a combination of frosts and mildew damages. In 2021, the yield had shed 25% compared to the five-year average with the harvest falling to a 35-year low. Harvesting was expected to begin around Sept. 10-12, on average. Unlike last year, the committee did not give full-year forecasts for sales and exports. Sign up here. https://www.reuters.com/markets/commodities/champagne-makers-call-reduced-grape-harvest-after-15-drop-sales-2024-07-19/