2024-06-26 23:34

June 27 (Reuters) - Britain's car output fell by 11.9% year-on-year in May, falling for a third straight month, as manufacturers wound down existing models and more plants transitioned to electric vehicle (EV) production, industry data showed on Thursday. A total of 69,652 cars rolled off production lines in May, compared with 79,046 in the same period last year, the Society of Motor Manufacturers and Traders (SMMT) said. April production volumes were down by 7%. Electrified vehicles, including fully electric models, plug-in hybrids and full hybrids, represented almost two-fifths, or 38%, of all output, up by 3 percentages points compared with May 2023. Manufacturers produced a combined 26,475 units of EVs in May. Production of EVs has successively grown as giants like Nissan (7201.T) New Tab, opens new tab and Jaguar Land Rover-owner Tata Motors (TAMO.NS) New Tab, opens new tab have poured in billions in the UK to ramp up EV plans as the country attempts to reach net zero by 2050. Ahead of the UK general elections on July 4, the SMMT had set out priorities in the sector for the next government, including backing British manufacturing and attracting green investment through an industrial strategy that guarantees affordable and sustainable energy, and new skills. Sign up here. https://www.reuters.com/business/autos-transportation/uk-car-output-falls-nearly-12-may-ev-transition-says-industry-body-2024-06-26/

2024-06-26 21:58

June 27 (Reuters) - A look at the day ahead in Asian markets. Inflation scares in Canada and Australia this week are a reminder that the global monetary easing cycle expected to broaden out and accelerate in the second half of the year is by no means certain. This is a potential headache for investors in Asian and emerging markets as the mid-point of the year approaches, and could weigh on their investments for the next six months. Figures on Wednesday showed that Australian inflation in May rose much faster than expected, back up to 4% and enough to flip the interest rate outlook - traders now reckon a rate hike this year is more likely than a cut. The Aussie dollar's rally quickly evaporated, however, much like the Canadian dollar's rally following surprisingly strong Canadian inflation numbers earlier this week. Both succumbed to the U.S. dollar, which hit a two-month high against a basket of major currencies on Wednesday. Will the inflation pulse in Canada and Australia show up in U.S. data too, and prevent the Fed from cutting rates? This is the worry for Asia and emerging markets - a strong U.S. dollar tightens global financial conditions and steers capital towards U.S. assets at the expense of emerging markets. So does rising Treasury yields, and on Wednesday U.S. bond yields broke out of their recent slumber and spiked higher. Wall Street closed modestly higher, but the dollar and yields may have more influence on Asian trading on Thursday. Thursday's Asia & Pacific economic calendar sees the release of Japanese retail sales, industrial profit numbers from China, an interest rate decision from the Philippines, and a speech from Reserve Bank of Australia deputy governor Andrew Hauser. The Philippine central bank is widely expected to keep its key policy rate on hold at 6.50% for a sixth consecutive meeting, according to a Reuters poll, and deliver the first cut in the last three months of the year. The Philippine peso is at its lowest level of the year against the U.S. dollar, down 6% year-to-date. That's only half of the 12% decline registered so far this year by the Japanese yen, which hit a 38-year low against the dollar on Wednesday. It is now well below the 160.00 per dollar level that triggered large-scale yen-buying intervention from Japanese authorities nearly two months ago. Not this time, at least not yet. Unsurprisingly, short-dated dollar/yen implied volatility has spiked higher, but the magnitude of increase and levels reached hardly suggest traders are fearful of heavy-handed intervention. Overnight implied vol on Wednesday rose the most since mid-May but only back to where it was on Tuesday. One-week implied vol rose the most in four weeks, but again, only back to where it was in mid-June. Here are key developments that could provide more direction to markets on Thursday: - Philippines rate decision - Japan retail sales (May) - China industrial profits (May) Sign up here. https://www.reuters.com/markets/asia/global-markets-view-asia-graphic-pix-2024-06-26/

2024-06-26 21:28

SAO PAULO/BRASILIA, June 26 (Reuters) - Brazilian President Luiz Inacio Lula da Silva signed a decree on Wednesday establishing a continuous inflation target starting in 2025, with quarterly accountability by the central bank. The decree empowers the National Monetary Council (CMN), the country's top economic policy body, to determine the target. In a subsequent meeting on Wednesday, the CMN confirmed the 3% official goal, with a tolerance range of plus or minus 1.5 percentage points. The decision follows intense criticism from leftist Lula on the target level last year, arguing it was too low and required a restrictive monetary policy, thus hindering the economy. However, in June 2023, his government announced that the 3% target would be continuous, although the formalization of the new system had been pending a presidential decree. When asked if this move solidified Lula's support for the target and could help reduce rising inflation expectations, Finance Minister Fernando Haddad said it was necessary to pay attention to the government's decisions, not the debates, stressing that Lula's commitment to the issue was made clear last year. Haddad, who is a member of the CMN along with the planning minister and the central bank governor, told reporters that the new system effectively frees the government from setting the official goal annually and, along with the government's fiscal rules, "establishes a new macroeconomic horizon for Brazil." Until now, the CMN had set annual inflation targets to meet each calendar year. But Lula's economic team advocates that pursuing inflation targets within a continuous timeframe allows a longer-term approach that provides more room to accommodate price shocks without requiring monetary tightening. According to the decree, starting in January, the target will be considered missed if annual inflation deviates for six consecutive months from the range of the respective tolerance interval. In such cases, the central bank will issue an open letter to the finance minister explaining the reasons, necessary measures to bring inflation back to target, and the expected timeline for their effectiveness. The decree also mandates the central bank to begin publishing a quarterly monetary policy report, "which will include the performance of the new inflation target framework, the results of past monetary policy decisions, and the prospective assessment of inflation." The change in the timeframe to assess the inflation goal's fulfillment was announced a year ago, but it hinged on the presidential decree. In a statement, the Finance Ministry said that the new regimen allows the anchoring of inflation expectations in longer horizons, adding that it shows the country's commitment to low and steady inflation. Now, any changes in the target would need to be announced at least 36 months in advance. When asked earlier on Wednesday if central bank director of monetary policy Gabriel Galipolo would be chosen to head the central bank once Roberto Campos Neto's term as governor ends in December, Lula said he is not yet focusing on the matter. Now in his third non-consecutive term, Lula said the central bank's autonomy has always been respected in his previous administrations, but reiterated criticism of the current benchmark interest rate of 10.5% given the annual inflation rate of 4%. Sign up here. https://www.reuters.com/markets/brazil-adopt-continuous-3-inflation-target-says-lula-2024-06-26/

2024-06-26 21:03

June 26 (Reuters) - U.S. energy production overshadowed consumption by 9 quadrillion British thermal units (quads) in 2023, according to an analysis released by the U.S. Energy Information Administration (EIA) on Wednesday that showed the widest margin in records dating back to 1949. Energy production rose 4% to hit a record of nearly 103 quads in 2023, the analysis found, while energy consumption eased 1%. WHY IT'S IMPORTANT The 2023 rise in U.S. energy production was driven by increases in natural-gas and crude-oil production, the analysis found. Multiple indicators suggest that the U.S. oil and gas industry has thrived under President Joe Biden's administration, despite its push to decarbonize the U.S. economy. BY THE NUMBERS Dry natural gas production increased 4% in 2023 - logging a 58% rise since 2013 - and crude-oil production has grown 69% since 2013. Crude production is up 9% from 2022. Renewable energy production rose 1% compared to the previous year, touching eight quads of energy and reflecting a 28% increase since 2013. Solar-energy production grew 15% last year, while wind production fell 2%. On the flip side, U.S. energy consumption declined slightly in 2023, the analysis found, with petroleum and natural gas consumption largely unchanged from 2022. Coal consumption dropped 17% to its lowest level in more than a century due to its shrinking role in electricity generation. KEY QUOTES "Natural-gas production has continued to increase despite lower prices because natural gas is produced as a byproduct of crude-oil production. That’s especially true in the Permian Basin, which accounts for almost half of U.S. crude-oil production," said Chris Higginbotham, an EIA spokesperson. Two primary factors are contributing to the decrease of coal consumption for power generation, Higginbotham added: coal generators are retiring and low natural-gas prices and increasing renewable capacity make coal less economical for power generation. Sign up here. https://www.reuters.com/business/energy/short-take-us-energy-production-exceeds-consumption-by-widest-recorded-margin-2024-06-26/

2024-06-26 21:03

BRUSSELS, June 26 (Reuters) - The European Union will set out how its member countries should jointly develop major renewable energy projects, in a bid to avoid projects being delayed by disputes over splitting the bill, a document seen by Reuters showed. As Europe's shift to low-carbon energy gathers pace, countries are planning major new wind farms and other off-shore energy projects that will link to multiple nations. How governments and companies in these countries split the bill for such projects is an open question, and Brussels is concerned that disputes over who should pay could hamper the build-out of these major new green energy hubs. "We don't underestimate the potential for conflicts, disputes and delay in projects of this complexity," a senior EU official said. Draft European Commission guidelines, due to be published this week and seen by Reuters, will provide a basis for governments to negotiate deals on these major offshore renewable energy projects. For example, countries should consider skimming off a share of these congestion revenues and putting the cash in a fund that could invest in future renewable energy projects benefiting multiple countries in the region, the draft said. Such a scheme "would address investment gaps persistently difficult to fill", for major cross-border energy projects, the draft said. Other ways to cover financing gaps could include "statistical transfer" deals in which one country invests in a renewable project in another country, in exchange for receiving credits that the investing country can count towards meeting its renewable energy goals, the draft said. Belgium and France are currently at odds over a major new wind farm planned off the coast of Dunkirk, which Belgium wants moved to a different site. Countries could also explore new ways to jointly own such projects, including by launching new offshore power transmission entities to develop offshore power grid projects linked to multiple countries, the draft said. It also urged countries to decide early how to share congestion income that a project will eventually generate - and consider splitting this based not only on the split in ownership of the project, but also the cost of operating it. Sign up here. https://www.reuters.com/sustainability/climate-energy/eu-drafts-plan-avoid-disputes-over-green-energy-mega-projects-2024-06-26/

2024-06-26 21:02

June 26 (Reuters) - Farmers and biofuel producers should tell the U.S. Department of Agriculture in the next 30 days how to improve its assessment of climate-friendly farm practices as the administration finalizes a clean fuels tax credit program set to take effect in 2025, Agriculture Secretary Tom Vilsack said on Wednesday. The Biden administration hopes to drive down transportation emissions in part by incentivizing farmers whose crops are used for biofuels to use climate-friendly farming techniques that store carbon in the soil. Guidance for a sustainable aviation fuel tax credit released by the Treasury Department in April disappointed some farm and biofuel groups for requiring farmers to bundle a set of three climate-friendly practices, a standard few farmers can meet. "I'll be the first to admit, and you will be the first to tell me, that (the SAF guidance) was not perfect," Vilsack said at a meeting of the Clean Fuels Alliance America. The USDA is soliciting comments for 30 days on how its approach to climate-friendly farm practices should be modified as the administration works on its guidance for the clean fuel tax credit. That credit will replace several other low emission fuel credits, include the one for SAF, beginning in 2025. Vilsack said that guidance could, for instance, adjust the bundling requirements, depending on the content of comments. "We heard it's not reflective of how farmers operate," he said. Vilsack also said he hopes that the rules will be completed in the fall in time for farmers to make planting decisions for the following year, though noted the Treasury Department will ultimately release the rule. Sign up here. https://www.reuters.com/sustainability/us-farm-agency-seeks-input-climate-friendly-farm-practices-biofuel-tax-credit-2024-06-26/