BEIJING (Reuters) – Senior Chinese diplomat Wang Yi said Washington should not let itself be blinded by ideological bias when dealing with China, the Chinese state news agency Xinhua reported on Monday.
Wang Yi made the comments when he spoke on the phone with U.S. Secretary of State Antony Blinken, Xinhua reported.
(Reporting by Meg Shen and Ella Cao; editing by Philippa Fletcher)
By Hadeel Al Sayegh
DUBAI (Reuters) -Saudi Arabia’s gross domestic product expanded by 8.6% in the third quarter compared with the same period in 2021, according to initial government estimates on Monday, as the world’s top oil exporter benefits from higher energy prices.
Growth was largely driven by a 14.5% increase in oil activities, the General Authority for Statistics said, while non-oil activities expanded 5.6%.
Second quarter real gross domestic product was up 12.2%, the kingdom reported in September, exceeding a flash estimate at the end of July of 11.8% growth on the back of higher oil prices.
The finance ministry separately reported on Monday Saudi Arabia’s fiscal figures for the third quarter.
It recorded revenues of 301.87 billion riyals ($80.14 billion), a rise of 24% from the same period a year earlier.
Ad: Save every day with Amazon Deals: Check out today's daily deals on Amazon.
Expenses rose 22% to 287.73 billion riyals in the third quarter, compared with the year earlier period.
It reported a budget surplus of 14.14 billion riyals for the third quarter, and oil revenues of 229.02 billion riyals.
Although revenues and expenses were higher year-on-year, there was a slight pullback compared with the second quarter, with revenues of 370.36 billion and expenses of 292.46 billion.
“The fiscal surplus narrowed in 3Q in quarterly terms on the back of lower revenue, both oil and non-oil, and despite a modest pullback in government spending from the 2Q level,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
“Nevertheless, Saudi is in position to realise a healthy fiscal surplus in 2022 with a strong yearly increase in oil revenue,” Malik said.
($1 = 3.7560 riyals)
(Reporting by Hadeel Al Sayegh; Editing by Kim Coghill and Alison Williams)
(Reuters) – The Russian rouble pared early losses to gain ground on Monday in the first session since Moscow said it would suspend its role in the landmark Black Sea grain deal over the weekend.
Global food prices climbed on Monday after Russia said it was suspending participation in the U.N.-brokered grain accord for an “indefinite term” after what it said was a major Ukrainian drone attack on its Black Sea fleet in Crimea.
At 1230 GMT the rouble was up 0.3% against the U.S. dollar to 61.37, reversing earlier losses that had seen it down 0.6% in morning trading. The currency was flat against the euro at 61.10 and up 0.4% against the Chinese yuan to 8.37 .
The July grain corridor deal, which helped to unlock Ukrainian exports from its southern Black Sea ports, was the most significant diplomatic breakthrough so far in the eight-month-old conflict in Ukraine.
Kyiv and the West criticised Russia’s decision to ditch the agreement and analysts warned that this could cause another spike in global food prices.
Monday represented the final day of a domestic month-end tax period, which usually provides some support to the rouble. Monday was also the first full session after the central bank ended its rate-cutting cycle on Friday and said Moscow’s partial military mobilisation drive would be inflationary over the medium term.
Ad: Save every day with Amazon Deals: Check out today's daily deals on Amazon.
“The end of the tax period and large dividend payments, coupled with a further decline in Russia’s trade balance, is likely to send the rouble in the direction of 65 (against the U.S. dollar) by the end of the year,” wrote Dmitry Polevoy, investment director at Moscow-based broker Locko Invest.
Russian stock indexes were up slightly.
The dollar-denominated RTS index had gained 0.2% at 1,116.2 points while the rouble-based MOEX Russian index was up 0.3% at 2,174.9 points.
(Reporting by Jake Cordell; Editing by David Goodman and Mark Heinrich)
CUMBERLAND, MD – Cumberland city police detectives investigating a gun incident on Park Street learned the suspects they were looking for also had open warrants for a robbery last week.
Officers responded to an assault 911 call on Sunday in the 200 block of Park Street that involved a firearm.
According to detectives, officers contacted witnesses and victims of the incident.
“They advised that they were walking in the area when they got into a verbal altercation with a male and female subject. They stated that the male suspect displayed a handgun and pointed it at them during the argument,” the Cumberland Police Department said. “The male and female then left the area on foot. Officers searched the area and located the two subjects walking nearby. When contacted, the male subject was found to be in possession of an airsoft-style pistol.”
Police arrested Levi Neal Jones, 24, of Cumberland, MD, was arrested for multiple charges of assault and disorderly conduct.
Jones and his accomplice, Ashley Kay Shrout, 36, also had active warrants issued for their arrest.
Ad: Save every day with Amazon Deals: Check out today's daily deals on Amazon.
“The warrants stemmed from an incident that occurred on October 16th at a residence in the 12000 block of McMullen Hwy. During that incident, it is alleged that both Jones and Shrout broke into the home and stole numerous items from the homeowner,” the department said.
LISBON (Reuters) -Portugal’s economic growth accelerated to 0.4% in the third quarter from the previous quarter’s 0.1% thanks to an unexpected rise in private consumption despite high inflation, although annual expansion slowed in a potential sign of things to come.
The National Institute of Statistics (INE) said on Monday in its flash estimate that between July and September, gross domestic product expanded 4.9% from the same period a year earlier, after a revised expansion of 7.4% in the second quarter.
The contribution of domestic demand to the quarter-on-quarter rise turned positive, “highlighting the growth of private consumption despite the acceleration of consumer prices, while the contribution of net external demand was lower than in the previous quarter”, the INE said.
“These are not bad numbers and show that consumers, despite having been buffeted by inflation, still showed purchasing power and perhaps even made anticipated purchases,” said Filipe Garcia, economist at IMF-Informacao de Mercados Financeiros consultants.
Portuguese consumer prices rose 10.2% year-on-year in October, at their fastest pace since May 1992 and up from 9.3% in the previous month.
Garcia said the GDP figures included part of the summer period, “which was the best year ever for tourism in Portugal and this positively impacted activity”, and the economy likely decelerated from September onwards, although activity seems to be above the European average.
Paulo Rosa, senior economist at Banco Carregosa, expected a contraction this quarter from the third after six consecutive quarters of growth, while year-on-year, activity could stagnate or grow just 2%, but said that the government’s target for the whole year was within reach.
The government expects the economy to grow 6.5% this year, before slowing down to 1.3% in 2023, hampered by high energy and food prices across Europe and the erosion of savings accumulated during the pandemic.
Last year, GDP grew 4.9%, when it bounced back from an 8.4% pandemic-induced contraction which was the worst annual decline since 1936.
(Reporting by Andrei Khalip and Sergio Goncalves, Editing by William Maclean and Alison Williams)
(Clarifies wording in paragraph 6)
By Summer Zhen
HONG KONG (Reuters) – Bond fund managers with strategies focused on Asian high-yield issuers have switched to cash and other non-China assets after suffering huge losses in China’s corporate bond market.
Once a sought-after investment that accounts for more than half of Asia’s high-yield corporate bond issuance, China’s property sector saw a record number of defaults in 2022 across top private developers and even some state-owned companies.
Capital outflows triggered by aggressive Federal Reserve interest rate hikes struck another blow to the already fragile segment.
Monica Hsiao, founder and chief investment officer of Triada Capital, an Asia-focused credit long-short fund, says she has not seen this kind of challenge in an investment career spanning more than 20 years.
“We hold over 50% of cash at the moment, higher than any time historically,” said Hsiao, who founded the fund in Hong Kong in 2015.
Hsiao, who managed Asia credit for London-based credit-focused asset manager CQS prior to setting up Triada, did not disclose the fund’s size and its performance.
More than two dozen Chinese property developers rated by Moody’s have defaulted since the beginning of 2021 and that has pushed the number of Asian high-yield companies rated junk to a record high.
Many holders of China high yield bonds have seen them trading below 20 cents on the dollar. The in-default bonds of property company Sunac China maturing in 2025 trade at 6 cents to a dollar.
The average return of the top 10 Asia high yield bonds is down more than 30% this year, Morningstar data shows, of which Fidelity Funds’ Asian High Yield Fund and UBS’s SICAV – Asian High Yield (USD) had shed more than 40% as of Oct. 27.
The property sector, crucial to China’s political and economic stability, has seen sharp declines in prices and sales after policymakers imposed strict curbs on borrowing by developers in mid-2020.
Hsiao said investors were hoping for policy measures to prop up real estate demand this year but that didn’t happen.
Hsiao kept reducing her fund’s China exposure from the first quarter and shifted to cash in the summer months, when the U.S. inflation threat and geopolitical risks increased.
‘UNINVESTABLE’ ASSET CLASS
Gordon Ip, chief investment officer for fixed income at asset manager Value Partners，says the fund has reduced overall exposure to China property and bought Indonesian and Indian bonds this year, mostly in energy or resources and renewables sectors.
Value Partners’ Greater China High Yield Income Fund was down 37% as of the end of September. The fund’s assets have fallen to $611 million from $980 million at the end of April.
“This has been an extraordinary year in terms of managing risks,” said Ip. “Rising rates, skyrocketing inflation, geopolitical tensions and intense sector risk (China property) have made it extremely challenging to navigate the market.”
Ip said the fund has been staying liquid by trying not to “over own” a particular issue and making sure it always has a reasonable level of cash.
Bond investors are generally sitting tight and already looking ahead to next year, said Nicholas Yap, head of Asia Flow Credit Desk Analysts at Nomura.
Investors do not see China’s property debt markets reviving anytime soon, given not just regulatory risks but also several developers’ differentiated treatment of onshore and offshore bondholders in the restructuring process.
“There is no reliable restructuring process in China that coordinates between onshore and offshore,” said Hsiao, adding she sees barely any willingness among defaulted issuers to negotiate.
While there are select bonds that have upside, China high yield as an asset class is currently “uninvestable”, she said.
“We’re right in the perfect storm. We hope for the best, but prepare for the worst,” she said.
(This story has been refiled to clarify wording in paragraph 6)
(Reporting by Summer Zhen; Editing by Vidya Ranganathan and Muralikumar Anantharaman)
(Reuters) – Twitter will revise its user verification process, Elon Musk said in a tweet on Sunday, just days after he took over one of the world’s most influential social media platforms.
“Whole verification process is being revamped right now”, Musk said in his tweet without giving more details.
Twitter is considering charging for the coveted blue check mark verifying the identity of its account holder, technology newsletter Platformer reported on Sunday, citing two people familiar with the matter.
Users would have to subscribe to Twitter Blue at $4.99 a month or lose their “verified” badges if the project moves forward, according to the report.
The CEO of Tesla Inc has not made a final decision and the project could still be scrapped but according to Platformer it is likely that verification will become a part of Twitter Blue.
Separately, The Verge reported on Sunday that Twitter will increase the subscription price for Twitter Blue, which also verifies users, from $4.99 a month to $19.99 a month, citing internal correspondence seen by them.
Twitter Blue was launched in June last year as the platform’s first subscription service, which offers “exclusive access to premium features” on a monthly subscription basis including an option to edit tweets.
The feature to edit tweets was also made available earlier this month after Musk launched a Twitter poll in April asking his millions of followers whether they wanted an edit button. Over 70% had said yes.
Musk has also requested that logged out users visiting Twitter’s site be redirected to Explore page which shows trending tweets, according to a separate Verge report on Sunday citing employees who were familiar with the matter.
(Reporting by Akanksha Khushi in Bengaluru; editing by Diane Craft and Sam Holmes)
(Reuters) – Thermo Fisher Scientific Inc said on Monday it would buy Binding Site Group from European private equity firm Nordic Capital in an all-cash transaction valued at 2.25 billion pounds ($2.6 billion), boosting its specialty diagnostics business.
Birmingham, U.K.-based Binding Site’s test helps detect and monitor multiple myeloma, a cancer in a type of white blood cell, and is on track to deliver more than $220 million of revenue in 2022, Thermo Fisher said.
Scientific instruments maker Thermo Fisher’s specialty diagnostics portfolio includes equipment for testing allergy and autoimmune diseases and for monitoring transplant-related biomarkers.
Speciality diagnostics business generated revenue of $3.65 billion for the nine months ended Oct. 1, accounting for about 10% of Thermo Fisher’s total revenue during the period.
U.S.-based Thermo Fisher expects the transaction to be completed in the first half of 2023 and boost adjusted earnings per share by 7 cents on the first full-year of ownership.
Thermo Fisher had earlier this year bought recombinant proteins maker PeproTech for about $1.85 billion in cash, after spending about $17.4 billion to buy clinical research services provider PPD last year.
(Reporting by Leroy Leo and Pratik Jain in Bengaluru; Editing by Sriraj Kalluvila)
(Reuters) – Electric vehicle maker Nikola Corp said on Monday it was working with KeyState Natural Gas Synthesis to create Pennsylvania state’s first low-carbon hydrogen production supply chain.
However, Nikola said it was working on a definitive agreement with the hydrogen producer to expand supply for Nikola’s fuel-cell electric vehicles.
The over 7,000-acre KeyState site is expected to be operational in 2026 and will also supply ammonia and urea for industrial and transportation markets.
Nikola is also building a hydrogen fuel cell electric semi-truck with a range of up to 500 miles and a refuel time of under 20 minutes that would enable it to carry freight over longer distances.
The truck maker added that KeyState plans to supply the company with up to 100 tonnes per day of low-carbon hydrogen, which can supply fuel for up to 2,500 Nikola Tre FCEVs (fuel-cell electric vehicles).
That quantity of hydrogen could displace over 51 million gallons of diesel fuel per year consumed, Nikola said.
The low-carbon hydrogen will help Nikola maximize value under the recently passed Inflation Reduction Act. Companies that produce hydrogen will also receive up to $3 per kilogram of the fuel for the first five years.
Nikola said earlier in October that the IRA would help reduce costs across its energy and electric truck businesses.
KeyState Natural Gas Synthesis is a joint venture between KeyState Energy and Frontier Natural Resources Inc.
(Reporting by Akash Sriram in Bengaluru; Editing by Maju Samuel)
BENGALURU (Reuters) – The Reserve Bank of India (RBI) will launch the pilot for a central-bank-backed digital rupee for the wholesale segment on Nov. 1, it said on Monday, identifying nine banks, including top lender State Bank of India, to participate in the project.
The pilot’s use case will be to settle secondary market transactions in government securities, with the e-rupee expected to make the interbank market more efficient, the RBI said in a statement.
Settlements in central bank digital currency would reduce transaction costs, the RBI added.
Besides SBI, the pilot will include Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank and HSBC, the RBI said.
The launch of the e-rupee for the retail segment is planned within a month in select locations, the RBI added.
The RBI has been exploring the pros and cons of a central bank digital currency for some time and is working towards a strategy to implement it in a phased manner, it said earlier this month.
The central bank’s plans for a currency in digital form comes amid its staunch opposition of cryptocurrencies.
(Reporting by Chris Thomas in Bengaluru; Editing by Savio D’Souza)
KUWAIT (Reuters) – Jazeera Airways is planning to get around $2 billion from commercial banks to fund 70% of a deal it has with Airbus for 28 A320neo airliners, the Kuwaiti carrier’s chairman told Reuters on Monday.
(Reporting by Ahmed Hagagy; writing by Lina Najem; editing by Jason Neely)
BELMAR, NJ – A social media post being shared this weekend reported a woman had been beaten, stabbed and mugged in Belmar, then left beside the road.
According to the post, ‘Belmar police are asking for help to identify her’.
Today., the Belmar Police Department said the post is unfounded and most likely a social media hoax.
“The Belmar Police Department has been made aware of a false post being spread through social media of an unidentified woman being mugged, stabbed, and left on the roadside in Belmar asking for help to identify her,” the department said today. “There have been no reports made of this incident and this post is believed to be a hoax. Please be mindful of posts you are sharing on social media, and it is encouraged not to share anything if you are not familiar with the individual.”
JERUSALEM (Reuters) – Israel and Bahrain hope to seal a free trade agreement before the end of the year, officials from both countries said on Monday.
Israel normalised diplomatic relations with Bahrain and its Gulf neighbour the United Arab Emirates (UAE) two years ago under U.S. sponsorship. While economic ties with the UAE has since taken off, Israel’s trade with Bahrain has lagged far behind.
“We’re optimistic and hopeful that we will close the deal by the end of the year,” Bahraini Minister of Industry and Commerce Zayed Alzayani said during a visit to a leading Israeli venture capital firm, Jerusalem Venture Partners (JVP).
Alzayani, who discussed future cooperation with JVP founder Erel Margalit, said another round of free trade talks was expected in mid-November.
Israel’s Economy Ministry told Reuters it would send a delegation to Manama for the next round “in order to conclude the negotiations as soon as possible, and hopefully no later than the end of the year.”
In May, Israel forged a free trade deal with the UAE, its first with an Arab country, that officials estimate will increase trade from $1.2 billion to $10 billion over the next five years.
(Reporting by Ari Rabinovitch; editing by Philippa Fletcher)
NEW DELHI (Reuters) – India’s federal fiscal deficit in the first half of the financial year through September rose to 6.20 trillion rupees ($74.91 billion) from 5.27 trillion a year earlier, though rising tax collections helped offset a higher subsidy bill.
India’s fiscal deficit for the April to September period touched 37.3% of annual estimates, official data showed on Monday, as the government spent more on fertiliser, food and fuel subsidies.
Net tax collections during April-September rose to 10.12 trillion rupees, about 10% higher than a year before, helping the government despite growing fears of a shortfall in receipts from the sale of stakes in state-run firms this year.
The federal government’s spending bill is expected to rise by nearly 2 trillion rupees this fiscal year, according to several economists’ estimates, following higher allocations for subsidies, stretching the fiscal deficit.
However, a rise in goods and services tax receipts helped by a pick-up in urban demand and higher inflation could help to meet the budgeted fiscal deficit target, they said.
Total expenditure for the first six months of the current financial year was 18.24 trillion rupees, compared to 16.26 trillion rupees a year earlier, data showed.
In February, while presenting the annual budget, Finance Minister Nirmala Sitharaman set the fiscal deficit target at 6.4% of gross domestic product for 2022/23 starting April, compared to 6.7% in the previous fiscal year.
The government aims to spend nearly 40 trillion rupees in the current financial year, up about 4% from the previous year but down in real terms due to near 7% inflation this year.
($1 = 82.7620 Indian rupees)
(Reporting by Manoj Kumar and Aftab Ahmed; Editing by Philippa Fletcher and Jan Harvey)
By Yimou Lee
TAIPEI (Reuters) – Production of Apple Inc’s iPhones could slump by as much as 30% at one of the world’s biggest factories next month due to tightening COVID-19 curbs in China, a person with direct knowledge of the matter said on Monday.
Manufacturer Foxconn, formally Hon Hai Precision Industry Co Ltd, is working to boost production at another factory in Shenzhen city to make up for the shortfall, said the person, declining to be identified as the information was private.
Its main Zhengzhou plant in central China, which employs about 200,000 people, has been rocked by discontent over stringent measures to curb the spread of COVID-19, with several workers fleeing the site over the weekend.
The possible impact on production comes amid a traditionally busy time for electronics makers ahead of the year-end holiday season, which is also a prime time for vendors such as Apple.
Foxconn on Sunday said it was bringing the situation under control and would coordinate back-up production with other plants to reduce any potential impact. Its share price closed down 1.4% on Monday versus a 1.3% rise in the broader market.
Apple did not respond to a request for comment.
Foxconn is Apple’s biggest iPhone maker, producing 70% of iPhone shipments globally, which in turn makes up 45% of the Taiwanese firm’s revenue, analysts at Taipei-based Fubon Research said this month.
It also builds the device in India, but its Zhengzhou factory assembles the majority of its global output.
A second person familiar with the situation said many workers remained at the Zhengzhou plant and that production was continuing.
GRAPHIC – More than half of Apple’s revenue is from iPhone sales
https://graphics.reuters.com/HEALTH-CORONAVIRUS/FOXCONN-CHINA/zjpqjqargvx/chart.png
STRICT COVID-19 MEASURES
Under China’s ultra-strict zero-COVID-19 policies, localities must act swiftly to quell outbreaks, with measures including full-scale lockdowns.
Factories in affected areas are often allowed to stay open on condition they operate under a “closed loop” system where staff live and work on-site. Businesses have said such arrangements pose numerous difficulties.
Foxconn on Oct. 19 banned dining at canteens at the Zhengzhou plant and required workers to eat meals in dormitories. It said production was normal.
The measures led to people who said they worked at the site venting frustration about their treatment and provisions via social media.
Scores fled the site over the weekend, with photographs and videos on social media purporting to show Foxconn staff trekking across fields in daytime and along roads at night. Reuters could not immediately verify the authenticity of the posts.
Foxconn has not disclosed whether any workers at the Zhengzhou site had been diagnosed with COVID-19. Authorities have since Oct. 19 reported 264 locally transmitted COVID-19 cases in Zhengzhou, the capital of central Henan province.
Foxconn implemented closed loop measures in March and July this year at its smaller Shenzhen factory as cases in the southern city rose.
In May, the Shanghai plant of another Apple supplier, MacBook assembler Quanta Computer Inc, was also hit by worker chaos after the discovery of COVID-19 cases despite a closed-loop system being put in place.
(Reporting by Yimou Lee; Additional reporting by Brenda Goh; Editing by Gerry Doyle and Christopher Cushing)
By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) – Many bond investors are playing it safe on the short end of the yield curve, even as Federal Reserve officials have started to float the idea of smaller interest rate hikes as soon as the December policy meeting.
Investors widely expect the Fed this week to raise its benchmark overnight interest rate by 75 basis points to a range of 3.75% to 4.00%, which would be the fourth supersized hike in a row. For December, however, the fed funds futures market has factored in a 68% probability of a 50-bps increase after hints from Fed officials of potentially slowing down the tightening pace.
“Our view is that the Fed will continue to tighten policy into 2023. We view price pressures as being well above their mandate and persisting into 2023,” said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management in Minneapolis.
“If our view is that inflation is a little more persistent and the Fed needs to be aggressive, then we still prefer to be on the shorter end of the curve,” he added.
In a rising rate environment, bond investors tend to reduce the duration of their portfolios. The longer the duration, the higher the losses if rates rise.
The Federal Open Market Committee meets on Tuesday and Wednesday, and will release its decision and policy statement at 2 p.m. EDT (1800 GMT) on Wednesday.
U.S. financial conditions (FCI), which typically include borrowing costs, equity levels and exchange rates, have loosened in the latest week, according to Refinitiv data, as stock prices rebounded. But conditions are much tighter than a year ago, before the Fed kicked off its 2022 interest rate increases.
Just two weeks ago, before the communications blackout period ahead of each Fed meeting, St. Louis Fed President James Bullard and Minneapolis Fed President Neel Kashkari, both of whom are widely perceived as policy hawks favoring aggressive tightening to combat the worst inflation in four decades, emphasized the need to stop raising rates in early 2023.
In separate comments, San Francisco Fed President Mary Daly said “the time is now to start talking about stepping down.”
Analysts said slowing the tightening process allows the impact of the rate hikes to feed in to the economy. The problem, however, is that the market looks at this step-down as a prelude to cutting rates, which many believe is not the case at all.
Tiffany Wilding, North American economist at PIMCO, said the challenge for the Fed, which is likely preparing the market for a pause in tightening, lies in not only conveying that pause while price pressures remained elevated, but reinforcing the message that the U.S. central bank is still focused on bringing down inflation.
“And … it isn’t going to quickly pivot to dropping rates in the face of what is likely to be increasingly weak economic activity,” Wilding wrote in a research note.
SLOW PACE DOES NOT MEAN LOOSENING POLICY
Just as important is the language and nuance in the policy statement and what Chair Jerome Powell says at the news conference following its release.
Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina, noted that if Powell makes any reference to a shift in its aggressive tightening pace, he will emphasize that this does not represent a loosening of monetary policy.
“It simply represents a change in the pace of tightening to assess the impact of what has been a record interest rate tightening cycle on the real economy,” he said
Much like U.S. Bank’s Hainlin, Hill believes inflation will remain stubbornly high, citing companies, particularly those selling consumer staples, that are pushing prices higher aggressively.
That said, Hill pointed out that short-term rates are getting well above long-term neutral levels, and said it makes sense to lengthen duration exposure a little bit.
“But by no means, we’re loading the boat right now. We need to be cautious about getting too optimistic with respect to a change in the trajectory of Fed policy.”
To be sure, some bond market participants, while still cautious, could not ignore the surge in U.S. yields which have provided value to longer-duration bonds.
Since the beginning of August, benchmark Treasury 10-year yields have soared about 148 basis points. The yield hit a 15-year high of 4.338% on Oct. 21.
“The chance of the Fed slowing the pace of rate hikes early next year has grown, suggesting that the majority of the overall yield rise this cycle has already unfolded,” said Chip Hughey, managing director, fixed income, at Truist Advisory Services in Richmond, Virginia.
He recommended adding duration to bond portfolios. Hughey noted that long duration, high-quality fixed income such as Treasuries are in a better position to provide portfolio protection and more attractive levels of income for investors as well.
(Reporting by Gertrude Chavez-Dreyfuss in New York; Graphics by Saqib Iqbal Ahmed; Editing by Alden Bentley and Matthew Lewis)
By Johan Ahlander and Anna Ringstrom
STOCKHOLM (Reuters) -The Swedish economy is heading into a recession next year, driven by rampant inflation and the war in Ukraine, the country’s new finance minister said on Monday.
The economy is now expected to contract by 0.4% in 2023, and there is significant risk that the outcome could be even weaker, Finance Minister Elisabeth Svantesson said in presenting her first economic forecast since the September election, in which a right-wing bloc secured a slim majority.
The Nordic country’s previous government had in August forecast growth of 0.4% in 2023.
“Sweden’s economic outlook is gloomy and we’re heading for a tough winter,” Svantesson told a news conference, adding that there was a high risk developments will be even weaker than the main scenario.
The finance ministry also raised its outlook for inflation, forecasting consumer price rises at fixed rates of 7.9% this year and 5.2% next year, up from the August projection by the previous government of 7.3% and 3.9% respectively.
Svantesson pledged to stick to Sweden’s fiscal policy framework under which public finances are run at a 0.3% of GDP surplus over an economic cycle. It is widely credited with having a significant impact on Sweden’s strong public finances.
“For us and me, it is important that fiscal policy in this situation is well balanced, that fiscal policy does not fuel inflation. And we will stick to the fiscal policy framework, and thereby ensure that we have room for manoeuvre if next year becomes even more difficult,” she said.
(Reporting by Anna Ringstrom, Johan Ahlander and Niklas Pollard in Stockholm, and Terje Solsvik in Oslo, editing by Gwladys Fouche, Stine Jacobsen and Mark Heinrich)
By Emma Farge
GENEVA (Reuters) – Global employment growth will “deteriorate significantly” this quarter, hit by the economic turmoil caused by the Ukraine war and by the impact of tighter monetary policy on consumption, the International Labour Organization (ILO) said on Monday,
There are already signs that a recovery in global hours worked that was seen in early 2022 went into reverse in the second and third quarters, the U.N. body said.
Overall, there were 40 million fewer full-time jobs between July-September than in the fourth quarter of 2019, which is used as the benchmark level before the COVID pandemic, it added.
“On current trends, global employment growth will deteriorate significantly in the fourth quarter of 2022,” the ILO said in its report on the World of Work.
The ILO attributed the deterioration in the level of hours worked in mid-2022 to the reintroduction of public health restrictions and ensuing labour market disruptions in China as well as to the Ukraine conflict and resultant inflationary pressures from disruptions to energy and food exports.
The report also said that excessive policy tightening could cause “undue damage to jobs and incomes in both advanced and developing countries”.
The ILO warned of declining job vacancies ahead and rising unemployment in the final months of the year. There are already signs that the labour market has cooled considerably in advanced economies, with sharp declines in vacancy growth, it said.
ILO Director-General Gilbert Houngbo called for a series of policies aimed at supporting the most vulnerable people and businesses, which might include channelling windfall corporate profits towards employment or income support.
“We cannot insist enough on the need for social packages and the need to ensure that the monetary tightening to combat the inflation is really dovetailed with social measures,” he told a Geneva press briefing.
(Reporting by Emma Farge; Editing by Andrew Heavens)
By David Carnevali and Joey Roulette
(Reuters) – FireFly Aerospace, the U.S. rocket builder that reached orbit in space this month, joining the likes of SpaceX and Rocket Lab, is seeking up to $300 million in a private fundraising round, according to people familiar with the matter.
Firefly has yet to specify the valuation it is seeking, the sources said. The space company was valued at more than $1 billion when private equity firm AE Industrial Partners became its controlling shareholder in March.
The Cedar Park, Texas-based company aims to complete the funding round by the end of the year, said the sources, who spoke anonymously because the matter was confidential.
Firefly Chief Executive Officer Bill Weber told Reuters in an interview this month the company was raising funds but did not provide details. A FireFly spokesperson declined to comment when asked about the fundraising, as did a spokesperson for AE Industrial Partners.
Weber said in the interview that fresh funding would help the company complete construction of manufacturing facilities for its Alpha rocket in Cape Canaveral, Florida, and accelerate development of a bigger rocket the company plans to build with Northrop Grumman Corp.
Firefly’s Alpha rocket reached orbit for the first time on Oct. 1. It is among a handful of U.S. space companies vying to launch small satellites into space.
Firefly is already taking orders of roughly $15 million per launch for its 95 foot-tall Alpha rocket, offering governments and satellite companies a medium-sized ride to space. SpaceX’s bigger Falcon 9 rocket costs $62 million and Rocket Lab’s smaller Electron rocket costs $7 million.
Firefly was rescued from bankruptcy in 2017 by Ukrainian-born entrepreneur Max Polyakov’s Noosphere Ventures. U.S. national security concerns forced Noosphere to sell its majority stake in FireFfly to AE Industrial Partners, ending a months-long crisis that prevented the company from launching its rocket.
Investments in space companies with capital-intensive projects have fallen in the third quarter, as decades-high inflation and rapidly rising interest rates force investors to focus on companies with viable products.
Venture capital investments in space companies fell 44% from a year earlier, according to a quarterly report from VC firm Space Capital.
(Reporting by David Carnevali and Joey Roulette; Editing by David Gregorio)
By Xie Yu
HONG KONG (Reuters) – Chinese property developer Greenland Holdings Corp said on Monday it was seeking its offshore bondholders’ approval to extend repayment on its bonds due between next month and 2025 by up to two years due to falling sales and poor market conditions.
State-backed Greenland joins a string of Chinese developers that have delayed or defaulted on offshore debt obligations since the second half of last year due to a stifling cash squeeze triggered partly by a regulatory crackdown.
“The Group has been experiencing significant declines in its sales and operations”, mainly due to the COVID-19 situation across China, and the negative market conditions, the issuer, an offshore unit of Greenland said in an exchange filing.
As a result, Greenland will not be able to repay the $370 million bonds due on Nov. 13, and the developer also faces difficulties in repaying other securities on time, it said in the statement.
The developer is looking to extend the November tranche by two years, it said.
Greenland also proposed to extend the maturity of a batch of notes to mature next June by one year and the remaining seven series of bonds by two years.
Greenland has been reeling under financial stress since last year as China’s property sector woes deepened.
In August, it borrowed 3 billion yuan ($411 million) from two state-owned shareholders to help it ensure delivery of homes, a move seen by some analysts that indicated it still had support from the government.
($1 = 7.2970 Chinese yuan renminbi)
(Reporting by Xie Yu; editing by Sumeet Chatterjee and Jason Neely)
By Chris Taylor
NEW YORK (Reuters) – Next time you are visiting the National Archives Museum in Washington, D.C., check out the 1297 copy of the Magna Carta, essentially the first written constitution in European history.
It may have been drawn up under England’s King John, but these days it belongs to David M. Rubenstein.
Rubenstein, the co-founder of private equity giant The Carlyle Group, not only bought that document, but copies of the Declaration of Independence and the Emancipation Proclamation besides – all of which he gives to institutions for public display.
To learn how Rubenstein amassed those kind of resources, look no further than his new book, “How To Invest: Masters on the Craft.”
In it, Rubenstein includes not only what he has learned over the years, but insights from other boldfaced names in the investing universe – such as Bridgewater Associates’ Ray Dalio, BlackRock’s Larry Fink, Renaissance Technologies’ Jim Simons, John Paulson of Paulson & Co. and more.
That crowd is a long way from his Baltimore childhood. At that time, there was not a whole lot of investing going on, with his father working a blue-collar existence for the Post Office, living paycheck-to-paycheck.
Starting from there and making it to the ranks of billionaires is no small feat, but Rubenstein is bracingly honest about both his investing misses as well as his hits. His biggest home run, of course, was starting Carlyle, raising an initial $5 million that has turned into a behemoth with $376 billion in assets under management, sitting astride the world of private equity.
His whiffs, meanwhile, include passing on little startups like Meta’s Facebook and Amazon, going so far back that he remembers when Amazon CEO Jeff Bezos used to hand-deliver every book order to the Post Office himself.
“The best investors have an ability to forget their mistakes and go onto the next thing, but I don’t have that,” Rubenstein told Reuters. “I think about that all the time. How could I have been so stupid?”
Nevertheless, Rubenstein seems to have done alright, with a net worth currently estimated by Forbes at $3.2 billion. His family office steers his personal investments and sticks not to more traditional asset classes like publicly-traded stocks or fixed income, but the area he knows best – private equity.
A couple of investments he singles out: Healthcare firm Redesign Health, which has grown to a valuation of well over $1 billion. He was also involved in the purchase of ticketseller StubHub shortly before the COVID-19 pandemic, labeled by Forbes at the time as the “Worst Deal Ever” because of the unfortunate timing, although prospects have rebounded nicely since then.
RUBENSTEIN’S ADVICE TO INVESTORS BIG AND SMALL
When it comes to philanthropy, Rubenstein takes a surprisingly hands-on approach – no foundation, no staff, just him. He does not take pleasure in having to turn people down, but he does enjoy following his own rules, including starting something that would not get started otherwise; something he is intellectually interested in, in which he can be involved beyond just writing a check; and something which will see real progress in his lifetime.
Rubenstein is also one of the early signatories of the Giving Pledge, the Bill Gates-led initiative encouraging America’s wealthiest to give away at least half their fortunes – a roster that has since grown to over 230 people.
But for mom-and-pop investors out there, Rubenstein has guidance as well, especially in this current downturn, which has so many people on edge looking at their cratered 401(k)s.
“The most common mistake investors make is that they get out of the market at the wrong time,” Rubenstein says. “When markets are depressed, that’s the time to actually invest. They shouldn’t panic and sell everything when the market goes down.”
For most retail investors, Rubenstein suggests an approach that hews to the fundamentals: Index funds, diversification, low fees, transparency and realistic expectations about rates of return. In other words, do not think of yourself as a genius who can beat the market, because realistically that is just not going to happen.
And do not think this book is going to turn you into Warren Buffett, either.
“It won’t automatically make you a great investor,” Rubenstein says. “But it can give you insight into some of the greatest investors in America, and how they became great – and how you can do a better job managing your own money.”
(Editing by Lauren Young and Josie Kao; Follow us @ReutersMoney)
TOKYO (Reuters) -Japan’s Panasonic Holdings Corp said on Monday it will start building a new battery plant in Kansas in November and aims to begin mass production by March 2025, targeting North America’s fast-growing market for electric vehicles.
The conglomerate’s energy unit said in July it had picked Kansas as the site for a new plant to supply batteries primarily to Tesla Inc, joining other battery producers planning massive U.S. investments to qualify for new EV tax credit rules and to tap that market’s potentially massive demand.
Panasonic said in a statement that it expects initial production capacity of 30 gigawatt hours per year at the new plant. That’s equivalent to roughly 60% of the company’s current annual EV battery production capacity in Japan and the United States.
Kansas state officials said in July the factory would create up to 4,000 jobs with investment of up to $4 billion, pending final approval by Panasonic’s board, which came through on Monday.
Hirokazu Umeda, Panasonic Holdings Group chief financial officer, declined to give a specific figure for the investment at an earnings briefing on Monday, but said as a rough estimate that it would be “on a scale of more than $4 billion” .
The company said the factory would produce its 2170 model lithium-ion battery cells, which are already supplied to Tesla, but may eventually make the more advanced 4680 format battery currently under development that is about five times larger and will offer major improvements in cost and vehicle range.
“We decided to start with the 2170 model, which can be launched with a sense of certainty and speed because of the need for batteries as soon as possible,” Umeda said.
Panasonic has said it would begin mass production of the 4680 model at its plant in Wakayama, in western Japan, by the end of March 2024, with expansion later to production in North America.
Umeda said the ramp up to mass production was proceeding as planned.
Panasonic on Monday also lowered its full-year operating profit forecast to 320 billion yen ($2.16 billion) from 360 billion yen for the year ending March 31. That compares with a 349.9 billion yen average forecast by 19 analysts.
Panasonic posted an 11% drop in second-quarter operating profit, but performed better than analysts’ estimates.
It reported 86.1 billion yen in operating profit for the three months to end-September, versus an average 81.6 billion yen profit estimated by nine analysts, according to Refinitiv data. A year earlier, the company earned 96.8 billion yen.
Although sales rose at its energy business, operating profit fell due to rising prices for raw materials and logistics, as well as increased development expenses and fixed costs as it increased production.
Its rivals, China’s CATL and South Korea’s Energy Solution, posted strong battery profit growth after they passed some of their cost increases to clients.
($1 = 147.9800 yen)
(Reporting by Satoshi Sugiyama; Editing by Edmund Klamann)
By Ann Saphir
(Reuters) – U.S. central bankers are expected to keep their inflation fight in high gear this week, even as they intensify a debate over when to downshift to smaller interest rate hikes so as to avoid sending the world’s biggest economy into a tailspin.
With the Fed’s preferred measure of inflation running at more than three times its 2% target, the outcome of the central bank’s policy meeting on Tuesday and Wednesday is not in doubt: it will raise rates by three quarters of a percentage point for the fourth straight time, bringing the target overnight lending rate to a 3.75%-4.00% range.
But what’s next is less clear.
Personal consumption https://graphics.reuters.com/USA-STOCKS/zdvxdyaoxvx/pce.png
After the last meeting, in September, Fed Chair Jerome Powell said that “at some point” it will be appropriate to slow the pace of rate hikes and take stock of how the sharpest rise in borrowing costs in 40 years is affecting the economy.
Defining that point, or at least its parameters, will be the subject of intense discussion at this week’s Federal Open Market Committee meeting.
Do price pressures need to ease convincingly first?
Or is the bar simply that inflation needs to stop getting worse, even if it takes time to actually get better?
How will a looming recession in Europe, a slowdown in China, and rising global commodity prices stoked by the war in Ukraine impact the U.S. outlook for inflation?
How to account for the lagging effect of rising U.S. rates, which are slowing the housing market dramatically but have yet to bite into the broader economy or lift the unemployment rate, currently at 3.5%?
Projections released at the end of the Sept. 20-21 meeting suggest that most of the Fed’s 19 policymakers expect to be able to begin to slow the rate hikes in December and reach a peak policy rate of 4.50%-4.75% in 2023.
But economic data since that meeting has been mixed, with U.S. inflation still searingly hot but some signs that household spending and job growth are easing.
Past the peak? https://graphics.reuters.com/USA-FED/jnvwyglebvw/chart.png
And during that time, Fed policymakers, with the notable exception of Powell, have offered a range of views on where they stand on a possible slowdown or even pause to rate hikes.
Fed Governor Michelle Bowman, for instance, said she’ll look for signs that inflation is moving down before she would want to reduce the pace of rate hikes. Minneapolis Fed President Neel Kashkari signaled he would be comfortable if inflation simply stopped rising.
It isn’t clear that two days of debate are enough to resolve those differences.
“There does not yet appear to be a consensus on the Committee about the preferred size of a December hike, limiting Powell’s ability to offer guidance,” Nomura economists wrote on Friday.
The Fed chief will instead, those economists and others predict, point to the range of data still to come before any decision needs to be made – including two more monthly reports on the state of the U.S. job market and, most importantly, fresh inflation readings.
“There is little reason for the committee to limit its optionality for December, as even the most dovish participants would likely prefer more information about how inflation and overtightening risks are evolving before signaling a policy turn,” Barclays economists also wrote on Friday.
Fed risk sentiment https://graphics.reuters.com/USA-FED/SENTIMENT/mopakmkkepa/chart.png
‘NEED TO BE CONVINCED’
Bets in futures markets weigh heavily in favor of a slowdown in rate hikes starting in December, but ultimately a top Fed policy rate of 4.75%-5.00%, slightly higher than policymakers themselves have flagged, by early next year.
“Everything is squared up to do 50 (basis points) in December,” said Vincent Reinhart, chief economist at Dreyfus-Mellon, and then to raise rates a bit further to a plateau that’s high enough to put downward pressure on inflation.
Other global central banks are signaling slower tightening ahead, with the Bank of Canada shifting to a half-percentage-point hike last week and a slightly less hawkish tone from the European Central Bank as it announced its own 75-basis-point rate hike last week.
Fed policymakers, Reinhart said, are also well aware that monetary policy typically goes too far.
“You tighten too much, you ease too much, you wait too long because you need to be convinced,” he said. “And knowing that … they’ll slow the pace.”
Still, anything from Powell that suggests he views the Fed’s September projections as stale could upend expectations for a December downshift and set the stage for a more aggressive touch.
(Reporting by Ann Saphir; Editing by Paul Simao)
(Reuters) -Sri Lanka’s key inflation rate eased to 66% in October after hitting 69.8% in September, the crisis-struck country’s statistics department said on Monday.
The still extremely elevated Colombo Consumer Price Index (CCPI) reflected a 85.6% jump in food prices in October and a 56.3% climb in the non-food group, the Census and Statistics Department said in a statement.
However, the pace of food inflation slowed from a all-time high of 94.9% in September.
Sri Lanka has been struggling with soaring inflation for nearly a year, partly triggered by its worst financial crisis in seven decades and a ill-thought out ban on chemical fertiliser implemented last year, which has since been reversed.
“We are finally seeing a drop in inflation and expect this to continue over the next few months. However, inflation is only likely to hit single digits after the second quarter of next year,” said Dimantha Mathew, head of research at First Capital Holdings.
The CCPI, released at the end of each month and closely watched by central bank policymakers, acts as a lead indicator for broader national prices and shows how inflation is evolving in Colombo, Sri Lanka’s biggest city.
Sri Lanka’s other main inflation measure, the National Consumer Price Index (NCPI), which captures broader retail price inflation, also touched a record 73.7% in September.
In an effort to tame prices and stabilise markets, the Central Bank of Sri Lanka (CBSL) has raised interest rates by 900 basis points so far this year. Its final policy announcement for the year will be in the last week of November.
Sustained high inflation would make it tricky for the government to introduce fresh indirect taxes in its upcoming budget for next year that will be presented to parliament on Nov. 14, analysts said.
Higher taxes are essential to boost public revenue to anchor fiscal consolidation and lock down a $2.9 billion bailout programme with the International Monetary Fund (IMF).
(Reporting by Chris Thomas in Bengaluru; editing by Philippa Fletcher, Kirsten Donovan)
By Leika Kihara and Yoshifumi Takemoto
TOKYO (Reuters) – Japanese authorities cannot control yen levels with currency intervention but they have various tools to smooth out volatile moves driven by speculators, former top finance ministry bureaucrat Yasushi Kinoshita said on Monday.
Japan has been conducting yen-buying interventions since September to prevent a sharp slide in the currency driven by the gap between steadily tighter U.S. monetary policy and the Bank of Japan’s continued ultra-loose policy.
“Currency intervention cannot and isn’t intended to move the yen significantly up and down, or keep it at a certain level for a sustained period of time,” said Kinoshita, seen as a candidate to join the Bank of Japan’s leadership next year.
“Rather, it’s aimed at preventing speculators from triggering volatile moves,” said Kinoshita, who played a key role when Japan conducted yen-selling intervention in 2011.
“Japanese authorities are armed with the wisdom and various tools to fight speculators,” he told Reuters in an interview.
Kinoshita said the central bank must eventually exit its ultra-loose policy but added that the BOJ must tread carefully and coordinate closely with the government in withdrawing stimulus.
“Everyone understands the BOJ must eventually head for the exit,” Kinoshita said.
“It must proceed steadily but cautiously,” he said, as withdrawing fiscal and monetary support simultaneously and too hastily would hurt the fragile economy.
Kinoshita, who retains close ties with incumbent policymakers, served as vice finance minister for about a year from 2013, when BOJ Governor Haruhiko Kuroda deployed his “bazooka” stimulus programme to eradicate deflation.
He is seen as one candidate to join the BOJ’s leadership when Kuroda’s term ends next April and those of his two deputies run out in March.
Some investors bet the BOJ will start to phase out its massive stimulus upon dovish governor Kuroda’s departure, as prolonged ultra-low rates drive unwelcome yen falls that boost import costs.
“Given that what the BOJ is doing now is unprecedented, it won’t be easy,” Kinoshita said of the likelihood of a smooth lift-off from ultra-low rates.
The BOJ sets a negative short-term rate target and caps the 10-year bond yield around zero, remaining an outlier among a wave of central banks raising rates to combat soaring inflation.
Kinoshita was director-general of the international bureau when the finance ministry intervened in 2011 to stem a sharp yen rise that was hurting exports. He is currently chairman of the government-backed Development Bank of Japan.
(Reporting by Leika Kihara; Editing by Hugh Lawson)