Latest news with #US-induced
Business Recorder
13 hours ago
- Business
- Business Recorder
Dollar holds steady
LONDON: The dollar edged up on Thursday as the threat of a broader Middle East conflict loomed over markets, while a raft of rate decisions in Europe highlighted the difficulty central bankers have in dealing with heightened uncertainty. Rapidly rising geopolitical tensions have boosted the dollar, which has reclaimed its safe-haven status lately. Iran and Israel carried out further air attacks on Thursday, with the conflict entering its seventh day. Concerns over potential US involvement have also grown, as President Donald Trump kept the world guessing about whether the United States will join Israel's bombardment of Iranian nuclear sites. The Federal Reserve left rates steady on Wednesday. The Bank of England also left rates unchanged on Thursday, citing elevated global uncertainty and persistent inflation as concerns for the economic outlook. The pound fell initially, but later recouped most of those losses. The Swiss franc, meanwhile, was stronger against the dollar following an expected rate cut from the Swiss National Bank. But the surprise came from the Norges Bank, which delivered a 25 bps rate cut, while markets had expected the Norwegian central bank to hold rates. The dollar and the euro both rallied by 1% against the Norwegian crown . The crown is still one of the top-performing major currencies against the dollar this year, with a gain of around 11%. Meanwhile, the euro dipped 0.1% to $1.1473. The dollar rose 0.2% against the yen to 145.56. The dollar index, which measures the currency against six others, was flat at 98.9 and was set for about a 0.8% gain for the week, its strongest weekly performance since late February. ING strategist Francesco Pesole said the fact that geopolitical risks and high oil prices were not 'US-induced risks,' unlike the risks to US government finances from Trump's tax cut plans or his tariff policies, the dollar could once again take on its role as a safe haven. 'The dollar is still in a more favourable spot than the energy-dependent safe-haven alternatives (like the euro) in this environment,' he said. US markets were closed on Thursday for the federal Juneteenth holiday, which could mean liquidity is lower. In a widely expected move, the Fed held rates steady, with policymakers signalling they still expect to cut rates by half a percentage point this year, although not all of them agreed on a need for rate cuts. Fed Chair Jerome Powell said goods price inflation will pick up over the course of the summer as Trump's tariffs start to impact consumers. 'Ultimately, the cost of the tariff has to be paid, and some of it will fall on the end consumer,' Powell told a press conference on Wednesday. 'We know that because that's what businesses say. That's what the data say from the past.' The comments from Powell underscore the challenge facing policymakers as they navigate uncertainties from tariffs and geopolitical risks, leaving markets anxious about the path of US interest rates.
Yahoo
05-06-2025
- Business
- Yahoo
BofA stays bearish on the U.S. dollar
-- BofA Global Research reiterated its bearish stance on the U.S. dollar in a note Thursday, even as it acknowledged that the view is becoming increasingly mainstream. 'We remain bearish on the dollar, but recognize this is becoming an increasingly consensus view, posing risks,' analysts wrote. While BofA continues to expect medium- to long-term weakness in the greenback, the firm outlined several upside risks that could support the dollar in the short term. 'Upside USD risks: ongoing US data resilience, further cooling of trade tensions, & congress finding the fiscal 'sweet spot,'' the bank stated. Still, analysts cautioned that those scenarios, while plausible, do not alter the broader trajectory. 'We remain core dollar bears, but near-term upside risks cannot be ignored,' the firm wrote. The ongoing strength in U.S. economic data remains a key risk to that outlook, even if the trend proves temporary. 'The most likely near-term catalyst for USD upside lies in the ongoing US data resilience or even a reacceleration, even if temporary.' However, BofA maintained that the longer-term effects of escalating trade tensions would likely weigh on the dollar over time. 'We view the longer-term impacts of a US-induced global trade war as ultimately keeping the USD as the main relief valve for the economy, especially from a starting point of elevated valuations,' the analysts noted. Ultimately, the bank feels that any short-term gains in the dollar are expected to be fleeting. 'We would expect any near-term USD rallies to ultimately be seen as selling opportunities, barring major policy and economic shifts,' BofA said. Related articles BofA stays bearish on the U.S. dollar U.S. dollar dips as Trump delays EU tariff hike Dollar surges on US-China trade deal, but Deutsche Bank sees reason for caution Sign in to access your portfolio
Forbes
03-06-2025
- Business
- Forbes
China Market Update: Hong Kong's Hopes Hinge On Trump-Xi Call & Policy Meeting Stimulus
CLN Asian equities delivered mixed performance overnight on hopes that a phone call between President Trump and President Xi would take place this week. Hong Kong outperformed, buoyed by a stronger renminbi (RMB) versus the US dollar, while South Korea was closed for the presidential election and Thailand was closed for the Queen's birthday. The Organization for Economic Cooperation and Development (OECD) emphasized that economic cooperation is essential for development, lowering its 2025 global GDP growth forecast to 2.9% from 3.2%. The OECD also reduced its US growth target to 1.6% from 2.2%, citing the ongoing US-induced trade war as a primary factor. Mainland China's economic data appeared to confirm the negative impact of the trade war. The May Caixin Manufacturing Purchasing Managers' Index (PMI) came in at 48.3, down from April's 50.4 and below expectations of 50.7. Caixin's private survey, which focuses on smaller companies, may have underperformed the PMI released by the National Bureau of Statistics (NBS) due to the higher export exposure of the firms included in the survey. Investors may view the weak reading as a catalyst for policymakers to introduce strong stimulus measures at the upcoming Lujiazui Forum, which begins on June 18th. Hong Kong had a strong session, with nearly four advancing stocks for every declining stock. However, trading volumes were only at 100% of the one-year average, and stronger volumes would have been preferred. Banks, internet stocks, and auto companies led gains, while underperformers were limited. Appliance giant Midea Group fell -1.82% in Hong Kong and -3.82% in Mainland China after the Chairman commented that he was not concerned about Xiaomi entering the home appliance industry, but his remark that Midea 'had no moat' may have unsettled investors. The auto and electric vehicle (EV) sector benefited from robust May sales figures. Li Auto rose +5.82% following its first-quarter results and strong May sales. Xiaomi's CEO announced that the company will reach profitability later this year and that the new YU7's price will be revealed soon. After the close, the Ministry of Commerce (MoC) and several departments announced new measures to promote EV and hybrid auto sales in rural areas. Mainland China equities also posted gains, though enthusiasm lagged behind Hong Kong. Financials led the advance, as banks, insurance, and brokerages all performed well. National Team exchange-traded fund (ETF) volumes were below average. Looking ahead, markets are watching to see whether a Trump–Xi phone conversation can pave the way for a summit between the two leaders. New Content Read our latest article: New Drivers For China Healthcare: AI Med-Tech Innovation, Cancer Treatment, & Favorable Balance of Trade Please click here to read Chart1 Chart2 Chart3 Chart4 Chart5 Chart6
Yahoo
24-03-2025
- Business
- Yahoo
Investors Seeking New EM Frontiers Switch Global Risks for Local
(Bloomberg) -- The rally in emerging-market local-currency bonds is getting more exotic, as investors seek to shield themselves from US-induced risks by venturing deeper into lesser-known frontier nations. They Built a Secret Apartment in a Mall. Now the Mall Is Dying. Chicago Transit Faces 'Doomsday Scenario,' Regional Agency Says LA Faces $1 Billion Budget Hole, Warns of Thousands of Layoffs New York Subway Ditches MetroCard After 32 Years for Tap-And-Go Despite Cost-Cutting Moves, Trump Plans to Remake DC in His Style William Blair has bought bonds in Jamaican dollars, Dominican Republic peso, Pakistani rupee, and Zambian kwacha. Meanwhile, AXA Investment is holding securities in the Kazakh tenge, Ninety One is mulling Ugandan shilling notes, Pinebridge is evaluating Uzbekistani soum bonds, and BlackRock Inc. has added Serbian dinar debt to its portfolio. Money managers are increasingly making off-benchmark allocations, leaving currency risk unhedged as they seek the juiciest yields fixed income has to offer. They're targeting markets that are relatively insulated from the global economy, with investment opportunities led by local drivers like growth, reforms, or high interest rates. 'We have a combination of what we view to be very undervalued currencies with very high carry, very high interest rates,' said Marcelo Assalin, who heads William Blair's emerging-market debt team. 'They tend to be uncorrelated to global markets, and that's the beauty of it.' In the past, investors diversifying into frontier nations often bought sovereign dollar bonds to avoid exchange-rate risks and stuck to names in benchmark indexes. That's changing, with investors going further off-grid in search of high yields and a hedge against global turmoil. But there's a trade-off: they're swapping global risks — like Trump's mercurial tariff policies — for local perils. These under-the-radar markets typically have low liquidity and can trap investors in case of a sudden downturn. Unexpected political and economic events can turn gains into losses overnight. Their tiny sizes also limit the scope of the investment opportunity. 'You need to be picky and you need to be doing your research because these markets are less known, less well covered,' said Aurelie Martin, an economist and investment analyst at Ninety One in London. Portfolio Mix To be clear, fund managers making these unconventional bets aren't turning their backs on mainstream emerging markets. In fact, local-currency bond gains so far this year are being led by the bigger countries. Brazil, Mexico and Chile have delivered double-digit returns, sending Bloomberg's benchmark for the asset class to its best start since 2023. High-yielding nations such as Egypt, where interest rates north of 20%, are luring carry traders. In comparison, returns from lesser-known frontier markets have been modest. The iShares JPMorgan EM Local Currency Bond ETF, which has smaller-nation securities among its top-10 holdings, is up 4.3% since the start of 2025. That's more than twice the gains in the Bloomberg EM Local Currency Government Universal Index, but far less than, say, Brazil, where investors earned 16%. Still, the case for stepping off the beaten path lies in diversification, according to Magda Branet, head of emerging markets and Asia fixed income at AXA Investment Managers UK. Isolation Appeal With minimal correlation to global markets, frontier nations can escape market contagions — a potential advantage at a time when investors anticipate a volatility surge in the months ahead. 'When you go into frontier markets, you're not really playing the global dollar weakening theme,' said Branet. 'You have to like the currency in order to go into the trade.' Branet, whose fund holds tenge bonds in Kazakhstan, said she didn't hedge for the currency risk as that would eat into the carry returns. Currently, larger markets like Brazil are outperforming due to a weaker dollar. If the greenback rallies again, it could spark large outflows. In contrast, funds expect substantial yields in frontier markets that can offset potential currency losses while still delivering profits. Juicy Yields Uzbekistan, for instance, offers a 17% coupon on its September 2034 soum-denominated bond. Pakistan's 10-year rate is 10.5%. Kazakhstan's March 2035 note carries a 10.25% interest, while Jamaica's five-year security pays 11.875% annually. 'We see reform momentum and improving credit fundamentals,' said Joseph Cuthbertson, sovereign analyst at PineBridge Investments, referring to Uzbekistan. 'The currency is on a credible crawling peg, and the bond yields are attractive after adjusting for any FX depreciation.' Yet, the risk of a sharp currency loss is never far away. The political flare-up in Turkey underscores how well-laid investment cases can unravel even in mainstream emerging markets. Turkey formally arrested President Recep Tayyip Erdogan's main political rival on Sunday. 'It's a question of being a bit more disciplined and more clear minded than usual,' AXA Investment's Branet said. What to Watch EM investors will be watching out for headlines on Ukraine peace talks, Lebanon bond restructuring, fresh fighting in Gaza and Turkey's attempt to restore investor confidence after a political flare-up Eastern European monetary policy will be in focus, with Hungary deciding on Tuesday and Czech Republic announcing its move on Wednesday. Rates are expected to be on hold in both countries Mexico's central bank may reduce its overnight rate by 50 basis points on Thursday. Brazil's central bank will publish its meeting minutes and quarterly monetary-policy report On Friday, S&P Global Ratings will announce its credit-grade decisions on the Czech Republic, Morocco and Oman; Moody's will rate Mozambique, Fitch will decide on Kosovo Sri Lanka may leave its policy rate unchanged on Wednesday as deflation is seen as temporary (Updates with developments in Turkey in penultimate paragraph) A New 'China Shock' Is Destroying Jobs Around the World How TD Became America's Most Convenient Bank for Money Launderers Tesla's Gamble on MAGA Customers Won't Work One Man's Crypto Windfall Is Funding a $1 Billion Space Station Dream The Real Reason Trump Is Pushing 'Buy American' ©2025 Bloomberg L.P. Sign in to access your portfolio
Bloomberg
23-03-2025
- Business
- Bloomberg
Investors Seeking New EM Frontiers Switch Global Risks for Local
The rally in emerging-market local-currency bonds is getting more exotic, as investors seek to shield themselves from US-induced risks by venturing deeper into lesser-known frontier nations. William Blair has bought bonds in Jamaican dollars, Dominican Republic peso, Pakistani rupee, and Zambian kwacha. Meanwhile, AXA Investment is holding securities in the Kazakh tenge, Ninety One is mulling Ugandan shilling notes, Pinebridge is evaluating Uzbekistani soum bonds, and BlackRock Inc. has added Serbian dinar debt to its portfolio.
