2025-04-03 19:04

EBA releases report on EU banks foreign funding Non-EU banks have a 10% share of total assets EBA warns of currency mismatch at certain lenders LONDON, April 3 (Reuters) - Non-EU banks have carved out "dominant" roles in some of Europe's key financial markets, including derivatives where U.S. banks prevail, the European Banking Authority said on Thursday as concerns about the strategic autonomy of the European financial sector grow. Reviewing the dependence of the EU banking sector on foreign banks and foreign currencies, the EBA - which has a mandate to protect and support the EU financial system - said that U.S. banks had a nearly 28% share of the EU derivatives market at December 2023, a rising trend first seen in mid-2021. Sign up here. Overall, non-EU banks' market share was 33.73%, including an 8.17% share in loans and 6.06% in debt securities, according to the data. The study was published less than a day after the United States imposed a slew of tariffs on imports, rattling markets and stoking fears of a deep global recession. It also comes as strategic allies and trading partners of the United States are evaluating their reliance on the superpower. Some European central banking and supervisory officials are questioning whether they can still rely on the U.S. central bank, Reuters reported last month. The overall market share of non-EU banks across all assets stands at around 10%, down from around 12% in the previous report, the EBA said. By currency, 67% of EU/EEA banks' exposures is denominated in euros, 19% is in U.S. dollars, a level which has remained stable since mid-2021, according to the EBA. "The market shares in certain areas, such as interest rate derivatives, fee income reaped from commodity trading and from providing collective investment services, are substantially higher and are in some cases indicative of dominant roles played by non-EU institutions in the EU banking market," it said. Olli Carsten, Head of Economic Analysis and Impact Assessment at the EBA said Brussels originally commissioned the analysis in the aftermath of Brexit and finding U.S. banks were strong in derivatives and repo markets was neither surprising nor worrying at this point. "But (the data) could now also contribute to the strategic autonomy discussion," he said. "The Commission wants to understand what this market looks like, how it is structured, and whether there are some areas that could raise potential concerns in situations like what we are witnessing now," he said. The EBA said it also found "a meaningful currency mismatch" at some lenders and recommended supervisors "pay attention to any gaps in stable funding requirements", ensuring currency breakdowns between assets and liabilities are adequately hedged. https://www.reuters.com/business/finance/us-banks-are-dominant-european-derivatives-eba-says-2025-04-03/

2025-04-03 18:20

NEW YORK, April 3 (Reuters) - Goldman Sachs (GS.N) , opens new tab warned sweeping U.S. tariffs will weigh on global growth and prompt the Federal Reserve to cut interest rates more aggressively than previously expected. "We view this as kind of a growth shock... this is going to be a hit to U.S. consumers," Ashish Shah, chief investment officer of public investing at Goldman Sachs Asset Management, told journalists at the bank's New York headquarters on Thursday. Sign up here. As market participants digest the implications of tariffs, Goldman executives said the economic outlook was clouded by U.S. trade policies that would likely trigger retaliation from other nations. While big investors are looking to diversify their global portfolios, they are mostly sticking with U.S. assets for now, said Marc Nachmann, global head of asset and wealth management at Goldman Sachs. "Large allocators are reluctant so far... but they are concerned," he said. GSAM, which manages $2.8 trillion in public assets, is a key part of Goldman's push to broaden earnings beyond its traditional mainstays of investment banking and trading, which accounted for about 65% of revenue in 2024. While equities plunged after the tariff announcements, Treasuries rallied on Thursday as investors sought safe-haven assets, said Lindsay Rosner, head of multi-asset fixed income at GSAM. "Duration has done really well today," she said, referring to bonds that benefit when markets expect interest rate cuts down the line. She warned about the twin risks of rising inflation and lower growth, a dreaded economic scenario that loomed over the U.S. in the 1970s. "The big word of stagflation is real." https://www.reuters.com/markets/us-tariffs-threaten-growth-shock-goldman-sachs-says-2025-04-03/

2025-04-03 18:01

BOGOTA, April 3 (Reuters) - Colombia needs an additional adjustment of some 46 trillion pesos ($11.1 billion) in the 2025 budget to meet the fiscal rule said Astrid Martinez, president of the autonomous committee on fiscal rule (CARF) on Thursday. The new projection is higher than the previous estimate of 40 trillion pesos, as CARF forecasts the country will fall short of the tax collection target set by the government for this year, Martinez said in a presentation at the annual congress of pension funds. Sign up here. Colombia is going through a phase of deterioration on its fiscal accounts, amid lower tax revenues, high public debt and strong limitations to reduce spending. "We believe that collection will be lower than projected, taking into account GDP growth and the elasticity of collection in relation to this growth," explained Martinez. The government announced earlier this year it will cut its 2025 spending budget by 12 trillion pesos to 511 trillion pesos, after Congress rejected a tax reform proposal at the end of 2024. The Ministry of Finance set a fiscal deficit target of 5.1% of GDP, which analysts see as unlikely to be achieved. ($1 = 4,139.75 Colombian pesos) https://www.reuters.com/world/americas/colombia-needs-111-billion-further-adjustment-2025-budget-meet-fiscal-rule-2025-04-03/

2025-04-03 17:08

Canada trade deficit for February was at C$1.52 billion Total exports in February dropped by 5.5% to C$70.11 billion February exports were second highest since May 2022 Imports rose by 0.88% to C$71.63 billion in February OTTAWA, April 3 (Reuters) - Canada unexpectedly swung into a trade deficit in February but both exports and imports stayed at near record levels, data showed on Thursday, as businesses built inventories in the United States to try to limit the impact of tariffs. The country's trade deficit for February was at C$1.52 billion ($1.08 billion), down from a 32-month high surplus of C$3.13 billion in January, Statistics Canada said. Sign up here. Analysts polled by Reuters had forecast a trade surplus of C$3.55 billion in February. Canada's merchandise trade has gained momentum since November as the threat of tariffs from U.S. President Donald Trump became more real. He has imposed tariffs on imports from Canada ranging from steel and aluminum to cars and parts, but on Wednesday did not impose any reciprocal tariffs. Tariff threats have forced businesses, especially in the U.S., to build up inventories to mitigate some of the cost impact. This is reflected in Canada's trade statistics as the country's surplus with the U.S. rose for three consecutive months, reaching a record in January. Its overall surplus also jumped to record levels in January. Total exports in February dropped by 5.5% to C$70.11 billion, Statscan said, adding that despite the drop, February exports were the second highest since May 2022. Exports declined in 10 of the 11 product sections, but did not offset the gains of the previous months. Exports of energy products, with a drop of 6.3%, posted the biggest decline in February, the first decrease since September 2024, as crude oil exports fell on lower prices. Although exports of motor vehicles and parts dropped 8.8% in February, with the exception of the month of January, they remained the highest in a year, the statistics agency said. "The drop in exports gave away all off the gains of January and then some more showing the front-loading effect seen in the previous months was slowing down," Stuart Bergman, chief economist with Export Development Canada. While stockpiling continued in February, the month was marked by volatility in exports and the trend would continue next month, Bergman said, adding the front-loading effect would fade further in April. Imports continued their upward march for a fifth consecutive month and rose by 0.88% to C$71.63 billion, it said. Exports to the U.S. were down 3.6%, but were still almost 80% of Canada's total exports in February. Imports rose 2.5% from the U.S., or 63% of its total imports. The Canadian dollar extended gains and firmed 1.03% to 1.4084 against the U.S. dollar after the trade data, or 71.00 U.S. cents. Currency swap markets see a 73% chance of a pause in interest rate cuts on April 16. ($1 = $1.4124 Canadian dollars) https://www.reuters.com/markets/canada-posts-trade-deficit-february-exports-near-record-level-2025-04-03/

2025-04-03 17:00

Swiss government says U.S. tariff impositions incomprehensible Swiss not planning retaliatory measures for now Switzerland is a major investor in the U.S. Swiss minister says tariffs could crimp investment in U.S. ZURICH, April 3 (Reuters) - Switzerland's government on Thursday described trade tariffs imposed on the country by U.S. President Donald Trump as incomprehensible, and vowed to stay in close communication with the European Union on how they proceed. Swiss President and Finance Minister Karin Keller-Sutter said she regretted that the U.S. was "turning further away from free trade and a rules-based trade order" but said her government was not planning retaliatory measures for now. Sign up here. She and Economy Minister Guy Parmelin vowed to take up their concerns with U.S. officials and both will make their case in person when they visit the United States later this month. Keller-Sutter said she had spoken to EU Commission President Ursula von der Leyen early on Thursday about the tariffs, noting that there was no indication Switzerland could be affected by possible EU countermeasures. "Mrs von der Leyen and I have agreed to remain in close contact and to inform each other about any further steps," she told a press conference, noting she also aimed to participate in a meeting of EU finance ministers next week. Switzerland has abolished industrial tariffs and officials were stunned Trump imposed a 31% tariff on imports from Switzerland compared with 20% from the EU. The U.S. is Switzerland's top export market, and Switzerland is the sixth-biggest foreign investor in the United States. Parmelin said the tariffs could be counterproductive. "Just the other day, I was talking to a CEO of a major company who told me they're in the process of investing over a billion dollars in the United States," he said. "So there's also a risk this will put the brakes on certain investments." Keller Sutter also said Switzerland does not manipulate the Swiss franc to boost exports, as some critics allege. https://www.reuters.com/markets/europe/switzerland-slams-us-tariffs-stays-close-eu-over-next-steps-2025-04-03/

2025-04-03 16:50

Canadian dollar gains 1% against the greenback Touches its strongest since December 6 at 1.4028 Canada avoids fresh tariffs on its goods Canada-US 10-year spread narrows 16.5 basis points TORONTO, April 3 (Reuters) - The Canadian dollar rose to a near four-month high against its U.S. counterpart on Thursday as Canada avoided fresh tariffs on its goods in a widening trade war that has led to investors ditching the American currency. The loonie was trading 1% higher at 1.4090 per U.S. dollar, or 70.97 U.S. cents, after touching its strongest intraday level since December 6 at 1.4028. Sign up here. Wall Street tumbled after U.S. President Donald Trump said he would impose a 10% baseline tariff on all imports to the United States and higher targeted duties on some of the country's biggest trading partners. Goods from Canada and Mexico that comply with the USMCA trade agreement between the three countries will largely remain exempt from tariffs, except for auto exports and steel and aluminum which fall under separate tariff policies. "We saw the initial reaction yesterday after the reciprocal tariff announcement - markets seemed to be celebrating the fact that there weren't any more tariffs on Canada," said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull. "But overnight we've seen a collapse for the broader U.S. dollar." The U.S. dollar (.DXY) , opens new tab posted sharp declines against a basket of major currencies as investors moved to price in four interest rate cuts this year from the Federal Reserve, up from three before the tariff announcement. In contrast, investors have reduced bets on the Bank of Canada continuing its interest rate cutting campaign this month. "I just don't think today is the day to be a hero and try to fade this," Bregar said. "This is a move where people are getting out and could continue maybe for another day or two." Canadian bond yields were mixed across a steeper curve. The 10-year yield was up 1.3 basis points at 2.937%, while the gap between it and the U.S. equivalent narrowed by 16.5 basis points to 110.5 basis points in favor of the U.S. note, the smallest since December 5. https://www.reuters.com/markets/currencies/canadian-dollar-heads-biggest-gain-two-years-after-tariff-reveal-2025-04-03/