2025-06-19 04:47

A look at the day ahead in European and global markets from Johann M Cherian Speculation over potential U.S. intervention in the Middle East has grabbed the market's attention this week, rattling investors who were otherwise focused on a series of central bank meetings that are expected to give outlooks on growth and inflation. Sign up here. President Donald Trump was keeping the world guessing on whether the U.S. might join Israel's air campaign against Iran, telling reporters outside the White House on Wednesday: "I may do it. I may not do it. I mean, nobody knows what I'm going to do." Bloomberg News also reported that senior U.S. officials are preparing for a possible strike on Iran in the coming days. This ambiguity has kept markets on edge for nearly a week now, while cracks are emerging among Trump's support base, some of whom fear the president may stray from his isolationist foreign policy stance. Investors have learned to be patient in their response to Trump's often unpredictable policymaking style, although analysts warn that any sign of escalation in the Middle East could spark a knee-jerk reaction in financial markets. Global stocks have steadily cooled after a recent rally, and analysts say the markets' biggest worry remains the lack of headway towards highly anticipated trade deals with Trump's tariff deadline less than a month away. Investors in developed-market bonds have approached the traditionally safe-haven assets with some trepidation. Ten-year bonds in Germany , Britain and the U.S. have been trading in tight ranges over the past few sessions. Amid all the uncertainties, markets are weighing potential inflationary pressures that could keep central banks hawkish. Increased military spending in the U.S. and European economies could drive up government debt levels and undermine the already waning appetite for developed-market bonds. On Wednesday, optimism around the Federal Reserve signalling lower borrowing costs this year was immediately tempered by Chair Jerome Powell's statement that he expects tariffs to add to inflation pressures. The Bank of England will most likely flag the repercussions from a recent spike in crude oil prices when it announces its rate verdict later today, despite signs that price pressures cooled as expected last month. Policy decisions today by central banks in Switzerland and Norway will also be in focus, after the European Central Bank earlier this month chose to err on the side of caution when it hinted at a pause to its rate-cutting cycle. Key developments that could influence markets on Thursday: - Central bank decisions due out of Britain, Switzerland, Norway and Taiwan - Commentary from ECB's Luis de Guindos, Francois Villeroy de Galhau - Eurogroup meeting in Luxembourg - Eurozone finance ministers to discuss Bulgaria's euro adoption, fiscal recommendations - U.S. markets closed for Juneteenth National Independence Day Trying to keep up with the latest tariff news? Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here. https://www.reuters.com/world/europe/global-markets-view-europe-2025-06-19/

2025-06-19 02:19

SYDNEY, June 19 (Reuters) - Australian employment dipped in May after solid gains the previous month, data showed on Thursday, though full-time jobs jumped and the jobless rate held steady in a sign of continued resilience in the labour market. Figures from the Australian Bureau of Statistics showed net employment dipped 2,500 in May from April, when they rose a revised 87,600. That was below market forecasts for a 22,500 increase, though the series has been very volatile in recent months. Sign up here. The jobless rate held at 4.1%, where it has been for over a year now. The participation rate dipped slightly to 67.0%. Other details of the report were strong, with full-time jobs rising 38,700 in May and hours worked rebounding by a solid 1.3%, after a flat April. There was little market reaction as the report did not move the dial on policy easing expectations from the Reserve Bank of Australia. Swaps imply a 65% probability for a quarter-point rate cut in July, more or less the same as before. "The drop in jobs does not reflect a sudden reversal of the labour market’s fortunes," said Kar Chong Low, an economist at Oxford Economics Australia "Instead, part of the fall reflects normalisation following exceptionally strong growth in April. Similarly, the rebound in hours worked, the tick down in underemployment, and the jump in full-time work show firms are still demanding workers’ time." The RBA has already cut interest rates twice since February to 3.85% as inflation slowed to the target band of 2-3%. However, consumers have stayed stubbornly frugal and economic growth has remained subdued, with U.S. tariffs and geopolitical conflicts darkening the economic outlook. All of that argues for more policy easing from the RBA in the months ahead, with investors expecting a total easing of 70 basis points by the end of the year. In the meantime, the labour market has proved to be resilient. The unemployment rate remains low at 4.1% and job advertisements are stabilising above pre-COVID levels. Wages have been well-behaved, with growth in the private sector mostly subdued. The central bank is expecting the unemployment rate to peak just a little higher at 4.3% this cycle. https://www.reuters.com/world/asia-pacific/australia-jobs-unexpectedly-dip-may-unemployment-holds-steady-2025-06-19/

2025-06-18 23:26

MEXICO CITY, June 18 (Reuters) - Ternium (TX.N) , opens new tab, a steelmaker with a massive Mexico business, on Wednesday pushed for stronger terms of a regional trade agreement ahead of a pending review, despite current headwinds from steel tariffs imposed by the government of U.S. President Donald Trump. WHY IT'S IMPORTANT Shipments from Mexico to the U.S. under the U.S.-Mexico-Canada (USMCA) trade agreement are currently exempt from tariffs, though steel products face a whopping 50% tariff. Sign up here. The U.S. and Mexico are negotiating a deal to reduce or eliminate the steel tariffs on imports up to a certain volume, Reuters reported last week. CONTEXT The USMCA deal is up for review next year, though some officials believe it may come sooner. In a presentation to analysts in New York on Wednesday, Ternium pushed for stronger "rules of origin" as part of the review to protect the region against what it called unfair trade. Steelmakers have accused China of engaging in a practice known as dumping, in which they sell their product abroad below market value. Products can be shipped through another country before reaching their final destination, often making their origin unclear. KEY QUOTE "While management acknowledges the adverse effects on the global economy, they view the U.S. (tariffs) as beneficial for long-term globalization," analysts at J.P. Morgan said in a note to clients. BY THE NUMBERS The U.S. shipped 2.28 million metric tons more of steel to Mexico than Mexico shipped to the U.S. in 2024, Ternium said, though the U.S. government has previously accused Mexico of flooding its domestic market with steel. WHAT'S NEXT Ternium is looking to boost its market share in Mexico's local market in the coming years, management said. In Brazil, it said Chinese imports continue to pressure the market. Ternium could also acquire the remaining shares it does not currently hold in Brazil's Usiminas (USIM5.SA) , opens new tab, the J.P. Morgan analysts said, though it is not a priority at the moment. https://www.reuters.com/world/americas/steelmaker-ternium-pushes-stronger-usmca-trade-pact-face-tariffs-2025-06-18/

2025-06-18 23:14

Seventh straight rate hike defies economists' forecasts Benchmark rate climbs to 15%, highest since July 2006 Policymakers stress long pause, discouraging rate-cut bets BRASILIA, June 18 (Reuters) - Brazil's central bank raised interest rates by 25 basis points on Wednesday and signaled it will keep borrowing costs steady for an extended period, defying expectations that it had already reached the end of its tightening cycle. The bank's rate-setting committee, known as Copom, decided unanimously to lift the benchmark Selic rate to 15%, the highest since July 2006, marking a seventh consecutive hike as unanchored inflation expectations and resilient activity in Latin America's largest economy kept policymakers on alert. Sign up here. Of economists polled by Reuters, 27 out of 39 had expected the bank to hold rates at 14.75%. Interest rate futures, however, showed divided expectations, pricing in roughly even odds between a pause and one final hike. In its statement, the central bank indicated that, after lifting rates by 450 basis points since last September, it now plans to maintain rates at current levels while monitoring inflation's path back toward the bank's 3% official target. "The Committee foresees an interruption of the rate hiking cycle to examine its yet-to-be-seen cumulative impacts, and then evaluate whether the current interest rate level, assuming it stable for a very prolonged period, will be enough to ensure the convergence of inflation to the target," policymakers wrote. Adding a hawkish tone, the central bank said it will remain vigilant and won't hesitate to resume rate hikes if needed. "The committee wants to steer the conversation away from any premature discussion about rate cuts at this point," said Rafaela Vitoria, chief economist at Banco Inter, who still sees a chance of a cut at the December policy meeting. In May, the central bank had stressed that a "significantly contractionary" stance would be needed for a "prolonged period" to bring inflation back to target, scrapping prior references to needing a "more contractionary" posture. Policymakers had also removed any form of forward guidance, emphasizing a strictly data-dependent approach. That had led many to bet that the central bank was done with its tightening cycle. But those views were tempered in recent days after central bank officials flagged that the cycle remained open, citing concerns about unanchored inflation expectations and a desire to keep options on the table as they digested data to calibrate the terminal rate. On the same day that the U.S. Federal Reserve left rates unchanged but signaled cuts this year, the Brazilian central bank said in its policy statement that economic activity in the country is still showing some strength, despite "some moderation in growth." Although the Brazilian real has strengthened since the central bank's last meeting, policymakers raised their 2025 inflation forecast to 4.9% from the 4.8% projected in May. For the end of 2026, the period most influenced by current monetary policy decisions, policymakers held their 12-month inflation outlook at 3.6%. Economists surveyed in a weekly central bank poll have lowered their inflation forecasts for this year. Still, their latest estimate is well above the bank's projection, at 5.25%. Longer-term expectations show no improvement, staying far from target as many anticipate the leftist administration of President Luiz Inacio Lula da Silva will pursue stimulus ahead of the 2026 election, potentially undermining the central bank's efforts to cool demand and bring inflation down. https://www.reuters.com/world/americas/brazil-central-bank-raises-rates-by-25-bps-seventh-straight-hike-2025-06-18/

2025-06-18 23:10

June 19 (Reuters) - India's clean industrial projects pipeline worth $89 billion is facing financing bottlenecks as only one project has reached a final investment decision in the past six months, a report by a clean industry alliance showed. The South Asian nation has 41 clean industry projects spanning green ammonia, hydrogen production and sustainable aviation fuels, yet faces challenges in converting announcements into operational facilities, the report by Mission Possible Partnership and Industrial Transition Accelerator said. Sign up here. The alliance is focused on advancing decarbonisation in high-emission sectors. India's clean industry projects have secured $13 billion in committed investment, far below China's $61 billion and the United States' $54 billion, according to the report. The slow development of the market for clean commodities at the right price point was a major bottleneck for investments in India, said Faustine Delasalle, CEO of MPP. "The higher costs of capital is an issue stifling investment across emerging and developing economies. We need to leverage the growing appetite from development and private finance institutions for clean industry developments," Delasalle said. The report also highlights a global pipeline of about $1.6 trillion in projects that have been announced but not financed, with 692 of 826 commercial-scale clean industrial projects across 69 countries still awaiting financing. "Less than 15 projects are currently reaching (a) final investment decision every year, delaying the climate, economic and social benefits associated with clean industrial developments," the report said, adding that policy uncertainty is also hampering progress. https://www.reuters.com/sustainability/climate-energy/indias-89-billion-clean-industry-pipeline-struggles-attract-financing-report-2025-06-18/

2025-06-18 22:33

Powell urges against aggressive government cuts to collection of economic data Data cutbacks could degrade key economic surveys, Powell warns Concerns rise over data integrity amid government cutbacks June 18 (Reuters) - Federal Reserve Chair Jerome Powell made a plea on Wednesday for the government not to cut back too aggressively on its efforts to collect data on the economy because the information it collects strongly benefits the entire nation. “The data we get right now, we can do our jobs. I'm not concerned that we can't do our jobs," Powell said at a press conference following the latest gathering of the central bank's interest-rate setting Federal Open Market Committee. But he suggested that at some point that may no longer be the case. Sign up here. Powell said he worried that staff cuts and changes in government reports over time will degrade the information the government produces. "From our standpoint, and I think the standpoint of businesses and governments and everyone: Having really good data on the state of the economy at any given time is a huge public good," Powell said. It does not just help the Fed, "it helps the government, it helps Congress, it helps the executive branch" and it helps private businesses. Calling the United States a global leader in government-produced economic data, Powell said, "I hate to see us cutting back on that." This data "is a real benefit to the general public" because it ensures people "have the best possible understanding of what's happening in the economy, and hence, what's likely to happen." Cutbacks have been an area of considerable focus as the Trump administration has targeted huge parts of the government for reductions amid a belief that it will save money. Many outsiders view the costs of these sorts of endeavors as relatively small while paying huge dividends. Concerns over the issue flared after the Bureau of Labor Statistics earlier this month announced a pullback in the work to collect information for the closely-watched Consumer Price Index. A measure tracking wholesale prices is also to be changed. Data like the CPI is of particular note because it helps set cost-of-living adjustments for things like Social Security retirement benefits, as well as union contracts. A CPI index based on reduced inputs is one that is less likely to capture what is really going on with price pressures, and that can have big real-world consequences. Some in the Fed are less happy with the state of data integrity. In a recent interview, soon-to-retire Philadelphia Fed President Patrick Harker said, "We're increasingly flying blind, or at least half blind ... and I'm worried about that." The numbers that central bankers rely upon to understand the economy are "not good" and they are not improving, Harker said. The issue, he said, goes beyond mere inflation numbers. https://www.reuters.com/business/feds-powell-says-central-bank-still-has-needed-data-do-its-work-2025-06-18/