2025-06-17 06:04

LITTLETON, Colorado, June 17 (Reuters) - Pakistan is rapidly emerging as a key leader in solar power deployment, and not just within emerging economies. The South Asian country has boosted solar electricity generation by over three times the global average so far this year, fuelled by a more than fivefold rise in solar capacity imports since 2022, according to data from Ember. Sign up here. That combination of rapidly rising capacity and generation has propelled solar power from Pakistan's fifth-largest electricity source in 2023 to its largest in 2025. What's more, so far in 2025 solar power has accounted for 25% of Pakistan's utility-supplied electricity, which makes it one of fewer than 20 nations globally that have sourced a quarter or more of monthly electricity supplies from solar farms. EXCLUSIVE CLUB Over the first four months of 2025, solar farms generated an average of 25.3% of Pakistan's utility electricity supplies, Ember data shows. That average compares with a solar share of 8% globally, around 11% in China, 8% in the United States and 7% in Europe. And while the average solar shares in the Northern Hemisphere will climb steadily through the summer months, very few countries will even come close to securing a quarter of all utility electricity supplies from solar farms any time soon. Indeed, only 17 countries have ever registered a 25% or more share of monthly utility electricity supplies from solar farms, according to Ember. Those nations are: Australia, Belgium, Bulgaria, Chile, Cyprus, Denmark, Estonia, Germany, Greece, Hungary, Latvia, Lithuania, Luxembourg, the Netherlands, Pakistan, Portugal and Spain. That list is heavily skewed towards Europe, where the power sector shock from Russia's full-scale invasion of Ukraine in 2022 sparked urgent and widespread power-sector reform and the rapid roll-out of renewable generation capacity. Indeed, Australia and Chile are the only nations aside from Pakistan that are outside Europe, and all included nations boast a far higher gross domestic product (GDP) per capita than Pakistan. IMPORT DRIVE The chief driver of Pakistan's solar surge has been an accelerating import binge of solar capacity modules from China. Between 2022 and 2024, Pakistan's imports of China-made solar components jumped fivefold from around 3,500 megawatts (MW) to a record 16,600 MW, according to Ember. Pakistan's share of China's total solar module exports also rose sharply, from 2% in 2022 to nearly 7% in 2024. And that import binge has continued into 2025. Over the first four months of the year, Pakistan imported just over 10,000 MW of solar components from China, compared with around 8,500 MW during the same period in 2024. That rise of nearly 18% in imported capacity has lifted Pakistan's share of China's solar exports to new highs too, with Pakistan accounting for around 12% of all of China's solar exports so far this year. SOLAR-CENTRIC The frantic deployment of imported solar modules across Pakistan in recent years has upended the country's electricity generation mix. So far in 2025, solar is by far the single largest source of electricity, followed by natural gas, nuclear reactors, coal plants and hydro dams. As solar farms were the fifth-largest supply source for electricity just two years ago, solar's pre-eminence so far this marks a sharp swing towards renewables within the country's utility network. In addition, the country is committed to much more growth in renewable energy generation capacity through the rest of this decade. Pakistan is targeting 60% of electricity supplies to come from renewable sources by 2030, according to the International Trade Administration. Through the first four months of 2025, renewable energy sources generated 28% of the country's electricity, so energy planners are aiming for a more than doubling in that share by the end of the decade. With solar modules representing the quickest and cheapest means to meet those goals, further rapid build-out of the country's solar farm system looks likely, which will cement Pakistan's status as a global solar superpower. The opinions expressed here are those of the author, a columnist for Reuters. Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn , opens new tab and X , opens new tab. https://www.reuters.com/markets/commodities/pakistans-solar-surge-lifts-it-into-rarefied-25-club-2025-06-17/

2025-06-17 06:04

LONDON, June 17 (Reuters) - Central banks around the world expect their gold holdings as a proportion of their reserves to increase over the next five years while expecting their dollar reserves to be lower, a survey by the World Gold Council (WGC) showed. Gold demand from central banks has risen significantly over the past three years despite its price rally to consecutive records. It hit an all-time high of $3,500.05 an ounce in April, up 95% since February 2022 when Russia invaded Ukraine. Sign up here. Seventy three central banks responded to WGC's survey, carried out between February 25 and May 20, and 76% of these expect their gold holdings to be higher in five years compared with 69% last year. Nearly three-quarters of respondents expected central banks' dollar-denominated reserves to be lower in five years compared with 62% last year. "Gold’s performance during times of crisis, portfolio diversification and inflation hedging are some key themes driving plans to accumulate more gold over the coming year," WGC said in a release. Central banks have accumulated more than 1,000 metric tons of gold in each of the last three years, WGC said, adding that this represented a significant rise from the 400-500 ton average in the preceding decade. "This marked acceleration in the pace of accumulation has occurred against a backdrop of geopolitical and economic uncertainty," WGC said. A record 95% of respondents think central bank gold reserves will increase over the next 12 months, up from 81% last year, according to WGC's survey, which also showed the Bank of England remains the most popular location for their gold reserves. Potential trade conflicts and tariffs were cited by 59% of central banks in the survey as relevant to the management of their reserves, the survey showed "A larger percentage of these came from emerging markets and developing economies - 69% - than advanced economy respondents - 40%", the council said. https://www.reuters.com/business/central-banks-favour-gold-over-dollar-reserves-wgc-survey-2025-06-17/

2025-06-17 05:54

Oil prices rise more than 4% on Iran-Israel fighting Trump says Iranian leader is safe "for now" Lack of trade agreements at G7 disappoint Fed expected to hold rates, Chair's comments in focus U.S. Treasury yields fall on flight to safety NEW YORK, June 17 (Reuters) - Wall Street indexes ended lower, oil kept climbing and U.S. borrowing costs fell on Tuesday as U.S. President Donald Trump left the Group of Seven summit early and investors awaited a series of interest rate decisions by major central banks. Trump returned to Washington a day before the summit ends as the Israel-Iran conflict intensified, saying U.S. patience was wearing thin but that he would not kill Iran's leader "for now." Sign up here. Yields on 10-year Treasuries fell, indicating stronger demand for a safe haven as investors weigh the conflict as well as preparing to parse Fed Chair Jerome Powell's tone at a scheduled update on Wednesday. Trump's early departure from Canada nixed hopes for more progress on issues like the tariffs he has promised to impose. "The market was anxious to hopefully hear updates on trade agreements out of the G7 and the news of Trump leaving early was disappointing, although we all know why," said Eric Sterner, chief investment officer at Apollon Wealth Management. "The market is paying attention to the (Middle East) conflict but it feels that's contained to those two countries," Sterner said. "It does cause concern, especially if Iran does anything with the Strait of Hormuz," he added, noting that around 20% of the world's oil supply passes through that waterway. U.S. crude continued to surge and settled 4.46% higher at $74.97 a barrel, while Brent rose to $76.54 per barrel, settling up 4.52% on the day. Stocks stayed under pressure, with the Dow Jones Industrial Average (.DJI) , opens new tab extending losses to end 0.70% lower on the day. The S&P 500 (.SPX) , opens new tab fell 0.84% and the Nasdaq Composite shed 0.91%. There was no noticeable interruption to oil flows, and Qatar said its production at the world's largest gas field was steady after an Israeli air strike led Iran to partially suspend production. Money managers noted that the VIX volatility index (.VIX) , opens new tab, sometimes known as Wall Street's fear gauge, has risen in the last week and hit a more than four-week high on Tuesday, but at 21.6 is well below historic highs. A tariff-induced rout sent it above 60 in April, closer to records above 80 hit during the 2008 financial crisis. "This is like Stage 1 of moving towards a little bit of volatility," said Matt Thompson, co-portfolio manager at Little Harbor Advisors. "The way I read it right now, the VIX marketplace thinks (the conflict) is going to be contained." The VIX futures curve, which reflects longer-term volatility expectations, has lifted, Thompson added, "which indicates to me there is increasing demand for protection but the market is not really rushing." Earlier in the day, in Europe, the STOXX 600 (.STOXX) , opens new tab closed around its lowest in three weeks. CENTRAL BANKS LOOM Investors awaited meetings this week among governors of the Federal Reserve, Bank of England and Swiss National Bank. The Bank of Japan left short-term interest rates unchanged on Tuesday, at 0.5% as expected. The Fed is widely expected to leave interest rates unchanged at Wednesday's meeting, but market participants will be monitoring new projections on how Trump's tariffs could affect growth and inflation. Traders are pricing in two cuts by the end of the year. "One thing that settled the markets earlier this year was the independence of the Fed and the fact they would not be influenced, but data-driven," said Matt Rubin, chief investment officer at Richmond, Virginia-based Cary Street Partners. "Jerome Powell is going to continue to express that they are focused on data at this point, and that data does not warrant a cut." The U.S. 10-year note last yielded 4.389%, 6.5 basis points down from 4.454% late on Monday. https://www.reuters.com/world/china/global-markets-wrapup-1pix-2025-06-17/

2025-06-17 05:36

EPFR data shows record inflows to emerging local currency bond funds Local currency bonds deliver returns of more than 10% so far this year US dollar slipped to weakest in three years in recent days LONDON, June 17 (Reuters) - A weakening U.S. dollar is lifting a long-neglected asset class - emerging market local currency debt - after a more than decade-long drought. Emerging market local-currency bond funds saw a new record of inflows in the week to Wednesday, according to EPFR data, notching eight straight weeks of inflows. Sign up here. The nascent flows remain small - and the uncertainty of tariffs, war and other global turmoil are stemming some flows. But investors expect they will continue, giving a boost to local debt markets in large emerging markets from Brazil and Mexico to Indonesia and India. "Many of the big emerging markets tell us about all the foreign buying of debt, and that is starting to pick up across some countries," said Jonny Goulden, head of emerging market fixed income strategy at JPMorgan. "This could be a potential turning point." Yields on the JPMorgan GBI Emerging Market local currency index are at their lowest since 2022 - partly a sign of flows of international cash. Emerging market local currency government bonds have enjoyed returns of more than 10% since the start of the year - more than double the around 4% delivered by the hard-currency peers, according to JPMorgan indexes. The weaker U.S. dollar, and questions over the years-long U.S. exceptionalism trade - when investors parked cash in booming assets of the world's largest economy - is nudging international investors to look elsewhere for bigger returns. The greenback slipped to its lowest level in more than three years last week. Slower global growth - and lower interest rates across the developed world - are adding to the hunt for yields. "The dollar is going to be much, much weaker. Bond yields or interest rates will fall - so there is a search for yield," said Luca Paolini, chief strategist at Pictet Asset Management. Emerging market bonds look set to be one of the main beneficiaries of that momentum, he said. The dynamics combined are helping to end the foreign investor flight from emerging markets' local currency bonds that Goulden said has lasted for some 14 years. In that time, JPMorgan estimates, the asset class has more than doubled from roughly $6 trillion to $13 trillion, with mainly local investors, and some global bond funds, buying. David Hauner, head of global emerging markets fixed income strategy at Bank of America, said that after years of a dollar bull market, and the U.S. exceptionalism trade, allocations to emerging markets were "absolutely rock bottom" - and had much space to grow. "This has been completely neglected for a long period of time, and now, people have to diversify," he said, adding he expected small but steady flows - and double-digit returns on local currency at the end of the year in dollar terms. The money is part of the closely watched global effort on the part of some international investors to diversify away from U.S. dollar holdings, and U.S. assets, after years of outsized returns that lured the bulk of the world's cash. "So far this year to date, local currency has performed very well," said Carlos de Sousa, portfolio manager at Vontobel. "That's a really direct, automatic effect" from the drop in the dollar. The fact that most emerging market central banks are broadly on a rate cutting trajectory - even as the outlook for the U.S. Federal Reserve's actions remain more mixed - is also adding to momentum. Phoenix Kalen, global head of emerging markets research at Societe Generale, called it "a rare moment of goldilocks for local assets." Local currency bonds, Kalen said, offer "compelling value," including in the Philippines, Czech Republic, Hungary, South Africa, Turkey, Brazil and Colombia. The current shift, Goulden, Hauner and others say, has not come close to reversing the years of outflows, and Hauner said it was more a "trickle" so far than a flood. But even small flows can have an outsized impact. "EM as an asset class is much smaller. So if you take out 1% from the U.S., that is basically the equivalent of 20% in emerging markets. So the impact of this flow could be quite meaningful," Bank of America's Hauner said. https://www.reuters.com/world/americas/emerging-market-local-currency-debt-could-end-decade-long-drought-dollar-wanes-2025-06-17/

2025-06-17 05:32

U.S. retail sales drop more than expected in May Yen gives up gains seen after of BOJ decision BOJ to slow balance sheet drawdown in fiscal 2026 Middle East tensions keep markets on edge Trump says everyone should immediately evacuate Tehran NEW YORK/LONDON, June 17 (Reuters) - The U.S. dollar pared losses to trade firmer on the yen on Tuesday, after economic data showed American consumers growing more cautious as trade and inflation uncertainty lingered ahead of the Federal Reserve's decision on interest rate later this week. U.S. retail sales were softer than expected in May, but consumer spending remained supported by solid wage growth. Sign up here. The dollar initially softened on the print, but quickly reversed those loses as the market digested the data's mixed picture, removing strength the yen had gained following the Bank of Japan's (BOJ) rate decision earlier. "The weaker headline retail sales release and last week's softer CPI print add more fuel to rate cut speculation, including calls from (U.S. President) Trump for a 100-bps cut," said Uto Shinohara, senior investment strategist at Mesirow Currency Management. "However, the full inflationary impact of tariffs has yet to pass through." Broader risk sentiment remained fragile with the Israel-Iran conflict entering its fifth day. The BOJ delivered little surprise to markets at the conclusion of its two-day monetary policy meeting, as it stood pat on rates and laid out a new plan to decelerate the pace of its balance sheet drawdown next year in the face of rising risks such as the Middle East conflict and U.S. tariffs. The yen swung between losses and gains after the decision, turning negative during Governor Kazuo Ueda's press conference, with the dollar last up 0.25% on the yen at 145.17 yen. Japanese Prime Minister Shigeru Ishiba and U.S. President Donald Trump have yet to reach a trade deal. Developments in the Middle East are keeping the mood tense, with Trump on Tuesday saying he wanted a "real end" to the nuclear dispute with Iran, and indicating he may send senior American officials to meet with the Islamic Republic. It follows news on Monday from the White House that Trump left the Group of Seven summit in Canada a day early due to the situation in the Middle East, as the president has requested that the National Security Council be prepared in the situation room. "The market is shifting its focus back and forth to the war in the Middle East and the trade war," said Adam Button, chief currency analyst, ForexLive. "So, I think the market struggles to keep the focus on economic data, even with the Fed coming tomorrow." The escalations between Israel and Iran have sent the price of Brent crude higher. Elsewhere, the euro was down 0.37% at $1.1516. The pound was last down 0.5% against the dollar at $1.3506 . Trump signed an agreement on Monday formally lowering some tariffs on imports from Britain as the countries continue working toward a formal trade deal. The risk-sensitive Australian dollar was down 0.22% at US$0.65103. Meanwhile, against a basket of currencies, the dollar rose 0.3% to 98.49. The Federal Reserve's policy decision on Wednesday is taking centre stage for FX market watchers. Expectations are for the central bank to keep rates on hold, though the focus will be on any guidance regarding the rate outlook. "The implications for the Federal Reserve's policy trajectory are mixed, and likely won't become clear for a few months yet," said Karl Schamotta, chief market strategist, Corpay. "At the moment, there's little risk to waiting before launching another round of rate cuts, so we expect an incrementally-hawkish message to emerge from tomorrow's meeting." Meanwhile, investors are also looking ahead to other central bank decisions including from the Bank of England and Sweden's Riksbank later this week to guide the next move in markets. https://www.reuters.com/world/africa/dollar-rises-yen-steady-ahead-boj-rate-decision-2025-06-17/

2025-06-17 04:42

TOKYO, June 17 (Reuters) - The normally sedate Japanese government bond (JGB) market has attracted global attention in recent weeks as a surge in yields sounded warnings for deeply indebted governments. Yields on super-long JGBs touched record levels last month, meaning higher borrowing costs for the government and creating urgency for the Bank of Japan (BOJ) and Ministry of Finance to steady the market. Sign up here. The BOJ on Tuesday laid out a new plan to decelerate the pace of its balance sheet drawdown next year in the face of rising risks such as the Middle East conflict and U.S. tariffs. Here's what you need to know: WHAT DID THE BOJ CHANGE? After many years of monetary stimulus to prop up Japan's flagging economy, the BOJ had bought more than half of all JGBs and is now trying to gracefully shrink , opens new tab those holdings in a process called quantitative tightening. Under a plan laid out last July, the BOJ has been slowing its monthly bond purchases by around 400 billion yen ($2.76 billion) steps each quarter. So in the current quarter, the central bank is buying 4.1 trillion yen of JGBs each month, down from 4.5 trillion yen each month from January through March. The BOJ said on Tuesday the tapering pace will slow to 200 billion yen step changes per quarter from next April. The central bank also decided to allow investors to keep more varieties of 10-year notes they borrow through its lending facility. The measure is expected to improve liquidity in the market and speed up the BOJ's divestiture of bonds. HOW DID WE GET HERE? Japan has about 1.3 quadrillion yen ($9.07 trillion) in outstanding debt securities, the world's second-biggest amount after the $28.2 trillion U.S. Treasuries market. Persistent fiscal deficits have caused Japan's ratio of debt to gross domestic product (GDP) to expand to about 250%, the highest in the developed world. Prime Minister Shigeru Ishiba said last month the nation's fiscal situation was worse than that of Greece. But unlike Greece, whose debt-to-GDP ratio was around 150% when the nation was bailed out in 2010, about 90% of Japan's debt is held domestically. That makes the JGB market less vulnerable to global investors who punish profligate governments by selling their debt, so-called bond vigilantes. WHAT TRIGGERED THE JGB SELL-OFF? Long-dated bonds have sold off around the world in recent weeks as investors grew wary about widening fiscal deficits and debt piles among major issuers, concerns encapsulated by Moody's downgrade of the United States on May 17. But Japan has some unique issues. Lawmakers are mulling cash handouts and other stimulus to woo voters ahead of an upper house election slated for July. Also, demand has fallen off for super-long bonds among traditional buyers. Japan's life insurers, for example, have steadily bought the securities over recent years to comply with new solvency regulations. With that buying mostly complete, insurers are now shifting into higher-yielding debt. A 20-year JGB auction last month laid bare the precarious situation. Demand was the weakest since 1987, as indicated by the auction's tail - the difference between the lowest and average accepted prices. That triggered a long-term debt sell-off That sent 40-year yields to a record high 3.675%, 30-year rates to an all-time peak of 3.185%, and 20-year yields to 2.595%, the highest since October 2020. Subsequent sales of 30- and 40-year securities also saw weak demand, sparking concerns of a runaway increase in borrowing costs. WHAT WAS THE RESPONSE? The rapid run-up in JGB yields spooked policymakers. In years past, Japan's central bank has come to the rescue in volatile markets by buying bonds and stocks. However, under Governor Kazuo Ueda, the BOJ has committed to shrinking its balance sheet, leaving the finance ministry to take the lead in calming markets. Finance Minister Katsunobu Kato warned that higher rates could further imperil Japan's finances and pledged "appropriate" debt management. The government issued rare warnings about rising yields in its economic roadmap last Friday. Ueda acknowledged views that demand for super-long bonds had declined and that volatility in those yields could impact shorter rates, which have a more direct economic impact. The finance ministry is now planning on trimming issuance of 20-, 30-, and 40-year bonds, balancing those reductions with increases of shorter-term notes, Reuters has reported. The ministry is also considering buying back some super-long JGBs. The rise in yields means JGBs are increasingly attractive for overseas investors, especially those looking to decrease dollar exposure. But foreign holders are more likely to dip in and out of the market, creating volatility. Kato has in recent days talked up the importance of domestic ownership of national debt and proposed a new type of floating-rate note and allowing unlisted companies to buy bonds designed for individual investors. WHAT'S NEXT? The finance ministry will meet market participants later this month, which will inform its decisions on bond issuance and buyback changes. An auction of 20-year JGBs on June 24 will be the next key test of demand for super-long bonds. ($1 = 144.8200 yen) https://www.reuters.com/business/finance/why-is-boj-tweaking-its-buying-japanese-government-bonds-2025-06-17/