2025-06-12 01:04
SEOUL, June 12 (Reuters) - South Korea's central bank governor said on Thursday "excessive" policy interest rate cuts could cause another round of price upswings in the property market and increase volatility in currency markets, although the domestic economy remains sluggish. "If we rely too much on economic stimulus policies out of urgency, there may be greater side effects later on. For example, if we cut the base interest rate excessively, there is a high risk that it will lead to a rise in real estate prices," Governor Rhee Chang-yong said in a speech prepared for the bank's 75th anniversary. Sign up here. His comments come after the bank flagged more rate cuts to come on the day it trimmed borrowing costs by a quarter percentage point to 2.5% on May 29, to reflect the impact of the U.S. trade tariffs and tepid domestic consumption. The widely expected rate cut, the fourth in the current easing cycle, came as the newly elected President Lee Jae-myung geared up for major stimulus measures including this year's second extra budget to boost growth. Rhee's concerns about excessively cutting interest rates also stemmed from recent currency market volatility. "The gap between domestic and foreign interest rates may widen further as the U.S. Federal Reserve adjusts the pace of its interest rate cuts, and uncertainty surrounding the results of trade negotiations with major countries may increase, leading to increased volatility in the foreign exchange market," Rhee said in the speech. https://www.reuters.com/world/asia-pacific/bank-korea-chief-says-excessive-rate-cuts-could-cause-price-upswing-property-2025-06-12/
2025-06-12 00:51
SAO PAULO, June 11 (Reuters) - The Brazilian government published on Wednesday an executive order altering taxes levied on investments, as well as a new decree walking back part of the recently announced hikes on the IOF tax on financial transactions. The government had announced in May the increase of the IOF tax, including on credit and foreign-exchange transactions, to boost public revenues. Sign up here. The move triggered strong pushback from both Congress and market players, prompting the government to seek an alternative path as lawmakers threatened to overturn the measure. A revised version of the IOF decree was published on Wednesday evening, partially or fully backtracking on several hikes to the rate, including on IOF levies on credit to companies and on the so-called forfait operations. As part of the alternatives to the IOF hike, the government also published an executive order, which will need Congress' approval to remain valid, with measures including broad changes on income tax on financial investments, as well an increase in the tax rate on sports betting firms' revenue. Among the changes to investment taxes, the government will now set the rate on investment income and capital gains, including stocks and bonds, at 17.5%, replacing the current sliding scale of 15% to 22.5%. It also sets a 5% income tax on investments currently except from income levy, and raises the income tax rate levied on so-called interest on equity (JCP) payments to 20% from 15%. The finance ministry did not release an estimate of the financial impact of the measures in its budget. https://www.reuters.com/world/americas/brazil-government-revises-iof-taxes-after-pushback-tweaks-investment-levies-2025-06-12/
2025-06-12 00:51
Oil prices close lower after hitting two-month high on Wednesday Market focusing on Middle East tensions, US-Iran talks US, Iranian officials to meet on Sunday in Oman NEW YORK, June 12 (Reuters) - Oil prices settled slightly lower on Thursday as traders booked profits from a 4% rally in the prior session, driven by concerns that worsening tensions in the Middle East could cause supply disruptions. Brent crude futures settled down 41 cents, or 0.6%, at $69.36 a barrel. U.S. West Texas Intermediate crude fell 11 cents, or 0.2%, to settle at $67.97 a barrel. Sign up here. U.S. President Donald Trump on Thursday said an Israeli strike on Iran "could very well happen," but added that he would not call it imminent and prefers to avoid conflict. The U.S. had earlier decided to move personnel out of the Middle East, sending both crude oil benchmarks up more than 4% to their highest since early April on Wednesday. The surge put the market in overbought territory based on several technical indicators, so it was likely due for a brief correction, StoneX Energy analyst Alex Hodes said. U.S. and Iranian officials were scheduled to hold a sixth round of talks on Tehran's uranium enrichment programme in Oman on Sunday, according to officials from both countries and their Omani mediators. Trump has repeatedly threatened strikes against Iran if the nuclear talks fail to reach an agreement. Tehran, which asserts its nuclear activity is for peaceful purposes, has said it would retaliate against strikes by hitting U.S. bases in the region. Rising tensions in the region have oil traders worried about possible supply disruptions. Britain's maritime agency warned on Wednesday that increased tensions in the Middle East may escalate military activity and impact shipping in critical waterways. "For the oil market, the absolute nightmare is a closure of the Strait of Hormuz," Arne Rasmussen, an analyst at Global Risk Management, said in a LinkedIn post. "If Iran blocks this narrow chokepoint, it could affect up to 20% of global oil flows," he added. JPMorgan said oil prices could surge to $120-$130 a barrel if the Strait of Hormuz were to be shut, a scenario the bank considered to be severe but a low risk. Still, oil traders were growing cautious. "We are still higher than two days ago as some short investors prefer to stay on the sidelines amid the uncertainty," said Giovanni Staunovo, an analyst at UBS. U.S. special envoy Steve Witkoff plans to meet Iranian Foreign Minister Abbas Araghchi in Oman on Sunday to discuss Iran's response to a U.S. proposal for a deal. The U.N. nuclear watchdog's 35-nation Board of Governors declared Iran in breach of its non-proliferation obligations on Thursday for the first time in almost 20 years, raising the prospect of reporting it to the U.N. Security Council. https://www.reuters.com/business/energy/oil-prices-tick-up-worries-escalating-us-iran-tension-2025-06-12/
2025-06-11 22:56
Mexican financial system resilient and solid, central bank says Banking system has sufficient liquidity and capital, per report Stress tests showed system can withstand adverse scenarios Bank Governor: Premature to think high inflation is imminent MEXICO CITY, June 11 (Reuters) - Mexican Central Bank Governor Victoria Rodriguez urged confidence in Mexico's banking system and economy on Wednesday, seeking to assuage fears about rising inflation and stagnant growth in Latin America's second-largest economy. The central bank offered an optimistic outlook in its biannual stability report released on Wednesday, saying Mexico's financial system has shown "resilience" despite ongoing trade tensions with the U.S. and a "global context characterized by the slowdown in economic activity." Sign up here. Banxico, as the central bank is known, is facing a challenging balancing act as it seeks to ease rising inflation while stimulating Mexico's sluggish economy. Despite the challenges, Mexico's banking system maintains "solid" liquidity with capital levels above regulatory minimums. Stress tests show that it can confront "simulated adverse scenarios," the report said. "Our country has a solid macroeconomic framework," Rodriguez said during a presentation of the report. Rodriguez downplayed concerns of long-term high inflation, saying it remains on a downward trajectory and far from the highs reached in 2022, when it peaked at 8.7%. Headline inflation in Mexico accelerated to 4.42% in May, exceeding the upper end of the central bank's target range of 3%, plus or minus a percentage point. Core inflation, which excludes volatile items like food and oil, rose to 4.06%, its highest level in almost a year. Banxico currently forecasts inflation will fall in the third quarter before converging to its target by the third quarter of 2026. "It would be premature to conclude or think that the Mexican economy is or will soon be in a period of high inflation," Rodriguez added. Rodriguez reiterated the board's position that is appropriate to continue easing the bank's monetary policy, following its 50 basis-point cut to its benchmark interest rate last month. A dozen economists surveyed by Reuters expect the Bank of Mexico to implement a fourth consecutive rate cut of 50 basis points at its next meeting on June 26, despite the inflation uptick. https://www.reuters.com/world/americas/mexican-financial-system-resilient-despite-risks-says-cenbank-2025-06-11/
2025-06-11 22:47
QUITO, June 11 (Reuters) - The International Monetary Fund said on Wednesday that it reached a staff-level agreement with the Ecuadorean authorities on the second review for a proposed augmentation of $1 billion. Amid a more challenging external environment, the authorities have requested an increase of the original arrangement from $4 billion to $5 billion, the IMF said. Sign up here. The move seeks to bolster financial backing for Ecuador's efforts to consolidate economic stability and promote inclusive development, Ecuador's Economy and Finance Ministry said in a post on X. The technical agreement will be evaluated by the IMF Executive Board in the coming weeks. Approval of the second program review would unlock a new disbursement to further strengthen Ecuador's fiscal and external position, the ministry added. https://www.reuters.com/world/americas/imf-ecuador-reach-agreement-proposed-augmentation-1-billion-2025-06-11/
2025-06-11 22:19
NAPERVILLE, Illinois, June 11 (Reuters) - U.S. corn supply estimates for the waning 2024-25 marketing year have been dwindling in recent months, though a notable rebound is expected for 2025-26. But the futures market might not be reflecting these trends, leading many to wonder if old-crop stockpiles are actually larger than the government has predicted. Sign up here. Normally, that supply trajectory might put Chicago futures in an inverse, where old-crop corn is pricier than new-crop. But so far this month, CBOT July corn has traded at an average of around 3 cents per bushel cheaper than December corn , reflecting a small carry in the market. Analysts think the U.S. Department of Agriculture on Thursday will trim its forecast for 2024-25 U.S. corn ending stocks to 1.392 billion bushels, rendering stocks down 21% on the year. In past Junes, such a decline in corn stocks has been associated with July-December inverses exceeding 50 cents. The closest comparison in terms of stock declines would be 2018, when July-December corn traded at a 21-cent carry during the first two weeks of June. At that time, U.S. 2017-18 ending stocks were pegged to ease 8% on the year, but the actual estimate was more than ample at 2.1 billion bushels. This demonstrates that contracting year-on-year supplies can be associated with market carry in June. Additionally, there are examples (2008, 2018) where this carry existed despite a reduction in stock estimates over the previous several months. Still, the current setup may suggest that either July futures are too cheap versus December, old-crop stocks are being understated, or some combination of both. PARSING PROBABILITIES Given the present market structure, what might this mean for old-crop corn stocks – and trade expectations – moving forward? If old-crop stocks are too low, it may not come to light on Thursday. There is no relationship between the old-new crop futures spread and the trend in USDA’s old-crop ending stock estimates from May to June. Fast-forward to June 30, when USDA publishes its June 1 stock survey, and the chance for a bearish bomb increases. Since 2008, whenever July-December corn traded near flat or in a carry during early June, analysts underestimated June 1 corn stocks about 73% of the time. On the flip side, analysts underestimated June 1 corn stocks in just one out of six years when old-new crop corn featured a strong inverse relationship. Since 2008, there is also a 73% hit rate for final corn ending stocks to be the same or higher than was estimated in June whenever July-December corn traded near flat or in a carry during early June. This same early June spread, however, does not suggest that final ending stocks will be bearish as the trade has gone on to both underestimate and overestimate September 1 corn stocks. WAKE ME UP WHEN SEPTEMBER ENDS The outcome is still wide open for the end of September, when USDA will publish final 2024-25 corn ending stocks. But right now, CBOT corn for expiration in mid-September is the cheapest of the bunch. July-September corn is trading at an inverse averaging 12 cents per bushel so far this month, which is unusual given the slight carry in July-December. The historical relationship between these spreads suggests that one or both are a bit out of sync. With multiple anomalies in the futures market setup having been identified, this might simply mean that 2025 is an outlier year. And if that’s the case, historical odds may be increasingly less reliable from here. Karen Braun is a market analyst for Reuters. Views expressed above are her own. Enjoying this column? Check out Reuters Open Interest (ROI) , opens new tab, 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 , opens new tab can help you keep up. Follow ROI on LinkedIn , opens new tab and X. , opens new tab https://www.reuters.com/markets/commodities/whats-up-with-wacky-cbot-corn-spreads-braun-2025-06-11/
