2025-11-03 14:44

Treasury to keep auction sizes for notes, bonds steady QT end to reduce Treasury's financing needs Economists note strong tariff receipts Focus on T-bills with Fed as ready buyer JP Morgan sees lower deficit for 2026 NEW YORK, Nov 3 (Reuters) - The U.S. Treasury is widely expected this week to announce its intention to keep note and bond auction sizes unchanged over the next 12 months, at least, as it likely continues to issue more bills and shorter-term debt to manage a sizable fiscal deficit. The Treasury will release its quarterly borrowing estimates on Monday at 3:00 p.m. ET (2000 GMT), followed by the quarterly refunding on Wednesday at 8:30 a.m. ET (1330 GMT). The refunding outlines details of the Treasury's financing plans for the upcoming quarter, including auction sizes for three-year and 10-year notes and 30-year bonds. Sign up here. The government's top fiscal authority has held bond and note auction sizes steady since February 2024 - a stance unlikely to change until late next year or early 2027, analysts said. "The (yield) curve has not steepened enough to the point that the Treasury will respond aggressively with their issuance patterns," said Brendan Murphy, head of fixed income, North America at Insight Investment. "There certainly has been more focus and pressure on the long end. The Treasury will likely adapt to that by issuing more bills and less coupons." The share of Treasury bills in the overall debt mix is expected to climb further from its current 21%, analysts said, as the government leans more heavily on short-term borrowing. Net bill issuance for 2026, excluding Federal Reserve purchases, is expected to rise to $555 billion from $344 billion this year, while net issuance of coupons - Treasury notes and bonds that pay interest - is seen falling to $1.5 trillion from $1.9 trillion this year, J.P. Morgan estimates showed. Analysts said the end of the Fed's balance sheet reduction program, also known as quantitative tightening (QT), will help keep debt issuance steady as it reduces the Treasury's financing needs. Under QT, the Fed allows bond holdings to mature without reinvestment, effectively increasing Treasury's borrowing requirements. To redeem maturing debt held by the Fed, the Treasury draws from its cash balance at the central bank, which it must then replenish by issuing new securities. The end of QT reverses that process. The Fed also announced last week it will start reinvesting all proceeds from maturing mortgage-backed securities into T-bills starting December 1, a move likely to encourage more bill issuance. "You probably need to increase bill supply by about $600 billion if the Fed is reinvesting mortgages into bills," said Joseph Abate, head of rates strategy at SMBC Nikko Securities. "It may seem like a lot, but if the Fed is there buying, $600 billion hopefully is not going to be hard to digest." LOWER BORROWING ESTIMATES Economists overall foresee lower borrowing estimates for the fourth quarter. In the last July announcement, the Treasury said it expected to borrow $590 billion in the last three months of 2025, with a projected cash balance of $850 billion by end-December. Jefferies Chief U.S. Economist Tom Simons said, in a research note, that he expects a moderate downward revision in net borrowings in the fourth quarter to $525 billion due in part to stronger-than forecast tariff revenue. J.P. Morgan also expects slightly lower-than-expected borrowings in the fourth quarter of $564 billion and $639 billion in the first three months of next year. The Treasury said in July that it expected to borrow $1.007 trillion in the third quarter partly to replenish its cash balance that dwindled during the latest debt ceiling episode. It is set to reveal the actual borrowing total later on Monday. In the meantime, strong demand for T-bills has allowed the Treasury to delay increases in longer-dated debt auctions, a strategy that has raised concerns about the potential risk of relying too much on short-term funding. Analysts warned that over-reliance on short-term borrowing could increase volatility in financing the deficit and heighten rollover risks if market conditions shift. That said, the fiscal picture seems to have evolved, analysts said. J.P. Morgan has revised lower its 2026 U.S. deficit forecast to $2.035 trillion from $2.125 trillion, citing a $350 billion boost in tariffs. Other financial institutions such as SMBC Nikko Securities also slightly lowered their deficit estimates for next year. One potential complication, however, is a looming U.S. Supreme Court ruling that could determine whether President Donald Trump's authority under the International Emergency Economic Powers Act extends to imposing tariffs without congressional approval. If the ruling goes against Trump, the U.S. government would have to return hundreds of billions of dollars in tariffs. The Supreme Court is set to hear oral arguments on November 5, with a decision likely before year-end. "Uncertainty around the future of tariff collections is hugely important for the overall deficit and issuance needs by the Treasury," said Zachary Griffiths, head of investment grade and macro strategy at CreditSights. https://www.reuters.com/business/no-surprises-seen-us-debt-issuance-t-bills-up-bonds-steady-2025-11-03/

2025-11-03 12:18

LONDON, Nov 3 (Reuters) - British transport minister Heidi Alexander said there were no injuries reported after a train bound for London from Glasgow derailed in northern England on Monday. North West Ambulance Service later said on Monday morning that it had stood down from "major incident status" and was withdrawing resources it had dispatched to the scene. Sign up here. Avanti West Coast, which operates long-distance services between London and Scotland, has advised passengers not to travel north from the city of Preston. The train operator said it expected disruptions to last a number of days. https://www.reuters.com/world/uk/no-injuries-reported-after-uk-train-derails-minister-says-2025-11-03/

2025-11-03 12:07

SHANGHAI, Nov 3 (Reuters) - A Chinese state bank closed retail gold accounts to new investors on Monday, two days after Beijing tweaked a long-standing tax exemption for the metal that is likely to hit retail demand in the world's biggest consumer market. State-owned China Construction Bank said on Monday it would no longer accept applications for one of its gold purchasing accounts without giving a reason. Fellow major ICBC also restricted new applicants but reversed the move hours later. Sign up here. The decisions follow Beijing’s announcement , opens new tab two days earlier that it would cut the full 13% value-added tax exemption to 6% for certain gold purchases through the Shanghai Gold Exchange and the Shanghai Futures Exchange from November 1. The change will affect industrial and jewellery users because gold purchased for investment, for example gold bars or ingots, is exempt, as are paper trades on the exchange. The new regime applies to non-members of the SGE regardless of the gold's ultimate use. "We expect the net effect is higher costs on gold consumption in jewellery and industrial uses," UBS analyst Joni Teves said in a note on Monday, adding it could spur more companies to join the exchanges, improving liquidity and transparency. The new tax regime comes amid a worldwide rush to buy gold, especially in China where consumers have lined up to purchase jewellery from retailers. The buying helped drive gold's rally to a record $4,381 an ounce on October 20. Spot gold prices on Monday briefly slipped below $4,000 an ounce and were last trading near that level and have dropped about 9% since hitting the record. Shares of gold jewellery retailers Laopu Gold (6181.HK) , opens new tab and Chow Tai Fook (1929.HK) , opens new tab dropped as much as 9% and 12%, respectively, on Monday, while gold miners Zijin Mining (601899.SS) , opens new tab and Zhongjin Gold (600489.SS) , opens new tab each fell around 1.5%. Last month, the value-added tax exemption for platinum was also removed for China Platinum Company, also beginning on November 1. https://www.reuters.com/world/asia-pacific/china-cuts-gold-tax-exemption-some-retailers-which-may-curb-buying-2025-11-03/

2025-11-03 11:44

Nov 3 - SM Energy (SM.N) , opens new tab and Civitas Resources (CIVI.N) , opens new tab said on Monday they will merge in a deal valued at about $12.8 billion, including debt, creating one of the largest independent U.S. oil producers that will hold a dominant position in the Permian Basin. The sale signals a recovery in dealmaking in the shale industry as companies seek scale to tackle volatility in the energy and equity markets. Sign up here. U.S. shale producers are turning to mergers as investors favor disciplined spending and steady shareholder returns over rapid growth in an uncertain oil market. Civitas shareholders will get 1.45 shares of SM Energy for each Civitas share, giving them about 52% ownership of the combined company. This values Civitas at about $30.29 per share, a 5% premium to its closing price on Oct. 31, and gives the deal an equity value of roughly $2.81 billion, according to Reuters calculations. Shares of SM rose 2.1% and that of Civitas climbed 2.7% in premarket trading. The combined company will hold about 823,000 net acres across top U.S. shale basins, including Permian and Denver-Julesburg (DJ), and is expected to generate over $1.4 billion in free cash flow this year. The merged firm will keep the SM Energy name and ticker, and remain headquartered in Denver. SM Energy expects to save about $200 million annually, and potentially up to $300 million, through lower overhead and operating costs. The company plans to prioritize free cash flow to cut debt and to maintain its quarterly dividend of 20 cents per share. SM Energy CEO Herb Vogel will lead the combined company. Its 11-member board will include six directors from SM and five from Civitas. The deal is expected to close in the first quarter of 2026. https://www.reuters.com/legal/litigation/sm-energy-civitas-resources-combine-128-billion-deal-2025-11-03/

2025-11-03 11:41

LONDON, Nov 3 (Reuters) - The pound remained under pressure against both the dollar and euro on Monday as traders tried to fine-tune their positions ahead of Thursday's in-the-balance Bank of England meeting. Sterling was down 0.27% on the dollar at $1.3132, just above last week's more than six-month low of $1.30965. Sign up here. It was steady versus the euro at 87.70 pence, but again wasn't far from last week's 88.17 pence to the common currency, the pound's softest in over two years. Monday data showing British factories had their strongest month in a year in October did little for sterling, in part because the recovery was driven by one-off factors. Instead, the week's focus is the BoE meeting - unusual among October and November's developed market central bank meetings in that there is reasonable uncertainty heading into it. Market pricing currently reflects around a one-in-three chance of a 25-basis-point rate cut, having risen from close to zero after a raft of economic data last month, most notably a cooler-than-expected inflation print. Pricing reflects a roughly two-in-three chance of a cut at either next week's or December's meeting. "Our base case is still a cut in December - I don't think one softer CPI print is enough and by December they'll have more information and have the budget - though it wouldn't be a huge surprise if they cut this week," said Lee Hardman, senior currency analyst at MUFG. British finance minister Rachel Reeves will announce her much-discussed budget in late November. And the uncertainty around Thursday's meeting means a sharp swing in the pound either way on the decision is likely, at least relative to other central bank meetings. Last week's well telegraphed hold by the European Central Bank did very little to the euro. Moves may not last, however. 'If they do stay on hold, we might get an initial rally in the pound, but I think it will peter out as people start thinking about December," said Hardman. https://www.reuters.com/world/uk/sterling-under-pressure-boe-week-arrives-2025-11-03/

2025-11-03 11:40

Nov 3 (Reuters) - Morgan Stanley on Monday raised its Brent crude forecast for the first half of 2026 to $60 a barrel from $57.5, citing the decision by OPEC+ to pause quota hikes in the first quarter of next year and recent U.S. and EU sanctions on Russian oil assets. The bank expects a "substantial surplus" in the oil market next year, peaking in the second quarter. However, it expects non-OPEC production growth will have slowed by then, and that OPEC production will also not grow significantly in 2026, due to diminished spare capacity, paving the way for the market to balance by the second half of 2027. Sign up here. OPEC+ on Sunday agreed to a small oil output increase for December and a pause in hikes during the first quarter of next year, as the group takes a cautious stance amid mounting concerns about a potential supply glut. It has raised output targets by about 2.9 million barrels per day (bpd), roughly 2.7% of global supply, since April. "The decision to halt quota hikes during 1Q does not materially change our production forecasts but still sends an important signal, i.e. the group is still adjusting supply in response to market conditions," Morgan Stanley said. The bank highlighted widening uncertainty in OPEC production data, noting that the spread between the lowest and highest estimates has regularly topped 2.5 million bpd this year. Although OPEC+ has announced production increases of 2.6 million bpd from March, the bank's best estimates suggest production has only increased by 0.5 million bpd. The United States this month hit Russian oil majors Rosneft and Lukoil with sanctions, while the European Union adopted a separate package of Russia sanctions. Brent crude futures were trading around $64.61 a barrel on Monday, while U.S. West Texas Intermediate stood at $60.80. https://www.reuters.com/business/energy/morgan-stanley-lifts-h1-2026-brent-forecast-60-opec-pause-russia-sanctions-2025-11-03/