2025-09-18 07:41

Pound, gilts decline after holding steady post BoE decision Rate and QT decision widely expected Mismatch seen between investor, market rate expectations MUMBAI/LONDON, Sept 18 (Reuters) - The pound slipped and gilt yields rose on Thursday, reversing course after having offered a muted reaction after the Bank of England kept rates unchanged and slowed the pace of its government bond holding reductions. Analysts said the shift appeared to stem more from stronger U.S. employment data that boosted the dollar broadly and sent bond yields higher than from the BoE's policy steps. Sign up here. Sterling was down 0.6% at $1.3541, while the yield on the benchmark 10-year gilt rose 5 basis points to 4.67%. "I don't see any sort of clear catalyst for the move, besides the fact that it seems to have gathered momentum since U.S. traders entered the fray," said Michael Brown, senior research strategist at Pepperstone. Earlier, BoE policymakers voted 7-2 to keep rates unchanged at 4% while slowing the annual pace at which the central bank sells gilts it purchased between 2009 and 2011 to 70 billion pounds from the current 100 billion pounds, in line with economist forecasts. UK inflation is almost twice the central bank's 2% target, and there are growing signs of weakness in the labour market. Yet money markets are only fully pricing in another rate cut by March next year, something some investors believe may be overly pessimistic. "There could be good news on the horizon that allows a few more cuts than the market expects. Commodity prices are not going up and that may weigh on inflation," said Christopher Mahon, multi-asset manager at Columbia Threadneedle. MOST STAGFLATIONARY DEVELOPED ECONOMY "The UK is now the most stagflationary economy in the developed world. A brutal mix of high inflation, weak growth, and rising unemployment," said Lloyd Harris, head of fixed income, Premier Miton Investors. "The next big moment for the BoE and for all sterling markets is the Autumn Budget," Harris said. Finance Minister Rachel Reeves will present her budget on November 26. She is under pressure to stick to her own rules on borrowing to keep Britain's finances on track, as reflected in some of the large swings in yields on long-term UK bonds this year. The central bank said it would skew sales away from long-dated gilts to minimise the impact on turbulent bond markets. Britain's 30-year borrowing costs had climbed to their highest level since 1998 earlier this month but have since eased. "The Bank of England's decision to slow its pace of bond sales was fairly consensus, but the decision to skew those sales towards shorter maturities should provide some relief to the long-end," said Matthew Landon, global market strategist at J.P. Morgan Private Bank in London. The 30-year gilt yield was last up 6 bps at 5.493%, tracking a similar sized move in its U.S. counterpart. Germany's 30-year bond yield was up 6 bps as well at 3.30%. The BoE is alone among major central banks in conducting outright sales of the government bonds it bought to boost the economy in the years after the 2008 global financial crisis, rather than just letting them mature. British stocks held on to their post-BoE gains, with the benchmark FTSE 100 (.FTSE) , opens new tab stock index last up 0.3%, while the more domestic-focused mid-cap stock index (.FTMC) , opens new tab was up nearly 0.4%. "There’s always going to be some sensitivity around the future inflation profile. And given the background of where the UK has been, I expect the Bank of England to remain cautious," Matt Hudson, UK portfolio manager at River Global, said. https://www.reuters.com/markets/europe/sterling-eases-before-boe-policy-decision-2025-09-18/

2025-09-18 07:03

HONG KONG, Sept 18 (Reuters) - Commodities have had a rough decade, but a confluence of structural factors suggests that after years of underinvestment, the stage may be set for the next super cycle. Commodities super cycles are long, powerful waves driven by major thematic shifts. The 1970s super cycle saw a mix of geopolitical supply shocks and loose monetary policy. The early 2000s super cycle was defined by China's historic urbanisation boom. Sign up here. Today, there are structural factors on both the supply and demand sides of the commodities equation that could catalyze the next boom. To begin, the supply outlook for commodities overall has a few points of vulnerability that, if tested, could support a bullish long-term outlook. First, critical resources and the capacity to process them are highly concentrated in just a few jurisdictions. For instance, S&P Global reports that over 40% of the world's copper production comes from Chile and Peru. Over 50% of the world’s iron ore is supplied by Australia and Brazil. And Kazakhstan alone accounts for over 40% of global uranium mine supply. This concentration extends beyond extraction to refining. China refines nearly 90% of the world's rare earth elements, which are vital for everything from electric vehicles to defence systems. It also refines over 40% of the world’s copper, critical for AI and electrification. We have already seen examples of countries using their control of commodities supply as geopolitical leverage. China temporarily restricted rare earth exports in 2025 during trade disputes, and the U.S. included long-term Liquified Natural Gas (LNG) purchase commitments in its tariff agreements with the European Union and South Korea. This trend of weaving energy security and dependency into trade discussions and other geopolitical disputes creates a persistent risk premium that could erupt into severe supply disruptions down the line. Compounding this is a simple geological reality: the easy, high-grade deposits have likely already been found. Greenfield mining projects can now expect to face declining ore grades, soaring capital costs, and lead times that could exceed a decade. Years of underinvestment, partly due to shareholder pressure on miners to prioritise dividends over growth, have starved the pipeline of future supply. INELASTIC DEMAND Powerful secular trends are also unfolding on the demand side that could be quite bullish for commodity prices over the long run. The global push for electrification and decarbonisation is profoundly metal-intensive. Copper is the perfect example. While traditional sectors like construction remain important consumers of the base metal, explosive growth looks set to come from electric vehicles, renewable power systems and the vast grid infrastructure needed to support them. Meanwhile, massive, cash-rich technology companies are investing hundreds of billions of dollars annually in capital expenditures to build out artificial intelligence data centres and related power projects. For these firms, securing the necessary energy and materials to win the Al race is an existential imperative, making their demand resilient. Copper is once again a case in point. The International Energy Agency (IEA) calls the metal a “global critical mineral” and estimates that demand based on stated policies and supply from announced projects could lead to a potential shortfall of 30% by 2035. This doesn’t look like the story of a cyclical shortage, but a structural collision between an inadequate supply base and accelerating demand. FINANCIAL TAILWIND Finally, the financial winds seem to be shifting in commodities' favor. First, there’s the simple matter of price. The inflation-adjusted copper price remains 30% below its 2011 peak, while the inflation-adjusted oil price and the overall Bloomberg Commodities Index (which includes energy, industrial and precious metals, and agricultural produce) are 70% below their previous peaks in 2008. This is in stark contrast to U.S. equities where the S&P 500 index (.SPX) , opens new tab continues to hit all-time nominal highs and has almost tripled since its pre-Global Financial Crisis peak in 2007, even after adjusting for inflation. At the same time, investors may need to find a new asset class to reduce portfolio volatility. That’s because inflation is proving sticky in several developed markets – most notably the U.S. – which could limit central banks’ ability to cut rates aggressively when economies weaken. That means the investors can no longer count on bonds to hedge downside risks to equity prices, leaving traditional balanced portfolios consisting only of equities and bonds vulnerable when investors suddenly seek to shed risk. Gold has already reasserted itself as a hedge against geopolitical turmoil and monetary debasement, driven by relentless central bank buying and growing retail interest. Perhaps industrial metals and other commodities may soon also be seen as strategic inflation and growth hedges, given the supportive supply-demand outlook. Yet, despite this potential, investment mandates that allow for direct investments in commodities, let alone dedicated commodity investment mandates, remain a rarity in most institutional portfolios. Many in the investment communities have taken the poor price performance of commodities over the recent decade to be indicative of the future trajectory. This backward-looking mentality could potentially stem the flow of capital into this area. FALLING INTO PLACE Crucially, once a super cycle starts, it takes a lot to put an end to it. This often requires either painful policy measures on the demand side or major technological breakthroughs on the supply side. Think former Federal Reserve Chair Paul Volcker's rate hikes in the 1980s, the U.S. shale revolution in the 2010s, and China’s property market downturn more recently. That means these cycles can last for a long time. While properly timing such booms is very challenging, one can note when the underlying conditions for a super cycle appear to be falling into place – and we could be seeing that now. (The views expressed here are those of Taosha Wang, a portfolio manager and creator of the “Thematically Thinking” newsletter at Fidelity International). 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/commodities-could-be-verge-new-super-cycle-2025-09-18/

2025-09-18 07:01

Brent, WTI both down for a second day of decline Fed rate cut of a quarter point already priced in, analyst says Market clouded by rising supply, US demand concerns TOKYO/SINGAPORE, Sept 18 (Reuters) - Oil prices declined for a second session on Thursday, after the Federal Reserve cut interest rates as expected and traders focused on concerns about the U.S. economy and excess supplies. Brent crude futures fell 26 cents, or 0.38%, to $67.69 a barrel by 0656 GMT. U.S. West Texas Intermediate futures dropped 28 cents, or 0.44%, to $63.77. Sign up here. The Fed cut its policy rate by a quarter of a percentage point on Wednesday and indicated it will steadily lower borrowing costs over the rest of the year, responding to signs of weakness in the jobs market. Lower borrowing costs typically boost demand for oil and push prices higher. But the latest move and the hint of two more cuts this year was already priced in, said Priyanka Sachdeva, a senior market analyst at Phillip Nova. "What caught markets’ attention was not just the easing, but Powell’s downbeat message," she said, referring to Fed Chair Jerome Powell. "He stressed weakening job markets and inflation that remains sticky, making the cut look more like risk-management than a demand booster." The indication of more rate cuts coming from the Fed signals that policymakers assess risk to the economy from unemployment to be higher than from inflation, said Claudio Galimberti, chief economist and global director of market analysis at Rystad Energy, in a client note. Persistent oversupply and soft fuel demand in the U.S., the world's biggest oil consumer, also weighed on the market. U.S. crude oil stockpiles fell sharply last week as net imports dropped to a record low while exports jumped to a near two-year high, data from the Energy Information Administration showed on Wednesday. A rise in distillate stockpiles (USOILD=ECI) , opens new tab by 4 million barrels, however, against market expectations of a gain of 1 million barrels, raised worries about demand in the world's top oil consumer and pressured prices. https://www.reuters.com/business/energy/oil-edges-lower-amid-worries-over-us-economy-market-oversupply-2025-09-18/

2025-09-18 06:53

BEIJING, Sept 18 (Reuters) - China has called on its top hog producers to "take the lead" in cutting output, state-run Shanghai Securities News reported on Thursday, as the country battles a supply glut and sluggish consumer demand in its massive pork sector. At a high-level meeting on Tuesday, officials urged major companies - including Muyuan Foods (002714.SZ) , opens new tab and Wens Foodstuff (300498.SZ) , opens new tab - to reduce breeding sows, lower slaughter volumes, and keep hog weights around 120 kg, the report said. Sign up here. The meeting, jointly held by the National Development and Reform Commission and the Ministry of Agriculture and Rural Affairs' animal husbandry bureau, signals a stronger push by Beijing to rein in overcapacity and stabilise prices. Authorities also plan to tighten credit for hog production capacity expansion and cut subsidies that fuel pig output growth, the report said. The move comes as hog prices plunge to around 13 yuan ($1.83) per kg, down from 18.8 yuan a year ago, according to consultancy MySteel, pressuring margins across the industry. As of 0607 GMT, shares of Muyuan had slipped 2%, while Wens tumbled 3%. ($1 = 7.1102 Chinese yuan renminbi) https://www.reuters.com/markets/commodities/beijing-urges-top-hog-producers-cut-output-state-media-says-2025-09-18/

2025-09-18 06:49

Powell describes rate cut as risk-management measure SPDR Gold Trust holdings fall 0.44% on Wednesday Sept 18 (Reuters) - Gold prices extended losses on Thursday as the dollar firmed after the U.S. Federal Reserve cut interest rates by an expected quarter of a percentage point and adopted a measured rhetoric on further policy easing. Spot gold dipped 0.6% to $3,637.41 per ounce, as of 0636 GMT, after hitting a record high of $3,707.40 on Wednesday. Sign up here. U.S. gold futures for December delivery slipped 1.2% to $3,671.30. "The general message from the Fed was slightly to the hawkish side on interest rates, they didn't really enthusiastically endorse lower rates," said Marex analyst Edward Meir. "As a result, we saw the dollar firm up after the Fed meeting and the Treasury rates also moved higher... I think over the short term, we are probably a little bit overbought here and we could retrace a bit further maybe to the $3,600 mark." The dollar (.DXY) , opens new tab rose 0.4% to extend gains against its rivals, making gold more expensive for other currency holders. The Fed reduced rates by 25 basis points on Wednesday and indicated it will steadily lower borrowing costs for the rest of this year. Fed Chair Jerome Powell characterised the policy action as a risk-management cut in response to the weakening labour market and the central bank is in a "meeting-by-meeting situation" regarding the outlook for interest rates. Traders are currently pricing in a 90% chance of another 25-bp cut at the Fed's next meeting in October, compared with a 74.3% probability a day earlier, according to the CME Group's FedWatch tool. The Bank of England will announce its own policy decision later on Thursday, and is widely anticipated to keep rates at 4%. Meanwhile, SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, said its holdings fell 0.44% to 975.66 tonnes on Wednesday from 979.95 tonnes on Tuesday. Elsewhere, spot silver fell 0.6% to $41.40 per ounce, platinum gained 0.5% to $1,371.60 and palladium eased 0.2% to $1,152.24. https://www.reuters.com/world/india/gold-slips-dollar-firms-after-feds-message-interest-rate-path-2025-09-18/

2025-09-18 06:40

PARIS, Sept 18 (Reuters) - French utility EDF's nuclear production was reduced by 1.1 gigawatt early on Thursday, data from the company showed, as workers lowered power output at the Flamanville 1 reactor as part of a nationwide strike expected to hit several sectors. Nuclear production was only affected at a single power plant while hydropower output was unaffected, the data showed. Sign up here. France has 57 GW of total nuclear capacity, which produces about 70% of the country's annual electricity. https://www.reuters.com/sustainability/sustainable-finance-reporting/nationwide-french-strike-cuts-french-electricity-production-2025-09-18/