2025-09-03 11:05

Fiscal worries send super-long bond yields higher Moves a warning to governments - Deutsche Bank CEO Japanese state borrowing costs hit record highs UK 30-year gilt yields rise to new post-1998 peak Gold races above $3,500 amid safe-haven scarcity LONDON Sept 3 (Reuters) - A sell-off in global long-dated bonds sent Japan's government borrowing costs to record highs on Wednesday, as mounting concerns over government debt sustainability and long-term inflation also rattled investors in Europe. Spot gold hit an all-time high of $3,546.99 as the rush out of long-term government debt, traditionally considered low-risk, sparked a hunt for alternative safe-haven assets. Sign up here. The 30-year Japanese government bond yield hit an unprecedented 3.255% on Wednesday, following a sell-off in similarly dated British gilts , U.S. Treasuries and Canadian bonds in the prior session. "The economic reforms needed to really cover increasing debt are lacking, and the capital market sees that," Deutsche Bank chief executive Christian Sewing said about the long-dated debt sell-off in comments at a conference on Wednesday morning. The trend may continue, he added, "if we see a further increase in political instability, if we don't see any reforms". British finance minister Rachel Reeves is expected to raise taxes in her autumn budget to remain in line with her fiscal targets, while in France Prime Minister Francois Bayrou looks set to lose a confidence vote as opposition parties balk at his spending cuts. In Japan, government departments have just presented record budget requests and senior aides to Prime Minister Shigeru Ishiba, including Secretary-General Hiroshi Moriyama, have offered to resign following their party's defeat in July's upper house election. On Wednesday, British 30-year gilt yields rose 6 basis points to a fresh post-1998 high of 5.752%, before recovering to last trade at 5.67%. Germany's 30-year yield was 2 bps lower at 3.398%, remaining close to its highest level in 14 years. The global trend would likely feed on itself, some analysts said, because higher yields in Japan meant Japanese savers who had for decades looked to overseas assets for income now had fewer reasons to buy non-domestic government debt. "Global bond markets no longer benefit from the Japanese hunt for yield," L&G Asia head of investment strategy Ben Bennett said. "It’s a perfect storm for long-dated bonds and a headache for governments." RIPPLE EFFECTS The gap between 2-year and 30-year U.S. government bond yields stands at about 133 bps, around its highest since December 2021, while the comparable measure in Britain is the highest since 2017. The 30-year U.S. Treasury yield briefly rose above 5% during Asia trade and last stood at 4.987% and, with yields at this level, investors are starting to watch for spillovers into other asset classes. "The 5% level is going to be impactful to equities," said Josh Chastant, portfolio manager, public markets at GuideStone Funds. "And you are starting to see some of that pressure." Britain's pound briefly fell to a four-week low of $1.3334 , before recovering a little. Japan's yen was a touch softer at 148.60 per dollar after sliding 0.8% in the previous session. European and U.S. stock markets remained unscathed as traders pinned their hopes on an anticipated U.S. rate cut later this month, with Europe's STOXX index (.STOXX) , opens new tab up 0.7% and U.S. S&P 500 futures about 0.4% higher. But Japan's broad Topix share index (.TOPX) , opens new tab closed almost 1.1% lower and MSCI's broad index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab dropped 0.4%. TARIFF TREMORS European purchasing managers indexes on Wednesday, viewed as barometers of overall economic conditions, showed expansion in Germany had slowed and France remained in contractionary territory as businesses dealt with U.S. President Donald Trump's unpredictable tariff policies. Trump on Tuesday said his administration would ask the Supreme Court for an expedited ruling on tariffs that an appeals court found illegal last week. The court allowed for the tariffs to stay in place until October 14. U.S. manufacturing also contracted for a sixth straight month in August as factories grappled with the impact of import tariffs, data showed on Tuesday, helping to drive Brent crude oil 1.9% lower to $67.84 a barrel on Wednesday. Friday's U.S. nonfarm payrolls data will be preceded by data on job openings and private payrolls, offering an update on the labour market that has become the focus of policy debate at the Fed. https://www.reuters.com/world/china/global-markets-wrapup-5-2025-09-03/

2025-09-03 10:54

Eight OPEC+ countries to meet on Sunday OPEC+ could also pause hikes for October, source says No immediate comment received from OPEC or Saudi authorities LONDON/MOSCOW, Sept 3 (Reuters) - OPEC+ will consider further raising oil production at a meeting on Sunday, two sources familiar with the discussions said, as the group seeks to regain market share. OPEC+ has reversed its strategy of output cuts from April and has already raised quotas by about 2.5 million barrels per day, about 2.4% of world demand, to boost market share and under pressure from U.S. President Donald Trump to lower oil prices. Sign up here. But those increases have failed to bring down oil prices, which trade near $70 a barrel supported by Western sanctions on Russia and Iran, encouraging further production gains in rivals such as the United States. Another output boost would mean OPEC+, which pumps about half of the world's oil, would be starting to unwind a second layer of cuts of about 1.65 million barrels per day, or 1.6% of world demand, more than a year ahead of schedule. Eight OPEC+ countries are due to hold an online meeting on Sunday expected to decide on October output. OPEC+ includes the Organization of the Petroleum Exporting Countries plus Russia and other allies. There is also a chance, some analysts and an OPEC+ source said, that OPEC+ could pause the increases for October. A final decision has not been made, the OPEC+ source said. OPEC headquarters and authorities in Saudi Arabia did not immediately respond to requests for comment. Brent crude was trading near $68 on Wednesday, down over 1% on the day but up from a 2025 low of near $58 in April. As well as sanctions, the OPEC+ hikes falling short of the pledged amounts have also supported prices, analysts have said. Until April, OPEC+ had been curtailing production for several years to support oil prices. At their last meeting in August, the eight raised production by 547,000 bpd for September, an early reversal of its largest tranche of output cuts plus a separate output hike for the United Arab Emirates amounting to about 2.5 million bpd. The next output cut layer of 1.65 million bpd is in place until the end of 2026, as is another 2 million bpd of cuts by the whole group. https://www.reuters.com/business/energy/opec-consider-further-oil-output-hike-sunday-sources-say-2025-09-03/

2025-09-03 10:52

LONDON, Sept 3 (Reuters) - What matters in U.S. and global markets today By Mike Dolan , opens new tab, Editor-At-Large, Finance and Markets Sign up here. Anxieties in long bonds continued to unsettle world markets on Wednesday, with 30-year government borrowing rates in Japan, Europe and the United States all spiking. The U.S. long bond touched 5% for the first time since mid-July. A mix a concerns about rising public debt piles, the European budget season, Federal Reserve independence, the week's U.S. jobs numbers and even another potential round of U.S. debt ceiling battles all appear to have conspired to jar the back end of the bond market. Meanwhile, Wall Street stocks had another bad day, with a 0.7% drop in the S&P 500. But futures perked up on Wednesday as Google-parent Alphabet surged 6% premarket after a Federal judge spared it from a forced breakup in a pivotal antitrust case over its Chrome browser. * Japan's 30-year government bond yield hit a record high, Germany's 30-year hit a 14-year high, French 30-year debt hovered near 17-year highs and Britain's 30-year gilt clocked its highest since 1998. Societe Generale said it expects more than 100 billion euros in European bond issuance this month and next. UK finance minister Rachel Reeves said on Wednesday that she would deliver her annual budget on November 26, with a focus on keeping a "tight grip" on public spending. Bonds rallied later, however, after a retreat in crude oil prices when Reuters reported OPEC would this weekend consider another output hike. * Gold prices continued to push further into record territory above $3,500, with global military and geopolitical tensions adding to debt market disturbances and long-term inflation worries. Chinese President Xi Jinping said the world faced a choice between peace or war at a massive military parade in Beijing, flanked by Russia's Vladimir Putin and North Korea's Kim Jong Un in an unprecedented show of force. The dollar slipped back from Tuesday's highs against the euro, yen and sterling - with Friday's critical August U.S. jobs release preceded today by the July job openings number. * Alphabet's post-bell surge on the Chrome antitrust ruling leads the single stock moves. Investors cheered the judge's ruling, which also allows Google to keep making lucrative payments to Apple that antitrust enforcers said froze out search rivals. Apple shares rose 3% out of hours. On Tuesday, shares of Kraft Heinz dropped 7% after the company said it will split into two companies, one focused on groceries and the other on sauces and spreads. With the food sector seemingly in play, shares of PepsiCo gained 1% after Elliott Management disclosed a $4 billion stake in the beverages company. Today's Market Minute * Chinese President Xi Jinping warned the world was facing a choice between peace or war at a massive military parade in Beijing on Wednesday, flanked by Russia's Vladimir Putin and North Korea's Kim Jong Un in an unprecedented show of force. * Kraft Heinz (KHC.O) will split into two companies, one focused on groceries and the other on sauces and spreads, it said on Tuesday, dismantling a packaged goods giant that never achieved the growth expected when it was formed a decade ago. * Holiday spending by U.S. consumers is set for its steepest drop since the pandemic as shoppers — particularly Gen Z — pull back amid economic uncertainty, a PricewaterhouseCoopers survey showed. * Data going back decades shows that, on average, September is the worst month for U.S. stocks. So should investors brace for another bumpy ride this year? Almost certainly, writes ROI markets columnist Jamie McGeever, and not just because of the "September effect." * China's net imports of refined copper dropped to a one-year low in July as the world's largest buyer found itself in competition with the U.S. for metal. Find out more in the latest piece from ROI columnist Andy Home. Chart of the day Reuters surveyed over 100 foreign exchange forecasters between August 29 and September 3 on U.S. dollar rates versus major currencies as well as the Chinese yuan, Russian rouble, Indian rupee, Brazilian real, Turkish lira and many others. The median forecast over the next year is for a 7.4% further rise in Japan's yen and 2.5% rise of the euro. Today's events to watch * U.S. July JOLTS job openings data (10:00 AM EDT), July factory goods orders (10:00 AM EDT); Canada Q2 labor productivity * Federal Reserve releases Beige Book on economic conditions (2:00 PM EDT) Minneapolis Fed President Neel Kashkari and St. Louis Fed President Alberto Musalem both speak * U.S. corporate earnings: Salesforce, Dollar Tree, Campbell's, Hewlett Packard -- Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website , opens new tab, and you can follow us on LinkedIn , opens new tab and X. , opens new tab (The opinions expressed here are those of the author, a columnist for Reuters) https://www.reuters.com/business/finance/global-markets-view-usa-2025-09-03/

2025-09-03 10:44

BENGALURU, Sept 3 (Reuters) - The U.S. dollar will weaken over coming months as market participants ponder the Federal Reserve's future independence and how many more rate cuts it may deliver, a Reuters survey of foreign exchange strategists showed on Wednesday. The greenback, down nearly 10% against a basket of major currencies this year, has been the worst performer among them. (.DXY) , opens new tab The short-dollar trade has dominated FX markets since late March, according to Commodity Futures Trading Commission data. Sign up here. Worries about the inflationary impact of tariffs, an enormous tax cut and spending law and repeated White House attempts to interfere with the world's most powerful central bank have reversed the dollar's fortunes after a multi-year run of strength. A weaker dollar trend will likely persist in the near-term as interest rate futures show markets fully pricing in two Fed cuts this year and possibly another in early 2026. Nearly 80% of respondents, 39 of 50, said net-short bets would either rise further by end-September or remain around current levels, according to the August 29-September 3 Reuters poll. The remaining 11 said short bets would decrease. No one chose "a reversal to net-longs." "A big risk is the fact everybody seems to think the dollar is likely to weaken, which means that positioning is all one way. That's sometimes a factor that should make us a little bit more wary," said Jane Foley, head of FX strategy at Rabobank. "If we get a lot of inflationary news from the U.S., there certainly would be room for pullbacks in favor of the dollar." FX strategists in Reuters polls, who have broadly accurately predicted the dollar's slide this year, forecast the euro , currently $1.17, to climb steadily to a median $1.18 and $1.19 in three and six months respectively. It was then predicted to trade at $1.20 in a year: the highest survey median since September 2021. In the meantime, U.S. President Donald Trump's repeated pressure on Chair Jerome Powell to slash rates to 1% and his efforts to oust Fed Governor Lisa Cook over mortgage fraud allegations are testing the boundaries of presidential power. Trump’s Fed board nominee Stephen Miran, chair of the Council of Economic Advisers, has called for sharply lower rates, argued tariffs have little inflationary impact, and proposed Fed governance reforms that would give the president greater control, including the power to dismiss its leadership at will. "The dollar will face some pressure to soften into the end of the year and it's going to be a function of two things: one, a resumption of the Fed's rate-cutting cycle and second, the market's questions with regard to the Fed's independence," said Paul Mackel, head of FX research at HSBC. (Other stories from the September foreign exchange poll) https://www.reuters.com/business/fed-rate-cuts-doubts-over-independence-keep-us-dollar-under-pressure-2025-09-03/

2025-09-03 10:32

MUMBAI, Sept 3 (Reuters) - The Indian rupee ended higher on Wednesday even as most Asian currencies fell, with market participants betting on the unit staging a recovery in the near term, while weakness in the dollar index and strong local shares also aided sentiment. The currency ended at 88.0700, up 0.1% from Tuesday's close of 88.1550. It hit an intraday high of 87.9900 before declining below the 88-mark. Sign up here. The rupee, which is among the worst-performing Asian currencies this year, hit an all-time low of 88.33 per dollar on Monday on outflows as well as concerns from the fallout of U.S. tariffs. A Reuters poll of currency analysts on Wednesday showed that the rupee will avoid a further dramatic slide, with a median forecast of 88.04 per dollar by the end of this month. However, over one-third expect the currency to drift towards 90 as long as hefty U.S. tariffs on Indian goods stay in force. The punitive 50% U.S. tariffs, among the steepest in the world, are threatening to curb trade and capital inflows. The rupee has fallen about 3% so far this year, weighed down by net foreign equity outflows of $15 billion, as ties with the U.S. remain strained over tariffs and New Delhi's purchases of Russian oil. "The rupee is expected to trade with a negative bias," said Amit Pabari, managing director of CR Forex. Still, the pair will face resistance near 88.40, while support remains at 87.50. Stalled trade negotiations with the U.S. and heightened political uncertainty in major global economies are likely to continue being a drag on the currency, Pabari said. Most Asian currencies weakened on Wednesday after a global bond market selloff deterred investors, with the Korean Won leading the losses. India's benchmark Nifty 50 index ended 0.6% higher, while the dollar index was down 0.2% at 98.215 at 1530 IST. https://www.reuters.com/world/india/rupee-up-second-day-bets-short-term-rebound-despite-tariff-related-risks-2025-09-03/

2025-09-03 10:30

Lagarde says EU should seek 'safeguards' from foreign issuers Italian regulator says stablecoins not legal tender FRANKFURT, Sept 3 (Reuters) - European Union legislators should demand safeguards and robust equivalence regimes from foreign issuers of stablecoins to prevent the risk of runs on reserves held in the EU, European Central Bank President Christine Lagarde said on Wednesday. The EU has put in place one of the world's strictest regimes on crypto assets, requiring that stablecoins, which are pegged to an official currency, be fully backed by reserves. Sign up here. But Lagarde said legislators should hold companies that issue stablecoins both in the EU and abroad to the same, high standards. "European legislation should ensure that such schemes cannot operate in the EU unless supported by robust equivalence regimes in other jurisdictions and safeguards relating to the transfer of assets between the EU and non-EU entities," she told a regulatory conference. "This also highlights why international cooperation is indispensable. Without a level global playing field, risks will always seek the path of least resistance," Lagarde said. Speaking later at the same event, Italian market regulator Federico Cornelli said EU rules had to make clear that cryptocurrencies, including stablecoins, could not be considered legal tender in any financial transaction. "Only the euro issued by our ECB is legal tender and this must be made very clear to all citizens," said Cornelli, a commissioner at Italy's market watchdog CONSOB. The ECB is the lender of last resort for euro zone banks and their chief regulator. It is also responsible for financial stability in the EU, along with national authority. Lagarde noted that the EU's Markets in Crypto-Assets Regulation (MiCAR) allowed holders of a stablecoin issued both in the bloc and abroad to liquidate it wherever they saw fit. This means they would likely choose the EU in the event of a run, in light of its stricter requirements on reserves. But reserves held in the EU may prove too low during such a fire sale. "In the event of a run, investors would naturally prefer to redeem in the jurisdiction with the strongest safeguards, which is likely to be the EU, where MiCAR also prohibits redemption fees," Lagarde said. "But the reserves held in the EU may not be sufficient to meet such concentrated demand." https://www.reuters.com/business/finance/ecbs-lagarde-says-eu-should-close-loopholes-stablecoin-regulation-2025-09-03/