2024-09-16 19:29
Sept 16 (Reuters) - Several oil companies including Exxon Mobil (XOM.N) , opens new tab and Chevron (CVX.N) , opens new tab defeated an appeal on Monday by consumers who accused them of colluding with former U.S. President Donald Trump, Russia and Saudi Arabia to cut oil production, boosting prices at the pump. In a 3-0 decision, the 9th U.S. Circuit Court of Appeals in San Francisco said two dozen consumers could not pursue class action claims because they concerned political questions and the oil-producing policies of foreign countries. The court also found a lack of proof that the oil companies violated antitrust law by conspiring to raise prices. Other defendants included Devon Energy (DVN.N) , opens new tab, Energy Transfer LP (ET.N) , opens new tab, Occidental Petroleum (OXY.N) , opens new tab, Phillips 66 (PSX.N) , opens new tab, Continental Resources, Hilcorp Energy and the American Petroleum Institute. Lawyers for the consumers did not immediately respond to requests for comment. The defendants' lawyers did not immediately respond to similar requests. The lawsuit stemmed from a price war that broke out in March 2020 between Russia and Saudi Arabia. Both countries boosted production quickly, ending three years of production and sales limits, after Russia rejected cuts proposed by Saudi Arabia and other OPEC producers. Consumers said the oil companies' complaints about sinking prices prompted the Trump administration to cajole oil-producing countries to slash production, boosting industry profitability. Within about two years, the price of a barrel of oil soared above $100 from less than $20, while the U.S. retail price of a gallon of gas more than doubled , opens new tab to over $5. In Monday's decision, Circuit Judge Ryan Nelson said courts shouldn't second-guess White House foreign policy, and had no authority to order Russia and Saudi Arabia how to manage their oil resources. He also said the early 2020 start of the COVID-19 pandemic drastically reduced oil demand, and was an "obvious alternative explanation" for why oil companies cut production. Monday's decision upheld a January 2023 ruling by U.S. District Judge Jeffrey White in Oakland, California. Nelson was appointed to the bench by Trump, a Republican. The other judges on Monday's panel, Ronald Gould and Richard Tallman, were appointed by Democratic President Bill Clinton. The case is D'Augusta et al v American Petroleum Institute et al, 9th U.S. Circuit Court of Appeals, No. 23-15878. Sign up here. https://www.reuters.com/legal/big-oil-companies-defeat-us-consumer-lawsuit-over-production-prices-2024-09-16/
2024-09-16 19:26
Loonie trades in a range of 1.3567 to 1.3607 Canadian home sales rise 1.3% in August Price of U.S. oil settles 2.1% higher 2-year yield hits a 2-year low at 2.862% TORONTO, Sept 16 (Reuters) - The Canadian dollar steadied against its U.S. counterpart on Monday but lost ground against most other Group of 10 currencies as investors awaited domestic inflation data and an interest rate decision by the Federal Reserve. The loonie was trading nearly unchanged at 1.3590 to the U.S. dollar, or 73.58 U.S. cents, after moving in a range of 1.3567 to 1.3607. It was the only G10 currency other than the yen not to gain ground against the U.S. dollar (.DXY) , opens new tab as expectations increased that the Fed could cut by 50 basis points, rather than 25, at a policy decision on Wednesday. Last Wednesday, the loonie touched its weakest level since Aug. 21 at 1.3622. The larger move could give the Bank of Canada "a green light to be able to consider something like a jumbo rate cut themselves," said Michael Goshko, senior market analyst at Convera Canada ULC. "I don't know of any other central bank that has worried about the risk of inflation undershooting the target." The Bank of Canada has said it could increase the size of rate cuts if the economy needs a boost. Since June, the central bank has lowered its benchmark rate three times by a quarter-percentage-point to leave it at 4.25%. Canadian home sales rose 1.3% in August from July but were down 2.1% on an annual basis. Canada's consumer price index report, due on Tuesday is expected to show inflation slowing to an annual rate of 2.1% in August from 2.5% in July. The price of oil, one of Canada's major exports, settled 2.1% higher at $70.09 a barrel, extending its rebound from a recent 16-month low. Canadian bond yields eased across the curve. The 2-year was down 4.9 basis points at 2.898%, after earlier hitting its lowest level since June 2022 at 2.862%. Sign up here. https://www.reuters.com/markets/currencies/c-lags-most-g10-currencies-ahead-domestic-inflation-data-2024-09-16/
2024-09-16 19:10
NEW YORK, Sept 16 (Reuters) - Futures on the fed funds rate, which measures the cost of unsecured overnight loans between banks, have priced in a nearly 60% chance of a 50 basis-point rate cut by the Federal Reserve on Wednesday, LSEG calculations showed. That was up from 45% last Friday and from 25% following the release of an in-line U.S. consumer price index report last week. The Fed will hold a two-day policy meeting starting on Tuesday and is widely expected to reduce the benchmark overnight interest rate currently in the 5.25% to 5.50% range. The rate reduction, however, has turned into a coin flip between 50 and 25 bps over the last few days. For 2024, rate futures have factored nearly 120 bps in easing, and about 250 bps in cuts by September of 2025. Up until last Friday, the odds were pretty much tilted toward a 25-bp cut. But reports by the Wall Street Journal and Financial Times late Thursday saying a 50-bp rate reduction is still an option, and comments from former New York Fed President Bill Dudley arguing for an outsized cut, triggered a pivot in market expectations. On Monday, Dudley reiterated his stance on the need for the Fed to do a big cut on Wednesday. In an opinion piece on Bloomberg News, the former Fed official noted that the Fed's dual mandate of price stability and maximum sustainable employment has become more balanced, which suggests monetary policy should be neutral, neither restrictive nor boosting economic activity. "Yet short-term interest rates remain far above neutral. This disparity needs to be corrected as quickly as possible," Dudley wrote. But whether the Fed goes 50 or 25 bps, Boris Kovacevic, global macro strategist at Convera in Vienna, said it does not really matter in the end "given the long lag and transmission mechanism, but it does matter in terms of how they want to be perceived." "If they go 50, there is chance that the Fed has some information that investors don't have and that recession risks are more likely than currently anticipated and priced in." Sign up here. https://www.reuters.com/markets/rates-bonds/us-interest-rate-futures-see-higher-odds-super-sized-fed-move-2024-09-16/
2024-09-16 18:55
LONDON, Sept 16 (Reuters) - Hedge fund Citadel said on Monday it has hired London-based portfolio managers for its Fixed Income and Macro business adding three new hires to start from November through next year. The $63 billion hedge fund said it has hired Bernard Singer as a portfolio manager and Ravi Vinda, as an associate portfolio manager, both joining from hedge fund Brevan Howard. They will both start from mid-2025. The investment manager also said in a statement it had hired Christine Boykiw as an associate portfolio manager who would take up her new role in November from UK bank, Barclays (BARC.L) , opens new tab. Jacob Westin, previously a portfolio manager at Point72, also joined this part of the business in London in August. The hires are a part of a broader push behind the hedge fund's macro-economic trading group, said a person familiar with the matter. Two of the hires, Vinda and Boykiw will be part of Sam Finkelstein's portfolio development programme. Reuters reported in February that Finkelstein had been hired from Goldman Sachs Asset Management to lead a programme in its fixed income and macro business for developing portfolio managers. Citadel, unlike some multi-strategy hedge funds, does not work in so-called "pods" which are not allowed to communicate, but rather in teams collaboratively. "Attracting exceptional talent and investing in their professional success has been a key driver of Citadel's long-term performance and we look forward to welcoming Bernard, Ravi and Christine to our growing fixed-income and macro team," the Citadel statement said. Multi-managers such as Citadel have continued to expand headcount this year. Over the last 12 months, these hedge funds added an estimated roughly 2,400 new hires an increase of almost 15%, a note from Goldman Sachs said earlier this month. Singer and Vinda declined to comment. Westin and Boykiw were not immediately available. Sign up here. https://www.reuters.com/business/finance/hedge-fund-citadel-expands-global-fixed-income-macro-team-2024-09-16/
2024-09-16 17:42
NEW YORK, Sept 16 (Reuters) - The Federal Reserve will likely not cut U.S. interest rates as deeply as the bond market expects due to a resilient economy and inflation remaining sticky, the BlackRock Investment Institute said in a note on Monday. The U.S. central bank is expected to cut interest rates for the first time in over four years on Wednesday, with speculation over the size of the first rate cut creating volatility across financial markets in the run-up to the decision. Traders in rates futures are betting on about 120 basis points in cuts this year and a total of 250 basis points by the end of 2025. This would bring interest rates to about 2.8%-2.9% by the end of next year from the current 5.25%-5.5% range. A reduction in interest rates of this magnitude reflects recession fears that are overdone, as well as expectations of a sustained decline in inflation which, instead, is likely to cool off only temporarily, said the institute, an arm of BlackRock, the world's largest asset manager. "As the Fed readies to start cutting, markets are pricing in cuts as deep as those in past recessions. We think such expectations are overdone," it said. Despite a recent uptick in unemployment, employment is still growing, and supply constraints will continue to put upwards pressure on prices, it said. "An aging workforce, persistent budget deficits and the impact of structural shifts like geopolitical fragmentation should keep inflation and policy rates higher over the medium term," it said. The institute is underweight, or bearish, on the prospects of short-term U.S. Treasuries as current yields reflect expectations of deep rate cuts. It maintains an overweight on U.S. stocks, instead, on optimism around the impact of artificial intelligence. Sign up here. https://www.reuters.com/markets/rates-bonds/fed-rate-cuts-will-not-be-deep-market-expects-says-blackrock-2024-09-16/
2024-09-16 17:22
LONDON, Sept 16 (Reuters) - Forty of the world's leading commercial banks have joined a G7-dominated pilot scheme with the New York Fed and leading central banks from Europe, Korea and Japan for a new digital currency platform designed to speed up and enhance cross border payments. The Agora project involves seven central banks in total and will aim to see if so-called 'tokenised' bank deposits can be used in combination with tokenised central bank digital currencies (CBDCs) in a faster and more advanced system. It will focus on what are known as 'wholesale' CBDCs - which are used only between banks rather than by the public - and look to iron out the challenges of different time zones, legal requirements and regulatory and technical systems. The list of commercial banks taking part includes many of the world's biggest lenders such as JPMorgan (JPM.N) , opens new tab, HSBC (HSBA.L) , opens new tab, UBS (UBSG.S) , opens new tab and Japan's MUFG. Led by the Bank for International Settlements and banking group the Institute of International Finance, it also cements something of a divide in the development of CBDCs, between Agora project and another called mBridge launched in 2021 between the central banks of China, Hong Kong, Thailand and the United Arab Emirates and recently joined by Saudi Arabia. (This story has been corrected to say that the project is led by the Bank for International Settlements and IIF, not G7, in the headline, and paragraphs 1 and 5) Sign up here. https://www.reuters.com/markets/currencies/top-commercial-banks-join-g7-led-central-bank-digital-currency-trial-2024-09-16/
