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Kashkari: Fed is "dead serious" about lowering inflation
Neel Kahkari, Minneapolis Federal Reserve President, said on Wednesday that U.S. employment looks "a bit better" now than earlier in the year, and that the Iran War has worsened an already high inflation rate. These views underscore Kashkari's preference to leave the Fed open to rate increases. Kashkari stated that he was "dead serious" about bringing the?inflation down at a St. Paul Area Chamber?event in St. Paul Minnesota. Kashkari is one of the three Fed policymakers that dissented at the Fed meeting in April. He advocated for a change in the Fed statement after the meeting to reflect an openness to interest rate increases and not only rate cuts. He spoke as 'the U.S. Senate was preparing to confirm Kevin Warsh, as the Fed’s new chairman. Donald Trump said he expected the Fed to reduce rates under Warsh. "The Federal Reserve chair has a great deal of influence." The chair sets the agenda. What topics will we be discussing? What types of?things are we going to consider in this 'deliberation?' Kashkari responded to a question on whether Warsh would deliver the rate reductions Trump desires. "But, when it comes to a vote (on interest rate), the chair is only one of twelve voters." So a new chair, no matter who it is, and whatever the situation, will need to convince his or her peers that this course of action is best.
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Poland claims to have intercepted Russian aircraft in the Baltic Sea
?Poland's air force intercepted an?Russian reconnaissance aircraft in international waters of the?Baltic Sea. The Russian flight was deemed a provocative act and a potential threat. The machine flew in international airspace with its?transponders off and without a flight plan. The Polish army stated in a social media post that there was no violation to?Polish airspace. Defence Minister Wladyslaw KsiniakKamysz stated that flights without transponders could be a 'threat to other aircraft' and 'that its pilots would always respond immediately. "Our aircraft intercepted an Il-20 Russian reconnaissance aircraft in international waters of the Baltic Sea." "This is yet another aggressive act by the Russian?Federation, and a test for our air defense system," he wrote in X. The Polish Army announced earlier?on Wednesday that?it?had conducted military aviation operations within Polish airspace in response to?Russian strikes against?Ukraine. The Operational Command of the Polish Armed Forces stated on X that "Ground-based radar reconnaissance and air defence systems which were activated have returned to standard operational activities."
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Gold continues to decline as inflation worries weigh on rate-cut bets
The gold price fell a second time on Wednesday as inflation fears fueled by war weighed on the expectations for interest rate reductions. Markets were also looking forward to the upcoming summit between U.S. president Donald Trump and Chinese President Xi Jinping. At 1:59 pm EDT (1759 GMT), spot gold was down by 0.6% to $4,686.35 an ounce. U.S. Gold Futures closed 0.4% higher at $ 4,706.70. U.S. Producer Prices increased more than expected in April, posting the biggest gain since early 2020. This is the latest sign that inflation has accelerated amid a 'war on Iran. Peter Grant, senior metals analyst at Zaner Metals and vice president, said that inflation remains sticky, and expectations of higher rates were reinforced. This has been pushing gold down the last two weeks. Gold is often seen as a hedge to inflation. However, higher interest rates tend to?pressurize the metal. The data released on Wednesday shows that the U.S. consumer price index increased in April by a further 3%, and its annual rate has reached its highest level in three years. Last month, the U.S. Central Bank left its benchmark interest rate at 3.50%-3.75%. According to CME Group's FedWatch, traders have priced in a U.S. interest rate cut for this year. Trump was in China to make deals, to maintain the fragile trade truce between China and the second largest economy of world, and to boost his public approval ratings, which were hurt by his war against Iran. India increased its import tariffs for?gold and?silver to 15%, up from 6%. This was done to reduce the amount of metals purchased overseas and to ease the pressure on the country's reserves of foreign currency. India is the?second largest consumer of precious metals in the world. Grant stated that the news of higher import duties from India could create a demand concern and be a long-term obstacle. After hitting its highest level in the past two months, spot silver rose 1.6% to $87.28 per ounce. Platinum rose 1.6% to $2.159.58 after reaching its highest level since 12 March. Palladium rose 1.2% to $1,508.39. Ashitha Shivprasad reported from Bengaluru, and Alexander Smith, Ali Williams and Diti Pjara edited the article.
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Gold prices in India surpass $200/ounce records amid profit-taking
Bullion dealers reported that gold discounts in India reached a record high of over $200 per ounce on Wednesday. This was due to the surge in price after the 'import duty increase, which triggered investor selling in a weakening 'demand. India raised its import tariffs for gold and silver from 6% to 15% on Wednesday as part of an effort to reduce overseas purchases of these metals and relieve pressure on the country’s foreign exchange reserves. "Discounts were insane in the physical market." "We were double-checking before we executed deals," said the bullion division chief of a Mumbai-based bank who has been trading gold for over two decades. Discounts offered by dealers in India On Wednesday, the official domestic price of gold was $17 per ounce, but that increased to up to $207 per ounce, including 15% import duty and 3% sales tax. Mumbai-based dealers at private banks said that the duty increase triggered a steep rise in gold prices in their locality, which led some investors to sell gold at deep discounts in order to take advantage of gains. The two bullion dealers refused to be identified as they weren't authorised to talk to the media. The price of gold futures on the?second largest consuming market in the world jumped 7.2% to 164 497 rupees for 10 grams. This was the highest level seen in over two months. The bullion dealer stated that investors?were also able to make profits on gold exchange-traded fund (ETFs) and this was adding to the supply?into the market. Ashok Jain of Mumbai's gold wholesaler,?Chenaji Narsinghji, stated that retail buyers and jewellers were on the sidelines. This increased selling pressure, pushing discounts up to "unusual high levels". A bullion dealer in Chennai also expressed concerns that the recent duty hike could increase smuggling as it increased?margins for gray-market operators from 9% to around 18%. Grey market operators sell gold for cash in order to avoid duty, which allows them to offer the product at a discount to market price by evading tax. (Reporting by Rajendra Jadhav)
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Sources claim that the Brazilian government will announce a measure to subsidise gasoline.
Two sources familiar with the matter said that the Brazilian government will announce an executive order on Wednesday to subsidize gasoline. The goal is to cushion consumers from the higher oil prices caused by the Middle East conflict. In a?statement, the government announced that it would hold a?press conference at 3 p.m. local (1800 GMT) on?Monday to announce "measures" for the fuel industry aimed at "addressing war's effects," but did not give any further details. According to a?source, the?subsidy would be paid to producers and importers of gasoline who will then pass on savings to consumers. The goal is an effect that's?similar to partial reductions in federal fuel tax. Last month, the government announced subsidies for diesel fuel and liquefied petroleum gas (LPG), as well as lower taxes on biodiesel and jet fuel. High fuel prices are a concern to?President Luiz nacio Lula da Silva who is expected to run for reelection in this year. (Reporting and writing by Bernardo Caram, Editing by Gabriel Araujo).
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Egypt signs $1.5 billion loan agreement with ITFC for food and energy security
Egypt and the Islamic Trade Finance Corporation signed a $1.5 billion loan on Wednesday, to support the food and energy security of the country in the north. ITFC CEO Adib Yourssef Al?Aama stated during the signing ceremony that the ITFC had approved more than $24 billion of funding for Egypt since?2008 to support the energy sector, food security and small and medium enterprises. The funding includes $8.8 Billion for the General Authority for Supply Commodities to support Egypt’s imports of?food?commodities. This includes 12.6 Million tons of wheat. The ITFC has also helped Egypt to pay off arrears owed by foreign oil companies that it has pledged to fully repay by the end June. Egypt's bread subsidy program, which costs up to $2.6 billion per year and relies on by 70 million people, is one of the largest wheat importers in the world. The government announced last week that it could end the current subsidy programme and replace it with cash transfers beginning in July. The loan is coming as Egypt's economy absorbs the shockwaves from the war in Iran. This will put fresh pressure on the?country that is still navigating its fragile reform path under the $8 billion IMF program. The war cast a shadow on Egypt's fragile economic stability. It remains heavily reliant upon hot money inflows for financing, and on gas imports for energy.
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Tyson Foods CFO: 'Spotty' expansion of US cattle herd by Tyson Foods.
Tyson Foods' Chief Financial Officer Curt calaway stated on Wednesday that U.S. producers are "spotty",?in their efforts to rebuild a nation's reduced herd. Supplies will remain tight as low inventories pushed beef prices to record levels. As part of his efforts to reduce domestic beef prices, President Donald 'Trump' has been considering possible executive actions that would lower tariffs on imported beef and regulations for producers. Prices for milk, eggs and other grocery staples are down since Trump's presidency in January 2025. However, beef prices have increased by over 16%. HIGH?PRICES AND DROUGHT WORRIES Ranchers are slow to keep female cows, also known as heifers, for breeding. This is a crucial step in rebuilding herds, and increasing beef production. Cattle supplies have dropped to their lowest level in 75 years by 2026. Producers have instead sent animals to be slaughtered in order to profit from high prices, and due concerns about the 'dry weather' limiting grazing land. Calaway, speaking at the BMO Investor Conference in New York, said that cattle supplies would remain tight until 2027. He added that heifer retention is "spotty" and "regional." He said, "We will still manage with a limited cattle supply." Meatpackers are losing money on their beef business because rising cattle costs outweigh the gains made by higher beef prices. Tyson closed a beef facility in Nebraska and reduced operations at another one in Texas, laying off thousands workers. The beef prices rose due to a strong 'demand' and ranchers cutting their herds as grazing lands in the western U.S. were affected by drought. The Trump?administration also halted the imports of Mexican cows to prevent the New World Screwworm parasite. Calaway stated that Tyson's business of prepared foods, which uses raw materials such as beef and pork, had seen commodity inflation in seven out of eight quarters. The Iran War has accelerated inflation for consumers. Producer prices in April posted their largest increase in four-years. Donnie King, CEO of Donnie King Enterprises, said that there is a "point" where consumers will turn away from a product because of the price. "Inflation" is a real thing. It persists. "We don't think that will change in any meaningful way."
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Rate cut bets are impacted by inflation worries as gold prices ease
The gold price fell a second time on Wednesday as inflation fears fueled by war weighed down on expectations of interest rate reductions. Markets were also looking forward to the upcoming summit between U.S. president Donald Trump and Chinese President Xi Jinping. At 12:38 pm EDT (1638 GMT), spot gold fell 0.3% per ounce to $4,701,50. U.S. Gold Futures rose 0.5% to $4 709.50. U.S. Producer Prices increased more than anticipated in April, posting their largest gain since early 2022. This is the latest sign that inflation has accelerated amid 'the Iran War. Peter Grant, senior metals analyst at Zaner Metals and vice president, said that "inflation is still sticky, so expectations of higher rates were reinforced." Gold is often seen as a hedge to inflation. However, higher interest rates tend to?pressurize the metal. TRUMP'S TRIP IN CHINA The data released on Wednesday shows that the U.S. consumer price index increased in April by a further 3%, and its annual rate has reached its highest level in three years. Last month, the U.S. Central Bank left its benchmark interest rate at 3.50% - 3.75%. According to CME Group’s FedWatch, traders have priced in a U.S. interest rate cut this year. Trump was in China to make deals, maintain the fragile trade truce between the world's second-largest economy and boost his public approval ratings, which were shattered by his war against?Iran. India has also increased import tariffs for gold and silver from 6% to 15% in an effort to reduce overseas purchases and relieve pressure on its foreign exchange reserves. India is the second largest consumer of precious metals in the world. Grant stated that the news of higher import duties has caused some?concerns about demand and could be a long-term headwind. Spot silver increased 3% to $89.13 an ounce, the highest level for two months. Platinum rose 2.8% to $2186.55 after reaching its highest level since the 12th of March. Palladium rose 2% to $1,521.12. Ashitha Shivprasad, Bengaluru. Alexander Smith and Alison Williams edited the article.
Powell's comments and trade war weigh on the dollar, stocks, and stock prices
The dollar was anchored near three-year lows on Thursday, after Federal Reserve Chairman Jerome Powell warned about the risks of slowing the growth of the economy and increasing prices due to tariffs.
After a bruising trading session on Wednesday, the spotlight remained on technology stocks in light of warnings issued by bellwethers Nvidia & ASML and earnings from Taiwanese TSMC.
Gold prices, which are considered safe havens, continued to rise, setting yet another record in the early hours of trading on Thursday. Powell's remarks that U.S. growth was slowing led Treasury yields to fall.
Stock markets in Asia were hesitant after the U.S. stock market closed with a sharp decline. South Korea's benchmark stock index rose 0.4%, while Taiwan stocks dropped 0.5%.
The Nikkei 225 index rose 0.7%, while the yen fell as Japan began talks with the U.S. President Donald Trump said that there had been "big progress" in the surprise decision to directly negotiate with the Japanese delegation.
Powell also said that the Fed will wait to see more data about the direction of the economy before it makes any interest rate changes.
Tom Graff is the chief investment officer of Facet. "Powell's in a tough spot," he said. "The Fed cannot act proactively to stem potential economic weakness because tariffs will likely also cause inflation."
They simply cannot cut rates when inflation is rising. "This is doubly true given that inflation is already very high."
The health of the semiconductor industry will be gauged by the earnings forecast from Taiwan Semiconductor Manufacturing Co., the world's biggest contract chipmaker.
The stock market took a beating on Wednesday, after Dutch giant ASML said that tariffs would increase uncertainty about its outlook for the years 2025 and 26.
AI pioneer Nvidia warned of a $5.5billion hit after Washington restricted the export of its AI processor designed for China.
"The chipmakers' demand could be affected if there is a recession, for whatever reason, said Chris Zaccarelli. Chief investment officer at Northlight Asset Management.
But there is the possibility that there could be a decrease in demand if there were tariff barriers, or if short-term costs are imposed.
Early trading saw Chinese stocks fall as fears of a escalating U.S. China trade war dampened sentiment. Blue-chip stocks were down 0.5% while Hong Kong's Hang Seng index was up 0.6%.
TRADE TALKS
Investors have focused on the fast-changing trade policies of Trump, as they wait to see whether new agreements will be reached between the U.S.
Investors dumped U.S. Treasuries and other assets last week because of uncertainty about the implementation of trade levies.
In the Asian hours, the benchmark 10-year Treasury yield remained at 4,302% after falling by over 4 basis points during the previous session.
The euro fell 0.33% to $1.1364, but it was still close to its three-year-high reached last week. The dollar index (which measures the U.S. money against six other currencies) was slightly higher for the day, at 99.562.
The yen reached a seven-month peak earlier in the session, before falling to 142.60 dollars per yen after Japan's Economy Minister Ryosei Acazawa stated that foreign exchange was not discussed during the Washington trade talks.
Gold prices have been the focus of commodities as they reached yet another record-high, reaching as high as 3,357.40 an ounce in the morning session, due to the safe-haven flow. Gold last stood at $3,337.4 an ounce.
The prospect of a tighter supply has helped oil prices extend their gains. Brent crude futures increased 0.38%, to $66.1 per barrel. U.S. West Texas Intermediate crude rose 0.58%.
(source: Reuters)