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McGeever: Investors are hearing Powell clearly because Treasury yields have plunged.
The decline in Treasury yields against the backdrop of record stock prices, tight spreads on credit and persistent inflation suggest that investors have accepted Federal Reserve Chairman Jerome Powell's view that policy is driven by employment rather than inflation. There's even a danger that a feedback loop could take hold whereby concerns about the labor market depresses yields and exacerbates fears of an economy slowing down, which in turn could maintain downward pressure on the yields. CPI inflation, a rare indicator of economic growth, will be released on Friday to investors who have been deprived of official data for three weeks due to the government shutdown. It's just not what they wanted. The report due on Friday is expected to reveal that the core annual inflation rate remained at 3.1% for September. This is more than a point higher than the Fed's target of 2%. Since nearly five years, the annual core CPI is at 3% or more almost every month. Bond market will likely shrug this off. Last week, the yield on two-year Treasury bonds fell to its lowest level since August 2022. This reflects investors' beliefs that the Fed would cut rates again next weekend, in December and even into next year. The 10-year yield has fallen below 4.00% and reached its lowest closing daily level in over a year. Even if the inflation rate is on the higher side, it's unlikely that this will cause a spike in yields. ASSESSING THE FRAGILIOUS LABOR MARK Investors have filled in the blanks with their own doomsday scenarios, as there were no official economic statistics during the three-week shutdown of the government. The slump in employment growth is what they have been wallowing over. The dramatic decline in job creation, which has been mostly offset by the shrinking labor pool until now, is alarming. Goldman Sachs economists outlined on Monday five reasons for the rapid decline in job creation: a slowdown of immigration, a reduction in government hiring and funds, adoption of artificial-intelligence technology; tariffs and trade uncertainty as well as costs related to tariffs; and macroeconomic risk. The underlying trend in payroll growth is now 25,000 per month, 125,000 less than the projections made in January. This is also below the "breakeven pace" of job growth required to stabilize unemployment, which was estimated at 75,000. This is on the higher side of estimates for breakeven. Anton Cheremukhin of the Dallas Fed estimates it at 30,000. This is down from 250,000 just two years ago. A low level of break-even job growth can help keep the unemployment rate down, but masks an even greater fragility on the labor market. Net job growth can quickly turn into job losses if the economy deteriorates. MESSAGE IN BARREL The Fed is well aware of this danger. Chair Powell indicated last month that fear of a rapid deterioration of the labor market was the main reason for the decision to continue cutting interest rates, even when inflation exceeded the 2% target. Investors and the Fed may both have other reasons for looking past the inflation rate that is still high. One is the signals from the oil markets. The link between the crude oil price and inflation may be weaker now, but that doesn't mean it should be ignored. Brent crude is near $60 per barrel, and oil prices are at a five-month low. This is down about 15% compared to the same time last year. The majority of energy analysts, such as those at the International Energy Agency (IEA), predict a persistent imbalance in supply and demand for the coming year. This is due to both increased production and weakened demand. If Eurasia Group analysts have it right, the glut could drive prices down to $55 per barrel by the end this year. This would be a 5-year low. Oil prices that are moderate have been exerting downward pressure on the inflation rate almost all year. Although cheaper crude oil won't help inflation reach the Fed's target of 2%, it can explain why investors and the Fed have turned their attention away from inflation towards the deteriorating labor market.
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Fortescue maintains its fiscal 2026 outlook, despite a rise in Q1 iron ore shipments
Fortescue, an Australian company, reported a 4.2% increase in iron-ore shipment for the first quarter on Thursday. The firm also set a new record for the first quarter production due to higher hematite shipping. The firm's hematite operation shipped 47.6 millions metric tons (Mt) in the first quarter. This was 3.3% more than the previous year. Fortescue has announced that it has drawn the loan in yuan denominated worth 14,2 billion Chinese Yuan ($1,99 billion) it secured in August for its decarbonisation plan. The five-year term loan facility, with an interest rate of 3.8% per year, was supported by major Chinese, Australian, and international lenders at the time. These included Bank of China, ICBC, and others. The fourth largest iron miner in the world saw its production costs drop 9.9% to $18.17 per metric tonne of wet iron during the first quarter. Fortescue has maintained its guidance of 195-205 Mt for fiscal 2026.
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US sanctions Russian oil firms as Moscow conducts nuclear drills
On Wednesday, the United States imposed sanctions on Russia's largest oil companies and accused Russia of not being committed to ending the conflict in Ukraine. This was as Moscow carried out a large-scale nuclear weapons training exercise. New sanctions were announced one day after the collapse of plans for a meeting between U.S. president Donald Trump and Russian president Vladimir Putin. Trump told reporters that he cancelled the summit because "it just didn't feel right." The U.S. Treasury Department stated that Russia's largest oil companies Rosneft, and Lukoil were targeted to hinder Moscow's ability fund its war machine. This was a dramatic change for the White House. It has alternated between a conciliatory and a pressurizing approach to secure peace in Ukraine. Trump only appeared to be ready to delay any new action against Moscow last week. Scott Bessent, U.S. Treasury secretary, said: "Now is time to stop killing and for an instant ceasefire." After Bessent's remarks, oil prices rose by over $2 per barrel. Trump has been resisting pressure from U.S. legislators to impose sanctions on energy, in the hope that Putin would agree and end the conflict. Trump said that he was ready to act now, as there is no end in sight. The U.S. President said that he is not yet ready to give Ukraine the long-range Tomahawks it has requested. Trump told reporters that it would take at least six month for the Ukrainians to be able to use these missiles. He was meeting with NATO Secretary General Mark Rutte. Trump stated that he would love to see Xi Jinping use his influence to stop the fighting before a meeting with Chinese President Xi Jinping next week in South Korea. Xi Jinping and Putin formed a strategic partnership between their countries. The Kremlin has released a video of General Valery Grasimov, who is the head of the General Staff and reports to Putin about the drills. Russia claimed to have fired missiles, from aircraft and submarines, as well as intercontinental ballistic missiles capable of hitting the United States. The Russian Defence Ministry reported that its Tu-22M3 strategic Bombers, which have a long range and can fly over the Baltic Sea at high altitudes, were escorted by foreign fighter jets - most likely NATO states - in various places. Putin has warned Kyiv and Western allies of Russia's nuclear power at key moments during the war in Ukraine. NATO also conducted nuclear deterrence drills this month. The rotating Danish presidency of the EU announced on Wednesday that the EU countries had also approved the 19th package against Russia, including a ban on Russian gas liquefied imports. The Wall Street Journal reported that the United States had lifted restrictions on Ukraine's usage of long-range missiles supplied by Western allies. This would have allowed Ukraine to increase its attacks on targets in Russia. Trump denied the report in a post on social media. Sweden announced on Wednesday that it had signed a Letter of Intent to Export Gripen Fighter Jets to Ukraine. This comes as European governments work to strengthen Kyiv's defenses in a conflict that has lasted for three years, eight months, since Russia's invasion. Ukrainian pilots are in Sweden testing the Gripen. It is a rugged, low-cost alternative to aircraft like the F-35 from the United States. Volodymyr Zelenskiy, the president of Kyiv, said that the country hoped to start using Gripens in 2013 and would purchase at least 100. TRUMP DOESN’T WANT WASTED MEEEING As the U.S. led peace effort was surrounded by renewed uncertainty, Russia and Ukraine launched heavy missile attacks against each other overnight. Last week, after months of diplomatic stalemate, Putin and Trump announced unexpectedly that they would be holding a summit in Hungary. The Kremlin stated the event could happen within two weeks. The White House announced the following day, after a telephone call between top diplomats of the two countries on Monday, that Trump did not have any plans to meet Putin in the "immediate future". Trump claimed he didn't want a wasteful meeting, something that the Kremlin also said Putin wanted to avoid. Russian officials, however, said that preparations for a summit continued. Dmitry Peskov, Kremlin's spokesperson, told reporters that the dates for a summit have not yet been determined, but preparations are ongoing. Three sources said that the summit was delayed after Russia reiterated its terms to the U.S. for a peace agreement, including the requirement that Ukraine cede the entire southeastern Donbas area. This was a rejection to Trump's last-week statement that both sides must stop at the frontlines. Sergei Ryabkov, the Russian deputy foreign minister, was quoted as saying that he couldn't confirm that Moscow has conveyed their position in the report by RIA. Shares in European Defence Companies are on the Rise Trump, in the first nine-months of his second term has been pushing for an end to this conflict, which is the deadliest one Europe has seen since World War Two. He has been critical of Zelenskiy at times, but he also expressed frustration towards Putin. The delay in the Putin-Trump Summit has led to a rise in European defence shares. The majority of European governments have pledged to increase military spending in order to meet Ukraine's defence needs. On Thursday, the leaders of the European Union will discuss a plan to use frozen Russian assets in order to extend a $163-billion loan to Ukraine. Moscow has declared that the scheme is theft and has promised to retaliate. Senior Ukrainian officials told Kyiv that it should be able to decide how to spend its funds and not just buy arms from European countries.
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Brazil's Eletrobras now known as Axia Energia
The Brazilian power company Eletrobras has announced that it will change its name from Eletrobras to Axia Energia. This is a move it says won't affect any of the firm's contractual, business or regulatory obligations. Eletrobras said in a filing that the ticker for its ordinary shares listed on the Sao Paulo Stock Exchange "ELET3", will change to "AXIA3", starting November 10. The new identity will gradually be incorporated into its communications and assets. The name change removes all references to Brazil as a result of the state owning the company. Eletrobras completed its privatization in mid-2022. However, the Brazilian government still owns almost 30% of total shares. Eletrobras has taken steps to distance itself from state-related issues in recent years. The firm, for example, last week Its stake in the state nuclear energy company Eletronuclear. It is responsible for 37% of all transmission lines and 17% of total power generation capacity in the country. The company has 81 installed plants with 47 hydroelectric, 32 wind, and one solar. In exchange for increased representation on the board of the company, the Brazilian government has pledged to stop questioning its 10% voting restriction in the firm, which is imposed by any shareholder or group. The former president Jair Bolsonaro privatized the company during the term of Luiz Inacio Lula Da Silva. Reporting by Isabel Teles and Alberto Alerigi Jr.; Writing by Fernando Cardoso, Editing by Brendan O'Boyle & Diane Craft
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Netflix and gold stocks fall as Gold continues to decline
On Wednesday, gold prices fell again, just a day after it had experienced its biggest single-day decline in five years. Most major stock indices also declined, with Netflix's shares falling after disappointing outlook. Investors booked profits, and gold, which was one of the best performing trades for the year, fell. The price of gold is still on track to have its best year since 1979's oil crisis. It has risen more than 50% this year. Spot gold dropped 1.49%, to $4.062.39 per ounce. In afternoon trading, shares of Netflix fell about 10% and Wall Street's major indexes plunged sharply. Tesla's earnings will be released after the close of trading, kicking off the earnings season for the Magnificent 7 group of megacap companies. Tesla shares are down around 2.5%. Investors have also taken note of developments in the world of trade. reported According to three U.S. officials and a U.S. government official, the Trump administration has been considering a plan that would curb software-powered exports from China ranging from laptops to jet engine to punish Beijing for its latest round of restrictions on rare earth exports. Oliver Pursche is the senior vice president at Wealthspire Advisors, located in Westport, Connecticut. He said that given the gains and sharp rally we have made in the past year, especially since April 1, combined with concerns about future economic growth, and the lack of data because of the government shutdown, "there's no need to move materially in either direction." But maybe, "you're taking some profits, you're doing some rebalancing," he added. The Dow Jones Industrial Average dropped 392.08 points or 0.84% to 46,529.77. The S&P 500 declined 67.23 or 1.01% to 6,667.43. And the Nasdaq Composite was down 385.72 or 1.69% to 22,567.94. The MSCI index of global stocks fell 7.29 points or 0.73% to 987.56. The STOXX 600 Index fell by 0.18%. However, London stocks rose for the third day in a row as investors bet more on interest rate reductions from the Bank of England following data showing inflation remained steady. The blue-chip FTSE 100 rose 0.9%. The yield on U.S. Treasury bonds fell, but the market remained range-bound. As the U.S. shutdown entered its 22nd day without a resolution in sight, the U.S. Treasury rates dropped. The yield of the benchmark 10-year U.S. notes dropped by 1 basis point to 3.953% from 3.963% at late Tuesday. Investors have priced in almost a full 25 basis-point cut to the Federal Reserve's rate when it meets next week. Due to the shutdown, there are no economic statistics from the United States. This could leave policymakers in a blindingly dark meeting. They may also be divided on which risks should receive the most attention. The yen increased against the dollar. According to sources, the new prime minister Sanae Takaichi has been preparing a stimulus package that will likely exceed last year's $139.19 billion (13.9 trillion yen) in order to help families combat inflation. Next week, the Bank of Japan will also meet. Like the ECB of Europe, it is expected that the central bank will maintain its current rate. The dollar index measures the greenback in relation to a basket including the yen, the euro and other currencies. The dollar fell by 0.14%, to 98.84. The euro rose 0.15% to $1.1615. The dollar fell 0.18% against the Japanese yen to 151.66. The oil prices rose. U.S. crude oil rose by 2.25%, to $58.53 per barrel. Brent was up 2.05% for the day at $62.58 a barrel.
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Brazil keeps $4 billion after partial victory on Tupi Field dispute
The Solicitor General's Office announced on Wednesday that Brazil had won a partial win in an international dispute over the Tupi oilfield, against a Petrobras-Shell-Petrogal consortium. This allowed the country to retain tax payments of 22.2 billion Reais ($4.11billion) and keep the money. Arbitration court of the International Chamber of Commerce is mediating the dispute between Brazil's oil regulator ANP and the International Chamber of Commerce over the tax regulations that govern the size of the field. The court's decision is a slight defeat for Brazil. It also determined that compensation can be paid in other forms than cash payments in the future if the amount of compensation is higher by 30% than the quarterly deposits since 2019, when the federal court ruled to the government's benefit. Shell declined to make a comment. Petrobras (which owns a 65% share in the consortium) did not respond immediately to a comment request. Tupi is Brazil's national animal. highest Producing field with more than 1 million barrels equivalent of oil per day. The consortium claims that Tupi includes Cernambi as well. However, the government views them as a single large field whose oil revenue is taxed at a higher rate.
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Gold continues to fall as investors take profits before US inflation data
Investors booked profits before the U.S. key inflation data that is due this week, which will determine whether gold prices are still rising or falling. As of 01:42 pm, spot gold was down by 1.7%, at $4,054.34 an ounce. ET (1742 GMT) after reaching as high as $4,161.17 in earlier session. U.S. Gold Futures for December settled at $4,065.40 an ounce, a 1.1% decrease. Gold prices are at multiple record highs this year and have gained 57%. This is due to geopolitical tensions and economic uncertainty as well as expectations of U.S. interest rate cuts. Prices dropped 5.3% on the Tuesday after hitting a record-high of $4,381.21 during the previous session. David Meger is the director of metals at High Ridge Futures. The 21-day moving median at $4,005 is a technical support for gold. The core inflation rate is expected to remain at 3.1% for September, according to Friday's U.S. Consumer Price Index report. This report was delayed because of the U.S. Government shutdown. Investors are almost fully pricing in a rate cut of 25 basis points at the Federal Reserve meeting next week. In low-interest-rate environments, gold, which is a non-yielding investment, tends benefit. In the meantime, Russia announced on Wednesday that they were still preparing for an upcoming summit between U.S. president Donald Trump and Russian President Vladimir Putin. Investors also await clarity regarding the potential meeting next week between Trump and Chinese president Xi Jinping. "We maintain a bullish outlook for gold and silver into 2026, and following a much-needed correction/consolidation, traders will likely pause for thought before concluding the developments that drove the historic rallies this year has not gone away," said Ole Hansen, head of commodity strategy at Saxo Bank, in a note. Silver spot fell 1.6%, to $47.95 an ounce. It fell 7.1% on Monday. Palladium increased 0.1%, to $1 409 80, while platinum gained 4.5%, to $1 620.83.
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Orange Polska announces a worse-than expected Q3 profit decrease
Orange Polska reported a 10% worse than expected decline in its net profit for the third quarter due to increased finance costs. However, it confirmed its guidance for core earnings and revenue. The third quarter net profit was 228 million Zlotys (63 million dollars). The analysts polled expected a net profit of 250 million zlotys. The Polish division of France's Orange attributed the drop in profit to increased net finance costs after it purchased a 5G licence. Why it's important Orange Polska, with a market capitalisation of 12.20 billion zlotys (approximately $9.04 billion zlotys), is the biggest listed telecoms in Poland. By the Numbers The third-quarter revenue increased 9.3% on an annual basis to 3,33 billion zlotys. Core earnings (EBITDAaL), however, grew by 2.9% to $899 million, due to cost control and strong direct margins. The company added 108,000 new mobile customers during the quarter. KEY QUOTES "We are happy that customer net additions have exceeded 100,000 for the first few years, particularly in mobile (...)." In a press statement, CEO Liudmila Climac said. She added, "The results achieved in the last nine-months give us high confidence to reach this year's guidelines." (Reporting and editing by Matt Scuffham; Marta Maciag)
FirstEnergy's strong demand and higher rates helped it to beat its quarterly profit forecast.
Utility FirstEnergy on Wednesday beat Wall Street expectations for the third-quarter profits, thanks to higher electricity rates and commercial and residential demand.
Data centers, which are power hungry and necessary to support artificial intelligence's boom, have been preparing the U.S. electricity industry for a surge in nationwide electricity consumption.
FirstEnergy, based in Akron, Ohio, has narrowed down its adjusted earnings estimate to between $2.50 to $2.56 per common share for the current quarter. This is still within its previous view of $2.40 - $2.60.
The company's quarterly performance was improved by new Pennsylvania base rates, but this was partially offset by increased operating costs.
FirstEnergy, for example, uses rate cases to determine customer charges by comparing the investments they made in their transmission and electric systems.
In the next five years, the company plans to invest 30% more in transmission.
Utility also increased its investment programme by 10%, to $5.5 billion in the current year.
FirstEnergy electric distribution companies service 6 million customers across Ohio, Pennsylvania and New Jersey as well as in Maryland, West Virginia and New York.
According to LSEG, the company reported an adjusted profit per share of 83 cents for the quarter that ended on September 30. This compares with an average analyst estimate of 77. Reporting by Vallari Shrivastava in Bengaluru and Sumit Saha; editing by Shreya biswas
(source: Reuters)