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Stocks fall, yields rise; 20-year Treasury auction shows soft demand
Investors worried about the deteriorating fiscal outlook in the United States and Treasury yields rose following a sale by Treasury Department of $20 billion worth of bonds for 20 years. After the auction, all three of the major U.S. indexes fell by more than 1%. The dollar fell widely as well. Treasury yields continued to rise after the U.S. Treasury Department reported a weak demand for its $16 billion sale 20-year bonds. The bond sale was weak, which reinforced the idea that investors are avoiding U.S. assets. Concerns continued to grow about President Donald Trump's attempts to push through a bill to cut taxes that could increase the debt by up to $5 trillion. Investor sentiment is fragile after Moody's downgraded United States' credit ratings late last Friday, fueling concerns over the country's $36 trillion debt load. Trump sought to gain more Republican support for his tax cuts and spending bill. Mike Johnson, the Speaker of the U.S. House of Representatives, acknowledged that a vote of the entire chamber might not take place on Wednesday because his Republicans are divided over the specifics of the sweeping legislation. The lack of progress in U.S. Trade Talks is also a concern, as trading partners are pressing Washington to reduce or eliminate tariffs. Tim Ghriskey is a senior portfolio strategist with Ingalls & Snyder, New York. Is there any chance that Trump will reduce this deficit during his tenure? I'd be surprised." He added, "We're in a period of waiting for tariffs." "Negotiations continue... but we're not sure if any progress has been made." The Dow Jones Industrial Average dropped 817.23, or 1.99%, to 41.860.01, while the S&P 500 declined 95.91, or 1.51%, at 5,844.55, and the Nasdaq Composite was down 270.07, or 1.4%, at 18,872.64. The MSCI index of global stocks fell by 7.93 points or 0.90% to 873.69. JD Sports, a British sportswear retailer, was among the decliners. The STOXX 600 pan-European index dropped 0.04%. Bitcoin meanwhile has reached a new record, surpassing the previous high set in January. Last seen at $107 569.81, it was up 0.58%. The 30-year bond rate rose by 11.5 basis points, from 4.967% to 5.0817% at the close of Tuesday. The dollar index fell by 0.36%, to 99.60, measuring the greenback in relation to a basket including the yen, the euro and other currencies. After Oman's Foreign Minister said that a new round nuclear talks would be held between Iran and the U.S. later this week, oil prices fell. The U.S. released data that was bearish on crude oil and fuel supplies. Caroline Valetkevitch reported from New York with additional reporting from Lawrence White in London, Johann M Cherian, Ankur Banerjee and Ankur Baerjee in Singapore. Editing was done by Sharon Singleton and Ed Osmond.
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Blackstone data center deal is a target for the group that blocked New Mexico utilities merger
The group that previously blocked TXNM Energy's merger plan said this week that Blackstone Infrastructure plans for data centres in New Mexico would be a major factor in determining whether or not stakeholders will challenge the $11.5 billion proposed acquisition by the private equity group of the electric company TXNM Energy. TXNM is a holding for regulated utilities including PNM in New Mexico. On Monday, it announced its agreement to sell with Blackstone. This was the latest in a series of recent deals in the U.S. energy industry, fueled by an increase in electricity demand due to Big Tech's AI-driven data centers. PNM, the New Mexico Department of Justice and other stakeholders such as consumer advocates, New Energy Economy, and the New Mexico Department of Justice will have to approve the agreement. New Energy was the driving force behind the campaign to thwart TXNM’s final agreement to sell its power to Avangrid, a U.S. subsidiary of Spanish electric company Iberdrola. Avangrid dropped its $8.3 billion bid for TXNM after the battle escalated in the New Mexico Supreme Court. Data centers are now the main driving force for the U.S. electric demand. This is expected to hit record levels this year and by 2026. Mariel Nanasi said that the director of New Energy Economy, Mariel, will examine the TXNM acquisition to see how Blackstone intends to capitalize on this demand in New Mexico. Nanasi stated that Blackstone is evaluating whether it intends to build data centers directly in New Mexico or via affiliates. It will also consider how to handle the cost of upgrading the electrical systems for the large energy load. She said, "We're going to need real guardrails to surround that." TXNM representatives and Blackstone representatives told investors on a conference call shortly after the announcement of the acquisition that they would meet with stakeholders in the next 90-days before filing their plans with the state. The proliferation of artificial intelligence data centres and their record-breaking electricity consumption has led to a regulatory battle over who will pay for upgrades and additional infrastructure for these giant energy consumers. According to a person familiar with Blackstone's TXNM agreement, and speaking on condition of anonymity, the regulated utilities can power data centres, but are prohibited by state regulations from developing or owning the centers. The person stated that the data center companies would pay for any transmission upgrades or new power generation to serve the data centers. (Reporting and editing by Rod Nickel, Laila Kearney)
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Canada's largest pension fund abandons net-zero emission target
Shift, a group of climate activists and pensioners, criticized Canada's largest pension plan on Wednesday to abandon its commitment to achieve net-zero emissions of greenhouse gases by 2050. The Canada Pension Plan Investment Board, which manages C$714.4 Billion ($516.93 Billion) in assets and has announced that it will abandon its commitment made in February 2022 of aligning operations and investments with the goal. Shift confirmed that the update, which is covered in its FAQ section, took place on Wednesday, but was unable to confirm the exact date. This action was taken after a wider reevaluation on climate goals, following the departure of several Canadian banks from the Net-Zero Banking Alliance in early this year. According to the plan, "recent developments in Canadian law" that were not specified affected its interpretation of the net-zero goal. Shift denounced this move. Shift stated in a press release that "Net-zero is not an option." In withdrawing from a commitment to invest in line its net-zero-by-2050 commitment, CPPIB management has failed its most fundamental goal - to responsibly handle the long-term savings of Canadians working and retired. CPP Investments has not responded to further requests for comment. Reporting by Maiya Kiedan; editing by Cynthia Osterman.
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BHP and Lundin’s Argentina copper project targets 2030 start
Vicuna Corp., owned by BHP Australia and Lundin Mining Canada, said that it expects to begin production on two copper projects in Argentina in 2030. Why it's important Argentina hasn't produced copper since 2018. However, it has a large pipeline of projects which could place the country in the top 10 global producers. There are 13 million metric tonnes of measured copper in the Josemaria mine and Filo del Sol deposit of Vicuna, and 25 millions metric tons of inferred or unmeasured copper. KEY QUOTES Jose Morea, the country manager of Vicuna, stated in an interview during ArMinera in Buenos Aires that "the construction timelines for these types of projects, for each deposit would take about three years or a little bit more." He said that the launch of construction will be delayed until a report on technical aspects is approved. Morea stated that it would be illogical to believe that, even if the report was approved after its presentation, we could have it in place before 2030. What's Next? The executive said that the companies will submit a report on technical aspects to the board of directors of Vicuna in the first half 2026. This report will help determine the exact start date for production and the life expectancy of the project. Vicuna plans to apply for the Large Investment Incentives Regime, promoted by Javier Milei’s government in order to attract investment. By the Numbers Morea, Vicuna's CEO, said that Vicuna will invest $400 million in this Latin American country in 2018, out of an estimated total investment in projects of $5 billion. CONTEXT Josemaria is a copper deposit that has advanced to the pre-construction stage. Filo del Sol is a gold-copper-silver deposit that has reached the exploration stage. It is located 11 km from Josemaria, on the Chilean border. Reporting by Lucila SIGAL in Buenos Aires Editing done by Kyra Madry and Matthew Lewis
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Amazon Investors rejects all shareholder proposals again
Amazon.com shareholders at their annual meeting rejected all shareholder resolutions again, including three that addressed the impact of Amazon.com on climate change. The re-election of twelve directors as well as the proposed executive compensation was approved by voters. Amazon urged investors to vote against all eight of the proposals. There were 14 resolutions last year and none of them received enough votes to become law. One of the eight proposals this year was a proposal to require additional reporting about Amazon's total carbon emissions. Another focused on the climate impact data centers have, and a third called for more disclosure regarding packaging materials, especially plastic. Amazon has said that its disclosures to date are adequate and it is working on reducing its environmental impact. Also rejected were two other proposals for the development of artificial-intelligence software. Amazon would have been required to assess its board structure and consider ways it could develop AI responsibly. The other resolution would have demanded a report about data collection and usage around AI. Seattle-based Amazon said that it was a leader in AI development and therefore no changes were needed. Amazon shareholders also requested that the company create a policy to ensure separation between its CEO and board chairman roles. Although not as a policy, Amazon already separates CEO Andy Jassy from founder Jeff Bezos. Bezos held both the CEO and chairmanship positions until 2021. In an attempt to maintain the company's political neutrality, shareholders voted against a proposal that would have mandated the creation of a report about risks associated with advertising. A proposal to solicit a report about warehouse working conditions was also rejected. This has been a constant source of criticism for the company. Jassy said that during a session of questions and answers, the tariffs placed by the Trump Administration on many imported products had not affected sales. He said that "we have not yet seen any meaningful increases in average selling prices." He said that not all sellers would take the same actions when there are two million of them. Some had raised prices, while others held their prices at a static level. Amazon will provide the full results of the vote to investors in a future securities filing. The shares were down by less than 1% to $203.20 on Wednesday. (Reporting and editing by Chris Reese in San Francisco, Joe Bavier, and Bill Berkrot.
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Copper prices rise on concerns about US debt and a weaker dollar
Copper prices rose on Wednesday, as investors, frightened by the growing U.S. government debt levels, sought out hard assets in a weaker dollar. The benchmark three-month price of copper at the London Metal Exchange was up by 0.1% to $9,528 per metric tonne as of 1615 GMT. Republicans in the U.S. House of Representatives try to overcome divisions within themselves about President Donald Trump’s tax cut bill and spending bill that would extend his tax cuts from 2017. Last week, credit-rating company Moody's stripped the U.S. Government of its top-tier ratings. The firm cited the nation's increasing debt. Ole Hansen is the head of commodity strategy for Saxo Bank, Copenhagen. He said that fiscal debt was a factor in not only gold, silver and platinum, but also copper, and tangible assets generally. If extended, this tax cut would essentially create a bigger hole in the budget of the U.S. This would make it riskier to own U.S. bonds." Last week, copper reached its highest price in six-weeks at $9,664, helped by a 90 day pause on the majority of their tit for tat tariffs agreed between China and the U.S., Hansen said. But that optimism is fading. It's not a very inspiring market at the moment. "I think we're in a waiting-and-seeing mode. That could limit the upside in short-term." The Shanghai Futures Exchange's most traded copper contract rose by 0.3%, to 78.100 yuan per ton ($10,839). The U.S. Dollar fell on Wednesday. This extended a two-day decline against major counterparts, lowering the price of commodities priced in greenbacks for buyers with other currencies. According to Sugandha Sagdeva, the founder of SS WealthStreet in New Delhi, the copper price is expected to reach $9,950 per tonne, barring any negative macroeconomic shocks. Lead prices fell 0.4% to $1973.50 per ton, after LME stocks on warrant jumped by 75%, to 216 175 tons. Other metals include LME aluminium, which rose 0.2% to 2,475.50 per ton, and nickel, which climbed 0.8% to 15,645; zinc, however, fell by 0.7% to 2,690.50, and tin, by 0.6%, to $32,900. text_section_type="notes">For related news and prices, click on the codes in brackets: LME price overview COMEX copper futures All metals news All commodities news Foreign exchange rates SPEED GUIDES (Reporting by Eric Onstad; Additional reporting by Neha Arora in New Delhi; Editing by Jan Harvey, Paul Simao and Ed Osmond)
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Republican holdouts huddled at White House to discuss Trump's tax cut bill
On Wednesday, a few hardline Republicans from the U.S. House of Representatives, worried that President Donald Trump’s tax-cut bill did not cut spending enough, headed to the White House as the party struggled for unity. The White House confirmed that House Speaker Mike Johnson would attend the meeting at 3 p.m., 1900 GMT, one day after Trump visited Capitol Hill personally to urge the Republican Party to unite around a bill to extend and add to his tax cuts of 2017. Analysts from nonpartisan groups have predicted that the U.S. debt of $36.2 trillion will increase by $2 trillion to $5 billion over the next 10 years. Last week, credit rating agency Moody's stripped the U.S. Government of its highest-tier rating due to the nation's increasing debt. Hardline Republican Andy Harris, who stood with eight other hawks in a Wednesday press conference, said: "We are encouraged by the progress made over the last 24 hours." "I believe this package will pass." "I don't believe it could be done now." Johnson said: "There's a chance to vote today." He acknowledged that hardliners had resisted the agreement on state and local tax deductions, a key issue for Republican legislators from New York and California who are crucial to his small majority. Hardline Republican Representative Chip Roy, of Texas, told reporters that negotiations were progressing, but he still had a way to go before supporting the bill. Around 1 am EDT (0500 GMT), the House Rules Committee, which is responsible for approving legislation in the House, began debating it. The House's success would pave the way for the expected weeks of debate in the Senate. The Republicans who control both chambers are waiting on the overall package of amendments to the bill from their leadership, which is intended to unite the various factions within the party. Democrats have proposed over 500 amendments. If Congress passes this legislation, some food and health benefits would be reduced for low-income Americans. Green-energy programs would also be cancelled, and tens and tens billions of dollars could go to immigration enforcement. Trump met with Republican legislators on Tuesday in an attempt to convince holdouts to accept what he called a "big beautiful bill," however, the visit did not sway a wide range of lawmakers who are opposed to certain features. Johnson is in a tight spot, since his party has a 220-212 narrow majority. A few "no" vote from his side can scuttle this bill that Democrats claim favors the rich and cuts social programs. The bill would extend Trump's 2017 tax cuts, which were his signature achievement during his first term in office. It also added tax breaks for income from tips and overtime wages that were part of Trump's populist push last year on the campaign trail. Analysts say that it could increase the federal debt by $2 trillion to $5 trillion. Representative Jason Smith, Republican Chairman of the House Tax-Writing Committee, stated during Wednesday's debate that "failure was not an option." "The American people voted to create a new America, where families and workers will prosper again. Main Street will grow and rural towns will flourish again. And America will win again." Democrats claimed that the bill benefits wealthy people disproportionately and cuts programs for working families. Gwen Moore said, a Democrat who is a member of the tax-writing panel: "We are going to ask Americans for credit cards to pay tax cuts to billionaires." "This bill is ugly, despite its deficits, because it's a betrayal to the contract we made with our American people and, in particular, our babies and our working people," said Gwen Moore, a Democrat on the tax-writing committee. DEBT CEILING Medicaid, the health care program for low income households, has been a major sticking-point. Fiscal hawks have pushed for tax cuts that would offset some of the costs. Moderate Republicans, however, say this will hurt the voters who they need to support them in the midterm elections for the Congress in 2026. A handful of Republican legislators, mostly from states with high taxes, such as New York and California are also opposed to the bill. They want an increase in the proposed cap for deductions on state and local tax. The bill would increase the debt ceiling of the United States by $4 trillion. The limit must be addressed by the summer of this year or lawmakers risk triggering an uncontrollable default. (Reporting and writing by Bo Erickson, David Morgan and Andy Sullivan. Editing and proofreading by Scott Malone Daniel Wallis and Howard Goller.
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Iran and the U.S. face each other without a Plan B when nuclear redlines collide
Three Iranian sources stated on Tuesday that the clerical leaders lack a clear plan in case efforts to settle a decades-long conflict fail. Iran's "Plan B" may be to turn to China or Russia if negotiations fail due conflicting redlines, according sources. However, with Beijing and Washington engaged in a trade war and Moscow distracted by its war in Ukraine the backup plan of Tehran appears unsteady. "Plan B" is to continue with the strategy prior to the start of the talks. Iran will not escalate tensions and is prepared to defend itself, a senior Iranian official stated. "The strategy includes strengthening the ties with allies such as Russia and China." Ayatollah Ayatollah Khamenei, Iran's supreme leader, rejected the U.S. demand to stop uranium enrichment on Tuesday as "excessive" and "outrageous", warning that talks would not produce results. After four rounds, there are still a number of obstacles to overcome. Tehran will not ship its entire stockpile of highly enriched Uranium abroad, or even engage in talks about its ballistic missile program. This is according to two Iranian officials and an European diplomat. Oman's Foreign Minister said that the fifth round of the World Cup will be held in Rome on May 23. A lack of trust between the two sides, and Donald Trump's decision in 2015 to withdraw from an accord with major world powers, has made it more important for Iran to get guarantees that Washington won't renege on any future agreement. Iran's clerical leadership is facing mounting challenges - including energy and water shortages; a falling currency; military losses in the region and growing fears that Israel will attack its nuclear sites. All of these are exacerbated by Trump’s hardline policies. Trump has been reviving a "maximum-pressure" campaign against Tehran, which includes tightened sanctions and threats of military action, since February. According to the sources, Iran's leaders "have no other option" but to sign a new agreement in order for them not face economic chaos that could threaten their rule. The Islamic Republic has been exposed to anger by the public after protests against social repression, economic hardship and harsh crackdowns. Iran's economy will not recover without lifting the sanctions that prevent free oil sales, and allowing access to funds. The second official said, as did others, due to the sensitive nature of this issue. The Iranian Foreign Ministry was not available to comment immediately. A THORNY TRAIL Wendy Sherman, former U.S. The former U.S. Undersecretary of Political Affairs, who led the U.S. negotiation team that achieved the 2015 agreement between Tehran and six major world powers, stated that it was impossible to persuade Tehran to "dismantle their nuclear programme and to give up on their enrichment - even though this would be ideal". She said: "So, that means that they will reach an impasse and that we could face war. I don't believe, quite frankly that President Trump is looking forward to that because he campaigned for a peace-oriented president." Even if the enrichment dispute narrows, lifting of sanctions is still fraught. The U.S. favors gradual removal of nuclear-related restrictions, while Tehran insists on immediate removal. Since 2018, sanctions have been imposed on dozens of Iranian institutions that are vital to the country's economy. These include its central bank, national oil company and other important Iranian institutions. Sherman responded that Iran would "continue to sell oil to China, India, and other countries, in order to circumvent sanctions". China has been Iran's main oil buyer despite the sanctions. This has helped to stave off an economic collapse. But Trump's increased pressure on Chinese trade entities, and tankers, threatens to disrupt these exports. Analysts warn of the limits to China and Russia's assistance. China may insist on lower prices for Iranian oil as the global demand for oil weakens. Beijing and Moscow cannot protect Iran from unilateral U.S. or EU sanctions if talks fail - something both Tehran and Washington are hoping to avoid. France, Britain, and Germany have all warned that they will reimpose U.N. sanction if a deal is not reached quickly, despite not being part of the U.S. Iran talks. According to the U.N. resolution of the 2015 nuclear agreement, the E3 has until October 18th to activate the "snapback" mechanism before the resolution expires. Diplomats and a document seen may suggest that the E3 nations could do this by August, if a deal is not reached by then. Diplomats warn, that a deal prior to then could mean, at best, a political framework similar to 2013 in which both sides made some immediate concessions, giving time for more detailed negotiations. A senior European official stated that "there is no reason" to believe it would take less time in comparison with the 18-month period of 2013. This is especially true when you consider the fact that the geopolitical and parameters are more complex now. (Written by Parisa hafezi and John Irish, edited by Stephen Coates).
MORNING quote EUROPE-Chinese consumers shut up store
A take a look at the day ahead in European and international markets from Wayne Cole.
China has kicked off the week with some uninspiring data as retail sales in November rose just 3.0% y/y, when mean forecasts had actually been for +4.6% y/y. House costs also continued to fall, though commercial output did a minimum of hold up.
Officials continued to broach stimulus, consisting of cuts in bank reserve requirements, but credit information revealed lower borrowing expenses are no aid when no one wishes to invest.
Chinese bond yields hit another record low in response, which has the central bank contacting commercial banks on their positions. In an ill-timed coincidence for the yuan , 10-year yields there posted their most significant weekly drop since 2018, just as longer-dated Treasury yields suffered the biggest weekly increase this year.
There have actually been reports Beijing was considering whether to let the yuan fall to strengthen its economy, but that only drew a. broadside from President-elect Donald Trump's trade advisor. Peter Navarro.
Over in South Korea, the political circumstance looks rather. steadier as Han Duck-soo has taken control of for impeached President. Yoon Suk Yeol and the Constitutional Court started examining the. impeachment. The court has up to 6 months to decide whether to. remove Yoon from office or to reinstate him.
Authorities repeatedly swore to stabilise financial markets,. which saw the KOSPI hold constant on Monday.
All eyes, naturally, are on the Fed conference on Wednesday. where a quarter-point rate cut is 97% priced in, and its. vanishingly rare for the central bank to disappoint such an. frustrating market consensus.
More appealing will be the assistance from Chair Powell and. the FOMC dot plots with markets assuming they will now see only. 3 cuts next year instead of four. The terminal rate could. also increase to 3.0% or more, from 2.875% in September. Markets are. much more hawkish, suggesting a flooring for rates around 3.80%, one. reason bonds took such a pounding last week.
Of the other central bank conferences, the Bank of Japan, Bank. of England and Norges Bank are seen on hold, while the Riksbank. is anticipated to cut and possibly by 50 bps.
Another mover on Monday was bitcoin which surged above. $ 106,000 after Trump floated a plan to develop a U.S. bitcoin. tactical reserve comparable to its strategic oil reserve.
Key developments that might affect markets on Monday:
- Appearances by ECB President Christine Lagarde, Vice. President Luis de Guindos and board member Isabel Schnabel
- PMIs for Europe and U.S.
- Bank of Canada Guv Tiff Macklem speaks
- Empire State Manufacturing Survey for December
(source: Reuters)