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After inflation data and tariff plan, US Treasury yields fall to record lows.
The U.S. Treasury yields fell on Thursday as a reading of inflation fueled hope that the Federal Reserve's preferred price measure might be lower than expected. The Labor Department reported that the Producer Price Index (PPI) of final demand increased 0.4% in January after an upwardly-revised 0.5% increase in December. This was higher than the 0.3% estimate by economists polled. The consumer price index (CPI) for Wednesday showed the largest increase in almost 1-1/2 years. The PPI data, which is part of personal consumption expenditures(PCE), the Fed Chair Jerome Powell stated on Wednesday as the preferred target inflation measure by the Fed, was soft. This added to the hope that the PCE reading could be lower than expected. Jack Ablin is the chief investment officer of Cresset Capital. He said that equity investors are taking their cues from bond markets. Tariffs had investors preparing themselves for a kind of alarmingly high number in terms of inflation. Investors also evaluated U.S. president Donald Trump's tariff plans. Trump has instructed his economics team to devise a plan that will impose reciprocal duties on all countries that impose duties on U.S. imported goods in a new volley against American friends and enemies, increasing the prospects of a global trading war. The Dow Jones Industrial Average grew 342.87 points or 0.77% to 44,711.43, while the S&P 500 climbed 63.10 or 1.04% to 6,115.07, and the Nasdaq Composite jumped 295.69 or 1.50% to 19,945.64. MSCI's global stock index rose 9.59 points or 1.10% to 882.37, after reaching an intraday high of 883.30. It was on course for its largest daily percentage gain since the 15th of January. The pan-European STOXX 600 Index rose 1.09% in a fourth consecutive session, closing at a record. Nestle and Siemens gained after their quarterly results. Also, there are hopes that the war between Russia, Ukraine and Ukraine will be ended through talks. The yield on the benchmark 10-year U.S. notes fell 9.9 basis points, to 4.535%. This is on course for its largest daily decline in a whole month. In addition to the PPI data the U.S. initial unemployment claims dropped 7,000 points to 213,000 seasonally adjusted, a level slightly below 215,000 and showing that the job market is still on solid ground. According to CME's FedWatch Tool, the expectation of a Fed rate cut continues to be delayed this year. The market does not price in a probability of greater than 50% of a reduction of at least 25 base points before July. Markets had not seen a greater than 50% chance of a rate cut before the September meeting. The dollar index (which measures the greenback versus a basket currencies) fell 0.76% at 107.09, and was on course for its largest one-day percentage decline since January 20. At $1.046, the euro rose 0.75%. Boris Vujcic, a Croatian policymaker, said that the European Central Bank (ECB) could reduce interest rates by three times more this year, even if it moves slower than its U.S. counterpart. However policy easing will be based on a rapid drop in inflation. The dollar fell 1.06% against the Japanese yen to 152.78. The pound rose 0.92%, to $1.2556. Official figures revealed that the British economy grew unexpectedly by 0.1% during the last quarter of the year. This was higher than the 0.1% contraction expected. However, longer-term problems remain. Prices of oil were a little lower today, recovering from their earlier drops as the downward pressure caused by hopes for peace between Russia and Ukraine was offset by optimism about a possible pause on new U.S. Tariffs. U.S. crude oil settled at $71.29 per barrel, down by 0.11%. Brent ended the day at $75.02 a barrel, down by 0.21%.
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US Senators reintroduce a bill that would allow nationwide, year-round E15 sales
On Thursday, U.S. Senators reintroduced bipartisan legislation that would allow year-round nationwide sales of gasoline containing a higher percentage of ethanol. The plan has the backing of an influential oil trade group. Senator Deb Fischer from Nebraska introduced the bill along with Tammy Duckworth from Illinois. She said that it would eliminate patchwork regulations which would restrict the availability of E15 blends in some areas. Biofuel producers and corn farmers have long sought year-round E15 sales. They would both benefit from a larger market. Fischer and Democratic senator Amy Klobuchar of Minnesota introduced the first bill in 2023. The government restricts the sale of E15 in summer due to concerns about smog. However, biofuels say that these are unfounded. If passed, the legislation would nullify a request by governors in the Midwest that would have allowed expanded sales of E15 to their states later this year. This request, which was approved by the Biden Administration in February 2024, is less attractive to industry players than a nationwide legislation. Some groups are concerned that it could lead to localized fuel prices spikes and supply problems. The American Petroleum Institute (API), an oil trade association that has sometimes been at odds with biofuels, supported Fischer's bill. Will Hupman is the vice president for downstream policy at API. He said that year-round nationwide E15 sales would prevent a confusing patchwork state regulations, and provide consumers with reliable access to fuels they use daily. Biofuels industry is pleased Emily Skor is the CEO of Growth Energy, the U.S. trade association for biofuels. Reporting by Stephanie Kelly, New York; editing by Nia William)
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Paulo Castellari named as the next CEO of French mining company Eramet
Paulo Castellari, the next CEO of French mining company Eramet, was announced as its nominee on Thursday after Christel Bories decided to step down. Eramet announced that Castellari would assume the CEO role on May 27 following a vote during the annual shareholders meeting. Bories will continue to be the Group's chairwoman. Castellari, born in 1970, is a dual Brazilian-Italian citizen with over 30 years of experience in the mining and metals industries, as well as in fertilizers and energy in South and North America as well as Europe and Africa. He worked for Anglo American from 2003 until 2015, then was named CFO and Deputy CEO of CEMIG in Brazil, before joining EGA, an aluminum producer, as the CEO of Guinea Alumina Corporation. Paulo Castellari is the CEO of Appian Capital Advisory's Brazilian branch, a private equity group that focuses on mining. Eramet stated last month that Bories will give up her chief executive role by May, while remaining as chairwoman. Bories has been CEO of Eramet since 2017. He has led a strategic shift towards minerals for electric vehicle batteries. This includes the development of a lithium mine, which began production in Argentina at the end last year. (Reporting and editing by GV de Clercq, Nick Zieminski and Gus Trompiz)
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After inflation data, stocks rise and US Treasury yields fall
The global stock index rose on Thursday, the first time in the last three sessions. Meanwhile, U.S. Treasury yields fell as a reading of inflation fueled hope that the Federal Reserve’s preferred measure of price might be lower than expected. The Labor Department announced that the Producer Price Index (PPI) was for Final demand rose After a downwardly revised 0.5% increase in December, the 0.4% rise last month surpassed the economists' estimate for a 0.3% gain. The consumer price index (CPI) for Wednesday showed the largest increase in almost 1-1/2 years. Fed Chair Jerome Powell has said that the PPI includes components that make up the personal consumption expenditures. On Wednesday The PCE, the Fed's preferred inflation target measure, was softened and added to the hope that the reading could be lower than expected. It looks like core PCE is going to come out around 0.3%. That's still high compared to January last year when it was only 0.5%. If the forecast is accurate, core PCE will fall from 2.8% down to 2.6% over the course of a year, said Chris Diaz. Diaz is co-head fixed income at Brown Advisory, Chicago. There will be enough downward pressure on the housing component and wages to continue to bring down inflation. The Nasdaq was up over 1% on Wall Street after the release of the US inflation data. All S&P sectors rose, but materials led the way. MGM Resorts, which had just opened its casino, saw a jump of nearly 17% and Tesla rose by about 5%. operator reported Better than expected quarterly earnings The Dow Jones Industrial Average rose by 343.48 points or 0.77% to 44,712.04, while the S&P 500 gained 52.00 points or 0.86% to 6,103.96, and the Nasdaq Composite increased by 235.87 or 1.20% to 19,885.82. The MSCI index of global stocks rose by 8.61 points or 0.99% to 881.39, and is on course for its largest daily percentage gain since Jan 15. The pan-European STOXX 600 Index rose 1.09% in a fourth consecutive session, closing at a record. Nestle and Siemens gained after their quarterly results. Also, there are hopes that the war between Russia, Ukraine and Ukraine will be ended through talks. U.S. President Donald Trump says On Wednesday, Trump said that both Russian president Vladimir Putin and Ukrainian president Volodymyr Zelenskiy expressed their desire for peace during separate phone conversations with him. He also ordered top U.S. government officials to start talks about ending the war. The yield on the benchmark 10-year U.S. notes fell 11.3 basis points, to 4.521%. This is on course for its largest daily decline in a whole month. In addition to the PPI data the U.S. initial unemployment claims dropped 7,000 points, bringing them down to 213,000 seasonally adjusted, a level that is slightly lower than the 215,000 mark and indicates the job market is still on stable ground. According to CME, the market has not priced in a probability of greater than 50% of a Fed rate cut of at least 25% until September. FedWatch Tool The dollar index (which measures the greenback versus a basket currencies) fell 0.52% at 107.35, and was on course for its largest one-day percentage decline since January 24. At $1.0432, the euro rose 0.48%. Boris, a Croatian politician Vujcic The European Central Bank may cut rates three times more this year, even if the U.S. counterpart moves slower. However, policy easing will be based on a rapid drop in inflation. The dollar fell 0.92% against the Japanese yen to 152.99. The pound rose 0.68%, to $1.2527. Official figures revealed that the British economy grew unexpectedly by 0.1% during the last quarter of the year. This was higher than the 0.1% contraction expected. However, longer-term problems remain. Oil prices are rising. The market is slightly lower and has recovered from its earlier declines. This was due to the downward pressure of hopes for peace negotiations between Russia, Ukraine and other countries being offset by optimism about a temporary pause in U.S. tariffs. U.S. crude fell 0.11%, to $71.29 per barrel. Brent dropped 0.21%, to $75.02 a barrel.
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Ecuador president names new finance minister, confirms interim oil minister
Daniel Noboa has confirmed Ines Manzano's position as interim Energy and Oil Minister and named Luis Alberto Jaramillo to the post of finance minister. After Luisa Gonzalez's performance on Thursday and late Wednesday, the changes were made. Unexpectedly well In the first round of Sunday's presidential election, Noboa is locked in a tight race to be re-elected in April. Jaramillo, who has served as Minister of Production since 2011, will be replaced by Carlos Zaldumbide. In December, the International Monetary Fund announced that its Executive Board had completed the first review. Extended Fund Facility For Ecuador, this allows for an immediate payment of approximately $500 million. In a letter published on social media, the outgoing finance minister Juan Carlos Vega announced his resignation. He said that during his tenure, government revenues had been boosted and debts had been paid. Manzano succeeded her predecessor as Energy Minister during a widespread, planned power cuts Last October. Noboa deployed military personnel on the streets and inside prisons in an effort to improve the dire security situation that was blamed on criminal gangs. (Reporting and writing by Alexandra Valencia, Editing by Leslie Adler.)
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Trump announces a roadmap for reciprocal tariffs against US allies and competitors
The White House announced that President Donald Trump will unveil a plan on Thursday to impose reciprocal tariffs against every country that imposes duties on U.S. imported goods. This is his latest trade salvo aimed at American allies and enemies, and the White House claims that it will improve economic and national security. Trump said to reporters in the Oval Office that he wanted a level playing ground when discussing the measures. A White House official said that tariffs would not be implemented on Thursday, but they could start within weeks. Trump's team of trade and economic experts is studying bilateral trade and tariff relationships. Howard Lutnick - Trump's choice for Commerce Secretary - said that the administration will address each country individually. He said that the study on the topic would be finished by April 1. Trump, who ran on a promise to lower consumer prices, has said that the price could rise in the near future as a result. "Tariffs, I think, are fantastic," he said. A White House official who spoke with reporters before Trump's Oval Office event said that the administration will examine the "most egregious" problems first, such as countries with the largest trade surpluses or highest tariff rates. He said that Trump's reciprocal duties would be equal to the higher duty rates charged in other countries. The tariffs would also aim to counter non-tariff barriers, such as heavy regulations, value added taxes, government subsidy and exchange rate policies, which can create barriers for U.S. goods to reach foreign markets. This effort will also include negotiations with certain countries in order to lower these barriers. The announcement seemed to be intended at least partly to start discussions with other countries. The official stated that Trump would lower tariffs for other countries if they lowered theirs. "The president will lower tariffs for countries who want to do so. Let's also acknowledge that higher tariffs are not always the main problem. China, Japan and South Korea are among the targets. He said that the tariffs would not be a "one-size fits all" solution, but instead more tailored levies. However, he didn't rule out a global flat tariff. The official stated that the lack of reciprocal tariffs in the U.S. had contributed to an enormous and persistent U.S. Trade deficit. Narendra Modi is the Indian Prime Minister, and he was due to arrive in New York at 4 pm (2100 GMT). He oversees a country that has the highest tariffs against U.S. imports of any other major trading partner. Trump admitted as much on Friday. The Republican President's latest round rattling of tariffs has increased fears of an expanding global trade war, and threatens to accelerate U.S. inflation. Trump's advisers on trade were finalizing plans for the reciprocal duties that the U.S. President has promised to impose against every country which charges duty on U.S. imported goods. Trump, who assumed office on January 20, has already announced tariffs for all steel and aluminium imports starting on March 12. He also imposed 10% tariffs to goods coming from China and put a hold of 30 days on tariffs imposed on goods coming from Canada and Mexico. Trump said Monday that he is also considering separate tariffs for cars, semiconductors, and pharmaceuticals. He said on Thursday that car tariffs were coming soon. Experts in trade say that structuring the reciprocal duties Trump wants is a big challenge for his team. This may explain why Trump's latest duties weren't announced earlier this week. Damon Pike is a principal and trade specialist with BDO International's U.S. division. He said that the reciprocal tariffs Trump envisaged would be a massive undertaking given that the 186 member countries of the World Customs Organization have different duty rates. "At an international level, you'll find 5,000 different product subheadings at the 6-digit level. That's 5,000 times 186 countries. "It's like an artificial intelligence project," said he. Experts believe Trump could use several statutes. These include Section 122 of Trade Act of 1974 which only allows a maximum flat rate of 15% for six-months or Section 338 of Tariff Act of 1929, which gives authority to act on trade discrimination which disadvantages U.S. Commerce, but which has never been used. Trump could also use the International Emergency Economic Powers Act to justify tariffs on China, and those pending against Canada and Mexico. Officials at the White House said this measure, as well as others, could be used. Pike added that, without IEEPA's help, it would take some sort of agency action before trade remedies could be imposed. "But everything seems to move quickly," he said.
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Brooke Rollins confirmed by the US Senate to be USDA's new director
The U.S. Senate voted on Thursday to confirm Brooke Rollins as the new head of the U.S. Department of Agriculture. She is a long-time ally of Donald Trump, a former White House advisor, and skeptic of climate change. Rollins is set to lead an agency of 100,000 employees, which oversees the farm programs, school meals, and food benefits. Rollins' appointment coincides with a period of low farm incomes, possible cuts to domestic food assistance, and an aggressive campaign by Elon Musk to reduce federal employees. After the Agriculture Committee heard Rollins nomination on January 23, and unanimously advanced her on February 3, the Senate confirmed Rollins by a vote of 72 to 28. Rollins was the leader of a conservative Texas organization that was backed by oil companies for 15 years. The group published reports during her tenure criticizing ethanol subsidies and farm subsidies. Rollins stated that the reports are decades old and do not reflect her current policies. She also said she supports ethanol. In a press release, Brian Jennings, CEO of the American Coalition for Ethanol said that his group is looking forward to working together with Rollins in order to finalize the 45Z tax credit for clean fuels and expand biofuel infrastructure. Amy Klobuchar, ranking member of the Agriculture Committee, asked Rollins if she believed climate change was a threat for U.S. ranchers and farmers. According to a copy her answers, she replied: "We know that climate change occurs throughout the year. However, the causes and solutions are still not well understood." In statements, both House Agriculture Committee Chairman Glenn "GT' Thompson and ranking Member Angie Craig said that Rollins assumed the role during a crucial time for agriculture. They looked forward to collaborating. Rollins served as acting director of White House Domestic Policy Council during Trump's first presidency, and later led the America First Policy Institute - a policy group aligned with Trump. The Trump administration has frozen most foreign aid, including farm grants and loans. This has caused work to stop at agricultural research laboratories and prevented some farmers from receiving government payments. (Reporting and editing by Franklin Paul, Nia Williams, and Leah Douglas)
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Southern California Edison gear will ignite more fires than in previous years by 2024
In 2024, SCE equipment will ignite nearly 60% more fires No cause yet determined for the Eaton Canyon fire that SCE is being sued for SCE partially blames the weather for increasing fire ignitions Tim McLaughlin Southern California Edison equipment caused nearly 60% more fires than the previous year in 2024. These were mostly small fires that were quickly put out as the utility fought to prevent disaster in the months before the Los Angeles wildfires. SCE disclosed in its quarterly report to regulators this month that the escalation in fire ignitions on their territory preceded the multiple wildfires which devastated Los Angeles' metropolitan area at the beginning of the year. SCE, an Edison International unit, is facing multiple lawsuits that blame its equipment for the Eaton Canyon fire, one of California's major wildfires. The cause of the fire has not been officially determined. SCE said that it did not know the cause of the fire. SCE's reports on ignition incidents reveal that the number of incidents will increase throughout 2024. This is especially true in districts with a high fire risk. SCE reported that 135 fires ignited on its territory in 2024. This is up from 86 events in 2023. The data SCE released this month shows a significant increase. SCE reported 135 fire ignition events on its territory in 2024. This is up from 86 in 2023, according to the data released this month. SCE stated that low humidity, dry vegetation, and high winds are among the factors which will increase fire ignition in 2024. David Eisenhauer, SCE's spokesperson, said: "We are worried when we see all three." Weather was one of the factors that were beyond the utility's control. According to SCE reports, fire ignition events are typically caused by equipment failures and wire-to-wire contacts, lightning strikes, and contact between wires and dried-out vegetation or balloons. SCE data revealed that, on average, over the last decade, SCE equipment has caused 120 fires per year in its territory. The California Public Utility Commission must be notified when a fire is caused by their equipment and spreads over one meter. The fires usually are small, and they can be extinguished without causing any serious damage. The Eaton Canyon Fire scorched 14,000 acres. According to Paul Zimbardo, an analyst at Jefferies, the damage caused by this fire will cost approximately $22 billion - before discounts for settlements. According to proxy statements filed at the U.S. Securities and Exchange Commission, Edison International's senior executives are rewarded for their performance based on a reduction in fire ignition events. Pedro Pizarro, the CEO of EIX, received a cash bonus worth $1.85million in 2023 because fewer fires were ignited. SCE, a company that is battling a severe drought in California and increasing power demand, is replacing and upgrading transmission lines, towers, and other equipment. According to SCE's testimony before California Public Utility Commission, it must catch up because infrastructure failure rates are increasing as equipment becomes outdated. SCE stated in CPUC filings that "the combination of age and obsolescence and limited designs that don't meet current standards lead to a greater probability of safety incidents, outages and longer outages when these do occur." SCE, for example, cited over 1,000 incidents of downed wires in 2022 and 43 explosions related to underground equipment. SCE admitted in a letter sent to the CPUC at the beginning of the month that the Los Angeles Fire Department believes the equipment used by the utility was responsible for the Hurst Fire which ravaged about 800 acres last January. Officials from the fire department said that it appeared that the fire started near a SCE tower that held high-voltage transmission cables that had fallen to earth. (Editing by David Gregorio).
U.S. weather forecaster: La Nina will fade and neutral conditions will emerge in March.
A U.S. forecaster stated on Thursday that La Nina conditions exist and will continue in the near future. There is a 66% probability of transitioning to ENSO neutral conditions between March and May 2025.
Why it's important
La Nina is an occurrence that is part of a larger El Nino Southern Oscillation cycle (ENSO), which involves water temperatures in central and eastern Pacific Ocean.
ENSO neutral is when the water temperature stays near average and the crop yields are more stable.
CONTEXT
The Japanese weather bureau stated earlier this week that no signs of El Nino, or La Nina, were evident, but La Nina characteristics are becoming more apparent.
Bureau added that 60% of the normal weather patterns will continue into summer.
In its monthly forecast, the National Weather Service Climate Prediction Center (CPC), said that "La Nina is expected to persist throughout the season of Feb-Mar-2025 with odds of 59%. This will be followed by an almost equally likely transition from ENSO-neutral to Mar-Apr-2025."
KEY QUOTES
The La Nina pattern is usually associated with better rains, improved crop production, and better crops in South Africa. It also results in wheat, sorghum and cotton in Australia. Palm oil in Southeast Asia. And a better monsoon in India. This was what we experienced last summer, said Donald Keeney.
Keeney said that "there are drier than normal conditions and lower crop yields across the southern Brazil and Argentina region this season. In addition, the conditions are dryer in the southern U.S. tier, which may impact the winter wheat production."
(source: Reuters)