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INDIA BONDS - Fuel tax cuts in India deal a fresh blow to bonds amid oil boom and heavy debt supply
Indian government bonds fell after New?Delhi’s excise duties on fuel clouded fiscal?outlook. This exacerbated market anxiety, already stoked due to the war-driven rise in oil prices and heavy debt supply. As of 10:40 am IST, the benchmark 6.48% bond yield for 2035 was 6.9256%. It had closed at 6.8750% during the previous session. The yield had reached 6.9523% earlier in the day. This was its highest level since July 2024. Bond yields are inversely related to bond prices. The bond market is caught up in a storm caused by adverse triggers which have pushed yields upwards. The end of the financial year is not what the market or regulator may have wanted, according to a trader at a private banking firm. New Delhi has reduced the special excise tax on petrol from 13 rupees to 3 rupees a litre. The duty on diesel was also reduced to zero rupees from 10 rupees, as fuel prices remain volatile and supplies are 'choked' by the Middle East - war. The impact of the duty reductions on the Indian government is estimated by economists at $15.91 billion to $16.97 billion for fiscal year 2027. Brent crude is hovering around $105 a barrel. Energy shipments have been halted through the Strait of Hormuz due to the war. The Strait of Hormuz carries one-fifth of all oil and LNG supplies in the world. India is the third largest crude importer in the world. High oil prices threaten to worsen inflation at home and increase the current account deficit. India has'retained' its inflation target of 4% over the next five-year period. Demand has also been impacted by supply pressures. Indian states are looking to raise 429.4 bn rupees via bond sales in the coming days, after raising a record 12.31 trln rupees during this financial year. As oil prices and Treasury yields remain high, India's overnight swap rates (OIS) have been under a lot of pressure. The two-year OIS was trading at 6.2850%, but the one-year OIS had not been traded yet. The liquid rate for five-year swaps was 6.65%.
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REFILE-Asian government scrambles to assure markets after Middle East war saps market confidence
As the U.S.-Israeli conflict with Iran continues, a growing number of governments are scrambling for liquidity and to calm the financial markets. This is due to the pressure that the war on Iran has placed on their currencies, and the volatility in the market. How different countries respond: SOUTH KOREA South Korea is planning to 'buy back emergency bonds worth 5 trillion won ($3.32 billion), to inject liquidity into the local bond market, and to cap rising yields. This comes after three-year treasury yields reached their highest level since mid-2024. The ministry has also extended fuel tax reductions and is currently drafting a 25 trillion won supplementary budget, which could include vouchers of cash for consumers and financial assistance for businesses. The Finance Ministry aims to submit the budget to the Parliament by March's end. The Japanese government will use?800 billion ($5 billion) of reserve funds to fund subsidies that aim to keep gasoline prices at around 170 yen a litre. The measure could cost up to 300 billion yen a month. The Middle East Crisis is driving energy prices sharply upwards. PHILIPPINES On March 26, the Philippines' central banks convened an unexpected, off-schedule, policy review. It said it was to reassure the market that they were?assessing the situation. It signaled that it would be ready to act if inflation expectations dropped. AUSTRALIA The Australian government has yet to make any major policy changes, or proposals. They have only taken steps to ensure the imports of fuel and diesel which are in short supply due to panic-buying. Prime Minister Albanese will meet with state premiers and chief minsters next week in order to devise a plan for managing the fuel crisis. The government anticipates that the crisis will last several months. The government has not considered fuel rationing, but it may consider other voluntary measures such as encouraging people to work at home. In May, the government will release its budget for 2026/27. It is being urged to reduce spending while some groups push for energy relief policies such as cutting taxes on fuel or providing direct assistance to households and small businesses. The government is considering taxing "excess profits" made by Australian gas companies to raise much-needed revenues. The central bank of Australia is more worried about inflation than economic development and has raised interest rates twice this year, to 4.10%. It could raise them again in May. NEW ZEALAND New Zealand 'has temporarily aligned its fuel standards with Australia in order to increase the import options. It will also provide temporary weekly assistance of NZ$50 (US$29.30) to low-income families from April to offset rising costs. The government also updated its National Fuel Plan and made it public. It outlines four phases of response for petrol, jet fuel and diesel fuel.
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Oil prices set to fall the most in a single week since 6 months
Oil prices dropped on Friday, and were on track to have the steepest weekly drop?in the past six months. This was after U.S. president Donald Trump announced that talks with Iran on a 'peaceful end' had been going well and he would pause his attacks on Iran’s energy plants for ten days. Brent futures dropped 84 cents or 0.8% to $107.17 a barrel at 0353 GMT. U.S. West Texas Intermediate Futures lost $1.02 or 1.1% to $93.46 a barrel. On a weekly basis, both benchmarks traded 4.6% lower despite Brent increasing 5.7% and WTI gaining 4.6% Thursday due to fears of a further escalation in the war. Oil is not only trading on headlines, but also the length of war. Priyanka?Nova, an analyst with Phillip?Nova, said that any direct damage to the oil infrastructure or prolonged war could 'force markets to quickly reprice higher. Trump has announced a pause on attacks against Iran's energy grid, but the U.S. also sent thousands troops to the Middle East. Trump is weighing the use of ground forces to take over Iran's strategic oil center of Kharg Island. A senior Iranian official said that the 15-point U.S. plan, which was sent to Tehran by Pakistan, was unfair and "one-sided". The war has deprived the world of 11 million barrels per day of oil, according to the International Energy Agency. Macquarie Group analysts said that if the war ends soon, oil prices will drop quickly, but remain at pre-conflict level. They said that prices could increase to $200 if war continues until the end of June. The market is becoming more and more pressured with each passing day. Mukesh sahdev, CEO and founder of the Australia-based consultancy XAnalysts, said that Asian countries are 'tapping buffer stocks' to adjust demand. Helen Clark reported from Perth, and Sudarshan Varadhan from Singapore. Sonali Paul and Saad Saeed edited the article.
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Chicago oilseeds and grain futures are wracked by uncertainty over the Iran war
Chicago oilseeds and grain futures fluctuated on Friday between 'gains and losses' as investors watched?developments? in the Middle East, amid mixed signals?from the U.S.?and Iran?about efforts to?end the war. The Chicago Board of Trade's (CBOT)?most active?corn contract gained 0.1%, to $4.67-1/4 a bushel. It has been up 0.4% this week. CBOT Wheat lost 0.1%, to $6.04 1/2 a bushel. However, it was up 1.6% this week. Soybeans rose 0.1% to $11.74 1/2 a bushel to bring the weekly gain to 1.1%. As they are used as biofuel feedstock, corn and soybeans tend to follow the movements of oil prices. Oil prices dropped in early trade and were down for the entire volatile week. U.S. president Donald Trump announced that talks with Iran on ending the war are going "very, very well." He also said he will pause his attacks against the energy plants of the country for 10 days. A senior Iranian official, despite Trump's optimistic assessment, said that the U.S. plan to end the conflict was "unfair and one-sided." Iran has continued to strike bases in Israel and the United States as a form of retaliation against U.S.-Israeli strikes. The Iranians also attacked Gulf States and blocked Middle East fuel imports via the Strait of Hormuz which transports about 20% of world oil and LNG. Iran has stated that it is not in talks with Washington. The traders are also waiting for a possible announcement on revised U.S. biofuel targets during a White House event that will take place later today. The U.S. Department?Agriculture will release its acreage estimates on Tuesday. Due to rising fuel and fertiliser prices caused by the Middle East War, the market is keenly interested in the planting decisions of farmers. The Russian Federation, which controls 40% of the global ammonium nitrate trade, announced on Tuesday that it would suspend its exports until April 21, to ensure a sufficient supply for the spring planting season. (Reporting and editing by Lewis Jackson, Sumana Nady and Subhranshu Sahu; Daphne Zhang)
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Singapore plans to establish Asia's gold trading hub
Singapore announced plans to transform the city-state of Singapore into a gold trading center for the entire Asia. Regulators and industry players are working together to improve the trading, clearing, and storage infrastructure. Singapore is one of many Asian financial centers racing to increase their gold trading and capture more bullion flows. Hong Kong, too, is pushing to expand the gold market's links with Shanghai. The Singapore Bullion Market Association and the Monetary Authority of Singapore have identified four areas of focus. These include the expansion of gold-related products on the capital markets and the establishment of a trust clearing and settlement system. Other areas include improving vaulting standards, studying vaulting services for foreign central bankers and sovereign entities and strengthening the vaulting and logistic standards. Chee Hong Ta, Singapore's Minister for National Development and MAS Vice Chairman, told reporters Friday that "we are not?placing a bet on whether?the price in the short-term will go up or down." What we do is create an ecosystem of gold trading activities based in Singapore. Chee stated that the plan was based upon industry feedback, and was intended to bring more gold and high value activity to Singapore as well as?creating employment. The working group was formed by MAS and SBMA in?January. Members of the group include DBS, ICBC Standard Bank JPMorgan UBS UOB SGX, and World Gold Council. OCBC announced in February that it was 'exploring physical gold custody' for wealthy and institutional clients. In an uncertain global climate, demand for gold remains strong, despite a recent sharp drop in prices triggered by a stronger dollar and a rise in oil prices.
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Rubio calls Iraqi Kurdish leader to discuss future of Kurdish people in Iraq
The 'State Department' reported that U.S. Secretary Marco?Rubio met with Kurdistan Regional Government (KRG) Prime Minister Masrour Barzani on a Thursday. He reportedly expressed "gratitude" for the KRG allowing oil from Iraq to reach international markets, including Kurdistan in Iraq. The State Department issued a statement saying that "the secretary expressed his gratitude to Kurdistan Regional Government, for allowing oil from Iraq to reach the global markets, including the 'Iraq Kurdistan Region. The Iran War has risen oil prices and shook global markets. The State Department said Rubio had "offered his sincere condolences to families of those Peshmerga who were killed in a?missile attack by Iran on March 24, and wished for a quick recovery to the injured." A Peshmerga press release said that at least?six Kurdish Peshmerga soldiers were killed in a rocket strike on their base in Iraqi Kurdistan north of Erbil, and another 30 were wounded. In a Peshmerga press release, the group said that Iran had carried out a "treacherous" attack. They also added?that six Iranian missiles hit a Peshmerga headquarters in Erbil north early on Tuesday morning. The Iran War?began February 28, when Israel and the U.S. attacked Iran. Tehran responded to the attack by attacking Israel and Gulf States with U.S. bases. The joint U.S. and Israeli strikes on Iran, as well as Israeli?attacks on Lebanon, have resulted in the deaths of thousands. Donald Trump, the U.S. president, has given a variety of goals and timelines for the war. These range from 'overthrowing Iran’s government' to destroying its military and missile capability. He said again on Thursday that he believes his side has won.
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Dubai crude's price slumps as sellers pile on offers to TotalEnergies
The spot premium for Dubai crude fell by more than half, reaching its lowest level in the last three weeks. More sellers appeared and increased their offers. TotalEnergies remained the sole bidder. The Middle East benchmark that is used to price millions of barrels of crude oil that Asia imports dropped to $17 a bar at Thursday's market?close, down by more than 60% compared to $51.20 a bar in the previous session. This highlights the severe?price instability due to the U.S. and Israel war with Iran that has disrupted the shipping in the Strait of?Hormuz. Three people have said that sellers such as Unipec Vitol Shell and BP began offering Dubai an hour before the trading window started. One of them said, "They had over an hour to continue offering (Dubai)." "Totsa was there, but they didn't try to counter them aggressively." Totsa is the trading arm of TotalEnergies and has been the only buyer of Middle East 'crude' during the Platts Window. It has purchased a total 69 Oman crude cargoes or 34.5 million barrels in the last month. Outside of office hours, the company was not immediately available for comment. It previously refused to comment on Dubai trades. Dubai's premium soared to a record high?of $65 a barrel last week, as the amount of crude? available for trading dropped after S&P Global Platts removed three of the five grades of crude oil in?anticipation of a long-term disruption?in shipping through the Strait of Hormuz. The price spike has led Asian refiners not to buy Middle East crude on the spot market, but instead purchase oil from Europe and Africa. (Reporting and editing by Florence Tan, Siyi Liu)
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New Zealand's contingency fuel plan is phased, but there are no immediate curbs needed.
New Zealand announced on Friday a four-phased strategy to manage the rising risks to petrol, jet fuel and diesel supplies. However, it said that no restrictions were needed at this time as the government was well-positioned to respond to potential energy shocks. Nicola Willis, Finance Minister of Canada, said that the country is in the first phase. This phase focuses on global developments and promoting voluntary fuel reductions. Willis said at a press briefing that there was no cause for immediate alarm. Companies have good confidence in fuel deliveries through the end of this month. She warned that the country should be prepared for disruptions in the event of a prolonged blockage of the Strait of Hormuz by tankers and a drop in refinery production. New Zealand is a country that is highly vulnerable to global supply disruptions. It imports nearly all its refined fuel. As of Sunday, New Zealand had 49 days worth of petrol, 46 of diesel, and 53 of jet fuel. This includes shipments on their way. The ministerial group overseeing the project will make any decisions regarding a change in phases, based on six criteria. These include changes to fuel stock levels as well as potential restrictions on exports from?refineries supplying New Zealand. In later stages, the plan could include stronger measures, such as prioritising fuel for emergency service, freight, food supply chains, and other key industries. Some employers may be encouraged to encourage employees to work from home. But?there's one place where we draw the line. We don't want children to be forced out of the classroom, as happened during COVID. Willis stated that we do not want children to be forced to learn at home. The government announced this week that it would temporarily allow the import of fuels?meeting Australian Standards for up to 12 months. This move was made in an effort to ease supply risks related to the Middle East Conflict.
Prices of iron ore fall after Cyclone Narelle spares Australian ports
Iron ore futures fell on Friday as traders unwound their?supply disruption bets following Tropical Cyclone Narelle's spared of vital port infrastructure in Western Australia.
As of 0330 GMT, the most-traded contract for May iron ore on China's Dalian Commodity Exchange?traded at $813.60 ($117.60) per metric ton.
The contract has still gained 0.13% this week.
On the Singapore Exchange, the benchmark April Iron Ore was $107 per ton. This is a 0.32% decrease. This week, it has fallen 1%.
Atilla Widnell is the managing director of Navigate Commodities. She said that iron ore futures will?likely experience a temporary corrective, because traders are relieved tropical cyclone Narelle did not affect vital Western Australian port infrastructure.
Even though the ports were closed, any damage to the infrastructure could have caused prolonged supply interruptions.
Widnell said that iron ore shippers are still concerned about bunker fuel and refueling, as the war in Iran continues to disrupt energy supplies, causing fuel rationing and increasing shipping costs.
The iron ore futures market was rangebound in the week ahead amid concerns about supply disruptions due to Australia and possible production cuts by steel mills related to environmental protection measures.
According to LSEG, data compiled shows that higher market risks also reduced transaction volumes.
Iron ore stocks are high.
A note from Shanghai Metals Market stated that hot metal production increased by 15,000 metric tonnes week-on-week this week. This indicates support for the demand.
Separately inventories of BHP’s Jimblebar Fines, a type of iron ore, in some Chinese ports fell to a near two-month-low after steelmakers rushed?to take delivery during a brief reprieve of an import ban of one week, traders said.
The ban was re-implemented in the past and is still in effect, along with BHP's Newman Fines.
Coking coal and coke, which are used to make steel, both fell by 2.43% & 1.75% respectively.
The benchmarks for steel on the Shanghai Futures Exchange have been moving lower. Rebar fell by 0.22%, while hot-rolled coils dropped 0.36%. Wire rod also weakened 0.3%, and stainless steel declined 0.62%. ($1 = 6.9132 Yuan) (Reporting and editing by Sumana Niandy).
(source: Reuters)