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McGeever: Trump blinks at the bond market's teeth as it grows bigger and worse.
Donald Trump, the president of the United States, is learning - again - how powerful and unforgiving bond markets can be. The sovereign debt markets have been hit by a global selloff, with rising inflation driving yields on bonds of long duration to the highest level in decades. The yield on the 30-year U.S. Treasury hit 5.20% on Wednesday, its highest since 2007. BNP Paribas' analysts predict a "deanchored rise" to 5.50% or even higher. The Federal Reserve's response function has changed dramatically, and traders are now predicting a rate increase by December with a 80% probability. They were preparing for two to three rate cuts in this year before the Iran war. The U.S. doesn't stand alone. Monday, the 30-year gilt yield climbed to 5.90% - its highest level since 1998. The UK bond sale has been fuelled not only by inflation concerns but also by increasing alarm about the country's financial outlook. It's already having political consequences. Andy Burnham, mayor of Manchester and widely considered the frontrunner for replacing embattled PM Keir starmer in a leadership race, reneged on a pledge made earlier to ease fiscal rules by the government if he won. Trump might seem to share little with a leftist mayor from the northern?of England. The rate drop and inflationary spike have been so extreme that Trump now seems to be backing off some of his previous pledges. In recent days, Trump has toned down his expectations that the incoming Fed chair Kevin Warsh would preside over rapid and aggressive rate reductions. Trump said in an interview published by Fortune magazine on Monday that he might have to wait for the war against Iran to be over before lowering interest rates. "You can't look at the numbers until the war ends," he said. Trump continued his comments on Tuesday by telling the Washington Examiner that he would let Warsh do what he wanted to do in regards to interest rates. He's very talented, and he will be fine. REALITY CHECK Uncertainty surrounds whether Trump's softening of his stance on interest rates was a result of his own assessment or that of Treasury Secretary Scott Bessent. Bessent is a former hedge-fund manager and former George Soros colleague who has been familiar with bond market sentiments for a long time. Trump seems to accept the fact that rates will not be reduced any time soon. The energy supply shock caused by the Iran War and the closing of the Strait of Hormuz has led to a surge in price pressures. This is because a fifth of all global oil and LNG supplies pass through this sea route. Inflation has also been higher than the Fed's target of 2% for over five years, and it is now on course to exceed 4%. According to a survey by the Philadelphia Fed of professional forecasters, CPI inflation is expected to average 6% in this quarter. Be Rational This backdrop is causing the pressure on the bond markets to increase rates. The spread between the two-year and the fed funds target is the largest in more than three decades. Investors are clearly saying that the Fed needs to tighten its policy. Tim Duy, SGH Macro Advisors, argues that the Fed will raise rates in September if it is "rational". It would still be less than two month before the midterms, which is a time that Trump will not like. Duy says that inflation is a "clear political liability" for Trump as he enters these elections. This complicates the president's calculations. Even though Trump may no longer be as fervent about lower rates, that doesn't mean he's now open to higher rates. Trump told CNBC about a month back that he'd be disappointed if Warsh did not?cut interest rates immediately. He posted on his Truth Social platform only two weeks ago: "Interest rates too high!" Reality, as reflected in the $30 trillion U.S. Bond Market, is beginning to bite for the moment. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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UN supports world court climate opinion, U.S. is among few who oppose
The United Nations General Assembly voted on Wednesday, 141-8, to support a 'world court opinion' that states have a legal duty to address climate change. UN Secretary General Antonio Guterres stated that the vote in which 28 countries abstained underscored the fact that governments must protect citizens from an "escalating crisis of climate change." He said that he welcomed the adoption of a resolution by the General Assembly on the ICJ advisory opinion on Climate Change. It was a powerful affirmation of international law, climate justice and science, as well as the responsibility of governments to protect their citizens from the escalating crisis. The resolution brought forward by Vanuatu affirms a July 20, 2025 advisory opinion of the 'International Court of Justice' (ICJ), that states are obligated by law to reduce their fossil fuel usage and combat global warming. The opinion, while not legally binding is expected to be used in legal cases involving climate change around the world. The United States, along with Saudi Arabia, Russia and Israel, Yemen, Liberia, Belarus, and Iran, joined Saudi Arabia in opposing the resolution. Turkey, India and oil producers Qatar, Nigeria and Qatar, who hosted the COP31 climate conference, were also abstaining. The Trump?administration removed the U.S.from the Paris Climate Agreement?and other?major?environmental accords and has pursued a policy to boost fossil fuel production. The resolution contains inappropriate political demands relating to fossil?fuels, said U.S. deputy ambassador to the?UN Tammy Bruce. Washington did not see any basis to require the secretary-general?to report on the legal questions raised. Vishal 'Prasad is the director of Pacific 'Islands Students Against Climate Change. The group that led the campaign to get an ICJ opinion called the vote a "commitment" to make it a reality. (Reporting and editing by Sanjeev?Miglani; Reporting by Valerie Volcovici)
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SoftBank-backed SB Energy files confidentially for US IPO
SB Energy, a power?infrastructure company, has filed a confidential IPO in the United States, it said?on Wednesday. The firm is looking to capitalize on investor demand for new listings. Investors are driving the IPO market, and recent'strong debuts' of AI chipmaker Cerebras Systems as well as geothermal -energy firm Fervo Energy have boosted confidence in firms that want to tap into public markets. SpaceX filed for an IPO in the U.S. on Wednesday. SB Energy is a large-scale infrastructure project developer backed by the SoftBank Group and OpenAI. The company was founded in 2019 and is currently building data center campuses for the rising demand of AI workloads. SB Energy announced in?January its partnership with OpenAI, as part of Stargate. Stargate is a U.S. Initiative to build next generation AI and energy infrastructure. According to its website, the company has raised over $18 billion for project capital. It also boasts a portfolio of?about 5 Gigawatts in operating and under-construction energy. Companies can prepare for IPOs without the scrutiny of the public by filing confidential documents with 'the U.S. Securities regulator. Reporting by Prakhar Shrivastava, Bengaluru. Editing by Shilpi Major and Shailesh Kuber.
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Oil and bond yields fall amid hope for Iran deal
U.S. treasury yields fell and oil prices dropped on Wednesday, as investors grew hopeful that the U.S. was close to a deal with Iran to end a war?in?the Middle East. Major stock indexes also rose - with?chipmaker stocks rising ahead of Nvidia quarterly results. Investors continue to watch headlines to see if there are any signs that the U.S. is making progress in its negotiations with Iran. Donald Trump, the U.S. president, said that on Wednesday negotiations with Iran are in their final stages. He also warned of more attacks if Iran does not agree to a deal. Trump said that the United States would wait for a few more days to get the "right response" from Iran. The U.S. Dollar fell from its?six week high while U.S. Crude fell $5.89 and settled at $98.26 per barrel. Brent fell $6.26 and settled at $105.02. Shipping data revealed that there were also some signs of an easing of the Gulf pressure on Wednesday, when two Chinese oil tanks left the Strait of Hormuz. The yield on the benchmark 10-year U.S. notes dropped 9.4 basis points, from 4.669% at late Tuesday. Recently, yields reached multi-year highs on inflation fears fueled by war. Consumer discretionary led the gains among S&P sectors. Jake Dollarhide is the CEO of Longbow Asset Management, located in Tulsa. He added that "pessimism is on the horizon" because the Fed has been pushed into a corner by higher oil prices. Fed funds futures traders have priced in about 50% odds that rates will be raised by the Federal Reserve in December. This is a dramatic change from the markets' expectations before the Iran War began in late Febuary, when they had been expecting two rate cuts for this year. The Dow Jones Industrial Average rose by 645.47, or 1.31 %, to 50,093.55. The S&P 500 gained 79.36, or 1.08 %, to 7,432.97. And the Nasdaq Composite increased by 399.65, or 1.55% to 26,270.36. The MSCI index of stocks around the world rose by 9.86 points or 0.90% to 1,101.65. The STOXX 600 pan-European index increased by 1.46%. In Europe and Japan too, longer-dated bonds were sold, but like Treasuries they also found relief on Wednesday. The benchmark yield for the eurozone, Germany's 10-year bond, has fallen 3 basis points to 3.16% from its 15-year high on Tuesday. The benchmark yield on 10-year U.S. Treasury bonds reached its highest level in 16 months Tuesday. Meanwhile, 30-year yields have hit their highest levels since 2007. NVIDIA RESULT, SPACEX FILING Nvidia's shares fell slightly after the close bell. The company announced an $80 billion program to repurchase shares and forecasted second-quarter revenues above Wall Street expectations. The stock closed the regular session with a 1.3% gain. The index of semiconductors closed the regular session with a 4.5% gain. After the closing bell, SpaceX also revealed its IPO filing. The company, which has revolutionized rocket tech, opened their books. This listing could be the first trillion dollar U.S. stock market debut. The dollar index (which measures the greenback against a basket including the yen, euro and a few other currencies) fell by 0.22% on the currency market to 99.09 while the euro rose by 0.22%, reaching $1.163. The dollar fell 0.14% against the Japanese yen to 158.81. Spot gold increased 1.39%, to $4543.55 per ounce. Reporting by Caroline Valetkevitch and Alun Qiu in New York; Additional reporting by Stella Qiu, Editing by Nick Zieminski & Matthew Lewis
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SpaceX's IPO: The Road to Success
Elon Musk filed SpaceX's hotly anticipated U.S. Initial Public Offering?on Wednesday. This move has transformed space exploration from being a speculative endeavor to a mainstream investing theme. Here's a timeline of SpaceX’s journey towards its blockbuster IPO. Elon Musk founded SpaceX in March 2002 using the money he earned from selling PayPal. SpaceX launched its first rocket in March 2006, but it failed. September 2008 - Falcon 1 was launched successfully by SpaceX for the first launch and became the world's first liquid-fuel rocket. SpaceX signed its first major contract in December 2008 with NASA for the transportation of cargo and supplies to International Space Station. May 2012 - SpaceX Falcon 9 rockets launched a Dragon capsule into space, becoming the first private spacecraft docked at the ISS. Falcon 9 Rocket explodes in mid-air on June 15, 2015. December 2015 – First successful vertical landing of Falcon 9 rocket. This was the first large rocket to successfully recover from a controlled landing after it had delivered a payload in orbit. February 2018 - Musk's Tesla Roadster, and its mannequin Starman driver, were launched into space by the?first Falcon Heavy launch. April 2019 - Crew Dragon capsule explodes during a ground test. May 2019 - SpaceX started launching Starlink satellites. This constellation is capable of beaming high-speed internet signals from space to customers all over the world. October 2020 - SpaceX completes its 100th successful Falcon rocket flight?since Falcon 1 flew into orbit for the first time in 2008. SpaceX Crew-1 will be the first operational mission in NASA's Commercial Crew Program. NASA has awarded SpaceX a contract for the first commercial human landing on the Moon as part of the Artemis program in April 2021. SpaceX launches the first ever all-civilian crew to orbit the Earth in space on September 20, 2021. NASA's Double Asteroid Redirection Test mission (DART) was launched in an interplanetary transfer orbit on a SpaceX rocket. This marks the first ever test of a planet defense system that is designed to protect Earth from a possible asteroid impact. April 2023: First Starship Rocket explodes after losing control. November 2023: Starship launch fails minutes after reaching the space. November 2023: A U.S. Judge?blocked the U.S. Department of Justice's pursuit of an administrative case accusing Elon Musk’s SpaceX of refusing to illegally hire refugees and asylum seekers. September 2024: The SpaceX Polaris Dawn spacecraft performed its first privately-managed spacewalk. SpaceX's "Starship" rocket fragmented in space just minutes after it was launched from Texas. This forced airline flights flying over the Gulf of Mexico, to change course to avoid falling debris. Starship explodes during a test on the ground in June 2025. February 2026 - SpaceX acquired Musk's artificial-intelligence startup xAI in a record-setting deal worth $250 billion, unifying the world's richest man's AI and space ambitions by ?combining the rocket-and-satellite company with the maker of the Grok chatbot. Musk stated that SpaceX will be focusing on building "a self-growing city" (February 2026) on the Moon. NASA official stated that the Starship rocket has been delayed by at least two years since NASA selected it as an astronaut'moon lander' in 2021. It is expected to need a?more amount of time before landing on the moon. SpaceX files its U.S. initial IPO confidentially in April 2026, laying the foundation for what could be one of the largest stock market flotations ever. SpaceX files its long-awaited U.S. IPO in May 2026, and it is expected to be the largest listing ever. (Reporting and editing by Leroy Leo, Anil D'Silva and Arasu Kanagi Basil in Bengaluru)
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Bond yields and oil prices fall amid hope for an Iran deal
U.S. Treasury Yields and Oil Prices fell on Wednesday, as hope increased that the U.S. was close to a deal with Iran in order to end the Middle East war. Major?stock indices also rose before the closely-watched results from Nvidia. Investors continue to watch headlines in search of signs that the U.S. is making progress with Iran on ending the war. Donald Trump, the U.S. president, said that negotiations with Iran are in their final stages. He also warned of more attacks if Iran does not agree to a deal. Trump said that the United States would wait for a few more days to get the "right response" from Iran. The U.S. Dollar fell from its six-week high while U.S. Crude fell $5.89 and settled at $98.26 per barrel. Brent fell $6.26 and settled at $105.02. Shipping data revealed that there were also "tentative" signs of an easing of Gulf pressure on Wednesday as two Chinese oil tanks left the Strait of Hormuz. The yield on the benchmark 10-year notes in the U.S. The yield on 10-year notes dropped 9.4 basis points from 4.669% to 4.576% late Tuesday. Recently, yields reached multi-year-highs on inflation fears fueled by war. Nasdaq was the leader on Wall?Street while S&P 500 consumer discretionary sector gained the most. Jake Dollarhide of Longbow Asset Management, Tulsa (Oklahoma), CEO, said that there is a renewed sense of optimism because oil prices and yields have fallen. He said that "pessimism is on the horizon" because the Fed has been pushed into a corner by higher oil prices. Fed funds 'futures traders have priced in about 50% odds that the Federal Reserve would raise rates in December. This is a dramatic change from the markets expectations before the Iran War began in late Februrary, when they had been expecting two rate cuts for this year. The Dow Jones Industrial Average rose by 581.66, or 1.12%, to 49.945.54, while the S&P 500 gained 68.20, or 0.9%, to 7,421.81, and the Nasdaq Composite gained 344.12 or 1.33% to 26,214.83. The MSCI index of global stocks rose by 9.25 points or 0.85% to 1,101.04. The STOXX 600 pan-European index increased by 1.46%. In Europe and Japan too, longer-dated bonds were also on the decline, but like Treasuries they saw some relief Wednesday. The benchmark yield for the eurozone, Germany's 10-year bond, has fallen 3 basis points to 3.16% from its 15-year high on Tuesday. The benchmark 10-year U.S. Treasury rate reached its highest level in 16 months on Tuesday, while the 30-year Treasury rate hit its highest level since 2007. NVIDIA RESULT AHEAD Nvidia will report its first-quarter results after the U.S. market close. According to the median estimate of an LSEG analyst survey, expectations remain 'high.' Revenue is expected to increase by nearly 80%, to $79 billion. Nvidia's shares rose 0.9%. Samsung shares had fallen as high as 4.4% before they closed near flat. Samsung Electronics union announced that it would suspend its strike scheduled to start on Thursday, after the two sides had reached a tentative wage agreement. This could have prevented a potential disruption of the production AI chips and other. The index of semiconductors rose?3.8%, well ahead of?Nvidia's results. On the currency market, the dollar index (which measures the greenback in relation to a basket of currencies, including the yen, the euro and others) fell by 0.22%, while the euro rose by 0.22%, reaching $1.163. The dollar fell 0.14% against the Japanese yen to 158.81. Spot gold increased 1.3%, to $4,539.60 per ounce. Stella Qiu, Caroline Valetkevitch and Alun Johnson in New York; Stella Qiu, additional reporting; Mark Potter, Kirby Donovan and Nick Zieminski, editing.
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Gold prices rise as Treasury yields and oil prices ease
Gold prices increased?1% Wednesday as the oil market was pressured by hopes of a?a?resolution in the Iran conflict. This helped to ease inflation concerns and pushed U.S. Treasury yields down from recent highs. Gold spot rose 1.1%, to $4,531.9 per ounce at 14:10 pm. ET (1810 GMT). Earlier in the session, prices fell to their lowest levels in over seven weeks. U.S. Gold Futures for June Delivery?settled at $4,535.30, up 0.1%. We've noticed a respite from the continuous increase in yields. As a result of this, gold prices have bounced off their recent lows, said David Meger. Director of metals trading, High Ridge Futures. The yield on the benchmark 10-year U.S. Treasury Note ticked down after reaching its highest level since Jan 2025 on February 2. The higher the Treasury yield, the greater is your opportunity cost to hold non-yielding gold. Meger said that "any type of resolution of the 'war' or opening of the Strait of Hormuz could be positive for the Gold Market in that it would lead to a reduction of interest rates, which would then be helpful or opportunistic to the market." Brent crude futures fell after U.S. president Donald Trump said again that the war with Iran will end "very soon." Investors remained cautious about the outcome of the peace talks, as Middle Eastern supply disruption continued. Minutes of the Federal Reserve meeting in April showed that officials had warned that the Iran war might fuel inflation. This boosted support for a rate hike. Gold that does not yield, despite being an inflation hedge is less effective in environments with high interest rates. According to CME’s FedWatch tool, investors are pricing in a 48.6% probability that the Federal Reserve will?raise interest rates in December and an 89.6% likelihood it will maintain current rates at its June meeting. Citi also said that it was'staying cautious in the near term on gold, with a zero to three-month price target of $4300/oz. Silver spot rose by 3.1%, to $75.06 per ounce. Platinum gained 1%.6 at $1,952.30 and palladium increased 1.5% to $1,373.62. (Reporting from Anjana Anil, Bengaluru; additional reporting by Anmol Chaubey; editing by Kirsty Donovan and Shakesh Kuber).
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EU opens the door to a finalised US trade agreement and prevent Trump tariff hike
The European Union reached a provisional agreement with Washington on Wednesday regarding legislation that would remove import duties from U.S. products. This is a crucial part of the trade deal signed in July. It will likely prevent higher U.S. Tariffs on EU Products. According to the agreement reached at?U.S. Under the deal struck at?U.S. After nearly 10 months, the European Parliament, which represents the EU government, and the Council, an EU-wide body, have agreed on a text that will allow EU duty reductions into effect. After five hours of negotiation, they agreed on strengthened provisions that would suspend concessions if Trump violated the agreement?and a sunset provision to terminate the deal by the end of the year 2029 without new legislation renewing it. Andrew Puzder, the US ambassador to the EU, congratulated them on the deal. In a blog post, he wrote: "We are encouraged by this step (while reviewing the details carefully)." This internal EU agreement should calm the tumultuous world's biggest?trading partnership, which involves an annual exchange rate of $2 trillion worth of goods and services. It comes a week following Trump's trip to China, where he made some nice remarks but did not make any major breakthroughs. The EU relies on the U.S. for about 20% of its exports. But Trump wants to cut the $200 billion goods trade deficit. Zeljana Zovko is the European People's Party's lead negotiator on the U.S. trade deal. She said, "I'm proud to announce that Europe avoided a damaging increase in?transatlantic tensions, and has protected European businesses, investments, and millions of jobs both on sides of the Atlantic." "The EU is a leader in defending our interests, and it walks the walk." Once approved, this will boost transatlantic cooperation and stability," European Trade Commissar Maros Sefcovic said on X. The American Chamber of Commerce within the EU expressed relief at the signing of the agreement. It said that it was an important step for companies who rely on stable trading and investment relationships across the Atlantic. SpiritsEurope also praised the agreement, stating that it would increase stability and predictability. German Economy Minister Katherina reiche said that it would provide planning certainty for business. TRUMP SET JULY 4 DEADLINE Trump said that he would increase tariffs on EU cars to 25%, up from 15% currently. He had previously threatened to do so. After Trump's threats of imposing?new tariffs? on European allies if they did not support his acquisition of Greenland, and after the U.S. Supreme Court ruled against his global tariffs, EU lawmakers had paused twice the necessary legislation. The EU should meet Trump's deadline of July 4, with the final vote in the European parliament expected to take place?inmid-June. Bernd Lange expressed his confidence that the European Parliament would vote for the deal, saying it provided a "safety-net" to deal with an unpredictable U.S. Administration. EU lawmakers wanted stronger guarantees. However, the two sides refused to accept the proposed "sunrise" clause under which the EU only reduced duties if the U.S. met its part of the agreement. The "sunset" clause was then pushed back from the 'end of March 2028' to the 'end of 2029. The European Commission may also suspend tariff preferences before the end of the year, if the United States maintains tariffs above 15% on "derivatives" such as wind turbines and fridges. EU governments were less keen to insert such items because they feared that it could create uncertainty and anger the Trump administration. Reporting by Philip Blenkinsop in Bengaluru and Mrinmay dey in Mexico City. (Editing by Alex Richardson and Lincoln Feast)
If the Iran war continues, Brazilian pulp giant Suzano expects prices to rise for toilet paper and tissues worldwide
Brazilian pulp giant Suzano announced on Friday that toilet paper, tissue and diaper prices will increase globally as companies try to cover higher transportation and 'chemical' costs if the U.S. and Israeli war against Iran continues.
Suzano is the largest producer of pulp in the world, with a market capitalization of more than $60 billion. This pulp is used to manufacture Kimberly-Clark Cottonelle toilet papers, Kleenex tissues and sanitary products, as well as diapers, cardboard packaging, and other everyday items.
The Iran War has caused a spike in oil prices, which have increased Suzano’s costs for shipping, trucking and rail.
Paulo Leime is the managing director of Suzano for Europe, Middle East and Africa.
Leime stated that "it will put pressure on the paper prices." "If this crisis continues...inflation should be back across ?multiple products, not only paper and tissue."
He did not provide any details on when prices could start to increase. His comments reflect widespread concerns that rising prices for food, petrol, and other basic goods could increase inflation, putting pressure on households.
Suzano, he said, has hedged against rising prices for certain raw materials including oil. However, indirect costs for chemicals that are key to pulp production such as caustic soda, sulphuric acids, and other chemicals, have also risen.
He warned that the "significant impact" had been felt on the business in the Middle East, where it holds a significant share of the market in Dubai, Abu Dhabi, Bahrain and Qatar.
The pulp industry, which is the fourth most energy-intensive sector in the economy, is particularly affected by the rising energy prices. Since the beginning of the war, the company's share price has fallen by?more than 15 percent.
Leime said that Suzano’s production will not be affected by rising energy prices, as its industrial sites are energy-independent.
Leime stated that the major?impacts will be on fuel prices.
Leime stated that Suzano now ships pulp to the Middle East via the Mediterranean and the Suez Canal, paying for "expensive trucking" through Saudi Arabia and Jordan. Richa Naidu is the reporter. (Editing by Josephine Mason, David Gregorio and David Gregorio.)
(source: Reuters)