Aurelia Butler

SINGAPORE (Reuters) – The dollar began the week on a strong note on Monday, leaving its peers languishing near multi-year lows after a blowout U.S. jobs report that underlined the outperformance of the world’s largest economy versus the rest of the world.The euro and the New Zealand dollar were pinned close to a more than two-year trough at $1.0242 and $0.5565, respectively, in the early Asian session. Trading was thinned with Japan markets closed for a holiday.The Australian dollar struggled to break away from its weakest level in over four years of $0.6139. It last traded 0.1% higher at $0.6153.Data on Friday showed U.S. job growth unexpectedly accelerated in December while the unemployment rate fell to 4.1% as the labour market ended the year on a solid footing, leaving traders heavily scaling back bets of Federal Reserve rate cuts this year.”This latest round of data underlines the fact that U.S. economic exceptionalism remains a key market theme to start 2025,” said Nick Rees, head of macro research at Monex Europe.”The U.S. labour market has stabilised but is not continuing to unwind, and that combined with upside inflation risks stemming from the new (Donald) Trump administration … should support an extended pause to easing by the FOMC.”Markets are now pricing in just 27 basis points worth of Fed rate cuts this year, down from roughly 50 bps at the start of the year.Adding to expectations of a less aggressive easing cycle is the view that U.S. President-elect Donald Trump’s plans for hefty import tariffs, tax cuts and immigration restrictions could stoke inflation. He returns to the White House in a week.Ahead of that, data on U.S. inflation is due on Wednesday, where any upside surprise could threaten to close the door on easing altogether. A slew of Fed officials are also due to speak this week.The U.S. dollar was firm at 109.67 against a basket of currencies, hovering near its strongest since November 2022.Against the dollar, the yen fell 0.12% to 157.92. The scale of the yen’s decline was mitigated by news that Bank of Japan policymakers could raise their inflation forecast at a policy meeting this month as a prelude to hiking rates again.Sterling last rose 0.07% to $1.2204 but strayed not too far from a 14-month low of $1.2239, also pressured by concerns at home over rising borrowing costs and growing unease over Britain’s finances.”It feels like all roads lead to a lower GBP, and rallies should be contained and swiftly sold,” said Chris Weston, head of research at Pepperstone.In China, the offshore yuan was little changed at 7.3605 per dollar.The People’s Bank of China suspended treasury bond purchases on Friday, briefly lifting yields and spurring speculation it is stepping up defence of the Chinese currency. More

By Wayne ColeSYDNEY (Reuters) -Asian shares slipped on Monday while the dollar held near 14-month peaks after an unambiguously strong payrolls report shoved up bond yields and tested lofty equity valuations just as the earnings season gets under way.The impact of the jobs report on U.S. rate cut prospects also raised the stakes for consumer price figures on Wednesday where any rise in the core greater than the forecast 0.2% would threaten to close the door on easing altogether.Not helping, was a spike in oil prices to four-month highs amid signs of weaker crude shipments from Russia as Washington stepped up sanctions on the country.Markets have already scaled back expectations for Federal Reserve rate cuts to just 27 basis points for all of 2025, with the terminal level now seen around 4.0% compared to the 3.0% many had hoped for this time last year.”Given such strong data, we now expect the Fed to cut rates only once this year, by 25bp in June,” said Christian Keller, head of economic research at Barclays (LON:BARC).”We still expect the FOMC to proceed with a cut in June, as we expect the economy to slow in coming quarters and inflation to continue to decline in H1, before tariffs lead to some firming in inflation in H2.” At least five Fed officials are on the docket to speak this week and offer their reaction to the jobs surprise, with the influential Federal Reserve Bank of New York President John Williams appearing on Wednesday.The hawkish turn on rates lifted yields on 10-year Treasuries to 14-month peaks of 4.79%, and they were last trading at 4.764% in Asia.Higher yields on risk free bonds raise the discounting bar for corporate earnings and make debt relatively more attractive compared to equities, cash, property and commodities.They also raise borrowing costs for businesses and consumers, and that is before President-elect Donald Trump’s proposed tariffs inflate import prices.This could test the optimism around corporate earnings as the season kicks off with the major banks on Wednesday, including Citigroup (NYSE:C), Goldman Sachs and JPMorgan.BEARS EYE STERLINGA holiday in Japan made for thin early trading on Monday and MSCI’s broadest index of Asia-Pacific shares outside Japan edged down 0.4%.While the Nikkei was shut, futures traded down at 38,770 compared to a cash close of 39,190.South Korean stocks eased 0.2%, with the political situation still in flux as a Constitutional Court hearing begin on Tuesday to decide if impeached president, Yoon Suk Yeol, will be removed from office or reinstated.Over in China, trade figures for December are due later Monday followed by data on gross domestic product, retail sales and industrial output on Friday.S&P 500 futures and Nasdaq futures were both off 0.1%, following Friday’s pullback. The inexorable rise in Treasury yields has boosted the dollar across the board and seen the euro fall for eight weeks straight to huddle at $1.0240, just above its lowest since November 2022. [USD/]The dollar was steady at 157.84 yen, though off a six-month top of 158.88 amid reports the Bank of Japan might revise up its inflation forecasts this month as a prelude to hiking rates again. Sterling was pinned near 14-month lows at $1.2202, with sentiment soured by a recent rout in the gilt market on concerns the Labour government would have to borrow more to fund spending pledges. [GBP/]British finance minister Rachel Reeves on Saturday vowed she would act to ensure the government’s fiscal rules were met. Gold prices were holding firm at $2,688 an ounce, having proven surprisingly resilient in the face of a stronger dollar and higher bond yields. [GOL/]Oil prices continued to climb on supply concerns as Russia’s seaborne exports hit their lowest since August 2023, even before the latest round of U.S. sanctions. [O/R]Brent jumped $1.43 to $81.19 a barrel, while U.S. crude surged $1.50 to $78.07 per barrel. More

DUBLIN (Reuters) – Financiers and lessors who make the global air travel industry tick gather for an annual meeting in Dublin on Monday, buoyed by strong lease rates and relatively stable oil prices but facing uncertainty over jet shortages and trade tensions.Ireland is home to the worldwide aircraft leasing industry, which controls about half the world’s airline fleet, and the Airline Economics gathering provides an early chance each year to monitor economic and trade risks around the globe.Leasing companies have seen rentals and resale values for jetliners rise as airlines try to meet new demand at the same time as planemakers are struggling to recover from the COVID-19 pandemic.For now, that means good profits for lessors and many airlines, since shortages push up demand and fares. But there are concerns over access to efficient new aircraft as supply chains lack parts and labour. Older second-hand planes have been in strong demand to fill the gap.”The main question for the industry is the speed at which manufacturers will be able to ramp up deliveries. That will determine a lot of other things,” said independent aviation adviser Bertrand Grabowski.He said lease rates had started to plateau with airlines increasingly unwilling to add capacity at any cost.Delegates are split on how long the shortage will last. “Several lessors and observers think the market can return to an excess of capacity after three years or so,” Grabowski said. Others believe the removal of some 4,000 jets left unbuilt during the pandemic will keep airlines short of jets for longer.Airbus is targeting production of 75 A320-family jets a month in 2027, having pushed back the goal repeatedly due to supply woes. Boeing (NYSE:BA) is edging back towards 38 of the competing 737 MAX a month – an interim ceiling imposed by regulators following the blow-out of a door plug on a 737 MAX a year ago.TARIFF TALKMany of the roughly 3,000 delegates heading to the Irish capital will also be weighing up the potential impact of the change of power in the United States, a week before President-elect Donald Trump is sworn in for a second term.Trump has promised to impose sweeping tariffs, which some analysts think could affect supply chains of aerospace and other industries while dampening air cargo demand.The head of the world’s second-largest lessor Avolon, Andy Cronin, said any impact on supply chains would be “unhelpful” at a time when airplane factories are struggling to meet demand. Avolon, a major customer of both Boeing and Airbus, has said the world’s dominant planemakers will continue to face capacity constraints for at least a decade.”Any increased costs or challenges that require reorienting … supply chains will be unhelpful to the recovery of stability in that system,” Cronin told Reuters.The airline industry has seen mixed results in the last year, hampered by the delivery delays, slow engine repairs, security issues in the Middle East and growing labour disputes. In December, airlines body IATA predicted record passenger numbers in 2025, with revenues set to reach more than a trillion dollars. But a recovery of travel from China and by business travellers has been slower than expected.Also under the microscope, Grabowski said, is the impact of a surging U.S. dollar on airlines that have to pay for fuel and planes in dollars but get revenues in fragile local currencies.MSCI’s emerging market currencies index is trading close to six-month lows. In India, the world’s fastest-growing air travel market, the rupee hit a record low on Friday. More

TOKYO (Reuters) -Prospects of sustained wage gains in Japan and the boost to import costs from a weak yen have heightened attention within the central bank to rising inflationary pressures that may lead to an upgrade in its price forecast this month, sources said.Even if the Bank of Japan were to raise its inflation forecast, the upgrade alone won’t lead to an interest rate hike if it is driven by temporary factors such as the rising price of rice and higher import costs, said three sources familiar with the bank’s thinking.The BOJ could hike rates this month if the board is convinced that sustained, broad-based wage hikes will take hold, and keep inflation durably at its 2% target, they said.”Risks to inflation are skewed to the upside due partly to renewed yen falls,” said one of the sources, a view echoed by another source.”Wage momentum also appears to be strong,” a third source said, adding the board may discuss revising up its inflation forecast for the fiscal year beginning in April.The BOJ will likely debate whether to raise interest rates from the current 0.25% at its policy meeting on Jan. 23-24. It will also issue fresh quarterly growth and price forecasts that serve as the basis for setting monetary policy.Under current forecasts, the board expects core consumer inflation to hit 1.9% for both fiscal 2025 and 2026. While the board has yet to discuss details of its forecasts, recent data and surveys have pointed to rising inflationary pressures.The yen is currently hovering at 158 to the dollar, down from around 140 hit in September and near levels hit when the BOJ hiked rates in July last year.Core inflation accelerated in November to 2.7% as the weak yen pushed up import costs, adding to stubbornly high prices of rice.Rising wages are adding to inflationary pressure, backing up the BOJ’s argument that Japan is on track to sustainably achieve its 2% inflation target – a prerequisite for further rate hikes.Wage hikes are spreading to companies of all sizes and sectors, the BOJ said in a quarterly report on Thursday, signaling that conditions for a near-term rate hike were continuing to fall into place.”The need to raise pay is more widely shared among small firms,” Kazushige Kamiyama, the BOJ’s Osaka branch manager, told a news briefing on Thursday. “We can expect solid wage gains this year.”While such optimism heightens the chance of a rate hike at the BOJ’s January meeting, Governor Kazuo Ueda has flagged uncertainty over U.S. President-elect Donald Trump’s policy as a reason to tread cautiously in pushing up borrowing costs.If comments and policies announced after Trump’s inauguration on Jan. 20 trigger volatile market moves, the BOJ could put off hiking rates again, some analysts say.Markets are focusing on BOJ Deputy Governor Ryozo Himino’s speech and news conference on Tuesday, for fresh hints on whether the bank could hike rates this month. More

GS expects two rate cuts in 2025- in June and December, and one additional cut in 2026, bringing the Fed’s terminal rate to 3.5% to 3.75%, from current levels of 4.25% to 4.5%. The investment bank’s shift in expectations came just after stronger-than-expected nonfarm payrolls data for December, which spurred increased bets that the Fed will have little immediate impetus to keep cutting interest rates. The reading also triggered steep losses on Wall Street.The Fed cut rates by 1% through 2024, but warned of a much slower pace of cuts this year. The central bank had effectively slashed its outlook on rate cuts to a projected two from four for 2025, citing concerns over sticky inflation and a strong labor market. GS analysts said that while their baseline forecast for rates remained somewhat more dovish than market pricing, it was hard to have “great conviction in the timing of cuts” due to expectations of robust U.S. economic data, which made cuts reasonable but not critical. The investment bank also said that it was uncertain over how the Fed will navigate increases in trade tariffs under incoming President Donald Trump, who will take office next week. Trump has vowed to impose steep import tariffs on several major U.S. trading partners, especially China. But American importers are expected to pay the tariffs, heralding an increase in domestic goods and services that are reliant on imports. Still, GS analysts said they did not expect Trump’s fiscal and immigration policies to have a perceptible impact on inflation, and that tariffs would likely not raise inflation enough to warrant interest rate hikes or to unsettle Wall Street.  More

LONDON (Reuters) -Zambia’s Securities and Exchange Commission (SEC) has sanctioned Standard Chartered (OTC:SCBFF) for mis-selling a Chinese property company’s bonds to one of the bank’s local wealth clients at the height of the Asian country’s real-estate crisis, according to a source. The source familiar with the matter told Reuters that the UK-headquartered bank, which is currently looking to sell its wealth and retail banking businesses in Zambia, was facing “enforcement action” for two breaches of SEC rules following a months-long investigation.The first was that it had failed to disclose “material information” about the bonds it sold in March 2022. Those bonds, issued by state-backed Chinese developer Sino-Ocean, defaulted just over a year later and are now, like many in the sector, almost worthless. In addition, the SEC found Standard Chartered had also used “exclusionary” contract clauses, which meant the client held all responsibility for the risks, which goes against Zambia’s securities rules.In a statement to Reuters, Standard Chartered said: “We respect the outcome of the Securities Exchange Commission in Zambia, however, in accordance with appropriate local procedures we will respectfully be exercising our right to appeal.” “We are fully aware of this matter, and we are reviewing the necessary details to clarify the situation. It is our priority at the Bank to ensure compliance with regulatory standards across all of our markets.” The SEC, which started its investigation of the case in April, said it was not able to comment on the matter when asked by Reuters. Under Zambia’s Securities Act, Standard Chartered now has 30 days to lodge its appeal.Zambia’s SEC has the power to fine, or publicly or privately “censure or reprimand” lenders, although it can’t formally order them to compensate customers for mis-selling. Reuters wasn’t able to establish what penalty the regulator is planning to impose on Standard Chartered.The lender announced in November it was looking to sell its Zambian wealth and retail banking businesses alongside those in nearby Botswana and Uganda. It has operated in Zambia for nearly 120 years making it the country’s oldest bank. It is currently reducing its overall footprint in Africa, however, having also sold its Tanzania business and subsidiaries in Angola, Cameroon, The Gambia, and Sierra Leone in the last couple of years. More

$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

(Reuters) – A look at the day ahead in Asian markets. If the reaction in U.S. stocks, bonds and the dollar to Friday’s sizzling U.S. employment report is any guide, Asian markets are in for a bumpy ride on Monday, rocked by another whoosh higher in bond yields and inflation fears.The U.S. economy created over a quarter of a million net new jobs and the unemployment rate fell last month, reflecting a robust labor market. That’s good news. But the bad news for asset markets, especially in emerging and Asian economies, is the impact on borrowing costs and the dollar.Treasury yields surged to the highest in over a year, the dollar hit a two-year peak, and traders are now only predicting one quarter-point rate cut from the Fed this year, in September.The S&P 500 fell to its lowest since November 5, the day of the U.S. presidential election, and it looks like soaring bond yields could crush investors’ appetite for risky assets like stocks.Japanese futures are pointing to a fall of more than 1% at the open in Tokyo on Monday, and it will be a similar story around the continent. Sentiment is already fragile, as the explosive rise in long-term bond yields has tightened financial conditions everywhere. According to Goldman Sachs, aggregate emerging market financial conditions are the tightest since late 2023.Uncertainty over the potential hit to growth in Asia – especially China – from the incoming Trump administration’s ‘America First’ trade policies is another reason to be cautious if not outright bearish.Trade figures from China on Monday are unlikely to lift the gloom. Economists polled by Reuters expect export growth accelerated in December while imports contracted for a third straight month.December’s import figures are likely to garner more attention as they reflect the strength of domestic demand, and can therefore perhaps be seen as an early sign of how successful Beijing’s stimulus efforts have been. The trade figures are the first clutch of top-tier indicators from China this week which include house prices, retail sales, industrial production, investment, unemployment and culminate on Friday with fourth-quarter and full-year GDP.Investors will also assess the People’s Bank of China’s announcement on Friday that it has suspended treasury bond purchases, spurring speculation it is stepping up defense of the yuan. Will this be enough to put a floor under yields and the yuan? The annual Asian Economic Forum opens in Hong Kong, and among the speakers on Monday are Hong Kong Monetary Authority Chief Executive Eddie Yue, China Investment Corp’s CIO Liu Haoling, and European Central Bank board member Philip Lane.Meanwhile, Indian inflation on Monday is expected to show that the annual rate cooled slightly in December to 5.3% from 5.5% in November. Here are key developments that could provide more direction to markets on Monday:- China trade (December)- India CPI inflation (December)- Asia Economic Forum More