Aurelia Butler

NEW YORK (Reuters) – Global sales of corporate bonds with environmental, social and governance (ESG) targets will rebound this year and top $460 billion, Barclays (LON:BARC) said, after the asset class had its first setback in 2022 as higher interest rates weighed on credit markets.ESG bond volumes swelled over the past few years but dropped by 22% in 2022 amid a broader slowdown in corporate bond issues, as companies faced significantly higher borrowing costs due to aggressive monetary tightening actions by global central banks fighting inflation.Corporate ESG bond issuance fell to $362 billion last year from $461 billion a year earlier, Barclays said in a credit research note. It expects ESG bond sales to grow by 30% this year and rebound to almost the same levels of 2021, predominantly driven by green bonds.”We expect green bond issuance to continue to dominate the market thanks to strong demand and a long list of green projects that need funding as companies put decarbonisation plans into action,” Charlotte Edwards, Head of ESG FICC Research at Barclays, said in the note. Shifting the planet’s energy system away from fuels that emit greenhouse gases will cost $2 trillion a year by 2030, according to estimates from the International Energy Agency.Companies and banks have crafted new instruments to help fund the transition.Among ESG debt options, green bonds’ dominance is yet to be challenged by a newer type of instrument, sustainability-linked bonds, which carry penalties for borrowers if they fail to meet certain targets.Companies can secure cheaper financing through green bonds, Barclays said, and their relative appeal has increased even further as investors doubted the key performance indicators used in the less mature sustainability-linked securities.”Volumes may have been stunted by concerns from investors around greenwashing in the market (due to concerns around unambitious targets, immaterial KPIs and small penalties),” Edwards said. Issuance of SLBs declined sharply to $60 billion from $95 billion in 2021. More

REPRESENTATIVE STEVE SCALISEThe no. 2 House Republican is a supporter of McCarthy who could get support from moderates in the caucus, while also appealing to hardline conservatives. However some moderate Republicans have suggested there would be no point in tossing McCarthy only to nominate someone so ideologically similar to him.For his part, Scalise, of Louisiana, has said that he supports McCarthy and has repeatedly voted for him.REPRESENTATIVE JIM JORDANThe Ohio congressman is leader of the House Freedom Caucus, a group of the most hardline House conservatives. Jordan has repeatedly supported McCarthy in speaker votes, but all 20 holdouts voted for him on Tuesday.REPRESENTATIVE BYRON DONALDSDonalds will be sworn in for only his second term in Congress once the speaker is chosen, but his far-right views have endeared him to the group of holdouts. During the third vote on Tuesday he joined their ranks in supporting Jordan, rather than McCarthy. On Wednesday he was nominated for speaker three times, winning all 20 holdout votes each time.FORMER REPRESENTATIVE FRED UPTONThe longtime Republican was first elected in 1986 and did not seek reelection to Congress in 2022. He could get support from Democrats as a moderate who voted to impeach former President Donald Trump in 2021. He signaled his openness to running for speaker to The Detroit News on Tuesday, calling the suggestion “intriguing.” The speaker is usually a lawmaker from the majority party, but it could be an outsider.FORMER REPRESENTATIVE JUSTIN AMASHA former Republican lawmaker from Michigan, Amash was both a co-founder of the House Freedom Caucus and the first Republican to call for Trump’s impeachment. He left his party in 2020 to join the Libertarian Party and did not seek reelection that year. He has been a vocal critic of the bureaucracy and backroom politics in Washington, and was at the Capitol on Wednesday putting himself forward as potential speaker.DEMOCRATIC MINORITY LEADER HAKEEM JEFFRIESJeffries was unanimously elected to lead his party in November, and has held all 212 Democratic votes during each of the six ballots. However it is extremely unlikely that any Republican would agree to support his bid for speaker regardless of any powersharing agreement, given the political fallout from doing so. More

Apple is expected to enlist another manufacturer to produce its premium iPhone models, breaking Foxconn’s hold on production after worker protests over Covid-19 curbs erupted at its megafactory in Zhengzhou last year.The company is set to sign its first big order with Luxshare Precision, a Chinese competitor to Taiwanese rivals Foxconn and Pegatron, according to three people familiar with the situation.Luxshare has already been producing small amounts of the iPhone 14 Pro Max at its plant in Kunshan, a city north-west of Shanghai, to compensate for lost production at Foxconn since November last year, said two people with direct knowledge of the matter. The iPhone 14 Pro transferred order represents a coup for Luxshare, which has steadily been winning an increasing share of Apple’s business. Foxconn had been solely responsible for delivering new iPhone Pro models, but Luxshare has finally proved it can assemble the most sophisticated devices.Apple’s ties to China have become closer in recent years as Chinese contract manufacturers win orders at the expense of Taiwanese partners. Goertek and Wingtech, assemblers of AirPods and MacBooks, have benefited, while Foxconn has attempted to reduce its reliance on China by establishing plants in India, Vietnam and the US.The disruption at Foxconn has caused shortages of iPhones and threatens to break Apple’s 14-quarter revenue growth streak. Foxconn said this week that the Zhengzhou factory had ramped up production to fulfil 90 per cent of the initial targets in December. “Foxconn has no bargaining power,” said Ivan Lam, an analyst at Counterpoint. “Taking orders for high-end iPhones is a testament to the [Luxshare] assembly plant, which could open their way for more diverse clients,” said Lam.Foxconn and Pegatron declined to comment. Apple and Luxshare did not immediately respond to a request for comment.

Apple has been working to diversify its supply chain away from Foxconn. But even for the veteran assemblers, who at present make basic iPhone models, it is difficult to produce the latest models. Luxshare was able to produce the high-end phone this year because of significant investment from Apple, said employees and experts. “With Apple’s dedicated investment, including increasing staffing in supply chain management, it only took Luxshare a few months to deliver the last-minute orders,” said an Apple employee in China. The employee said it usually took Foxconn six months to revamp production lines for new iPhone models.Eddie Han, an analyst with Isaiah Research, said Apple’s “strong” investment in the company was crucial for mass-producing the Pro models.Founded by former Foxconn worker Grace Wang, Luxshare has been expanding its footprint in Apple’s supply chain for years. It assembles everything from AirPods to iPhones, but, until now, it has struggled to win orders of the iPhone premium models.Luxshare’s annual revenues have surged from less than $2bn in 2016 to $24bn in 2021, as Apple has become the company’s biggest partner. In that period, margins decreased from 8.6 per cent to 5.1 per cent, reflecting the competition for contracts. Luxshare’s share price has fallen 44 per cent over the past year, dragged down by a global tech rout. Foxconn’s shares are down 22 per cent. Additional reporting by Gloria Li in Hong Kong and Patrick McGee in San Francisco More

Good morning. The World Health Organization has accused China of underrepresenting the severity of its coronavirus outbreak and the real number of deaths, in its strongest rebuke yet of Beijing’s handling of the pandemic. “We believe the current numbers being published from China underrepresent the true impact of the disease in terms of hospital admissions, in terms of ICU [intensive care unit] admissions, particularly in terms of deaths,” Mike Ryan, head of the WHO’s emergencies programme, told reporters. Beijing’s definition of Covid-19 death, which was changed last month, was “too narrow”, Ryan said, as he called on Beijing to offer greater transparency on the extent of the surge in cases since president Xi Jinping brought an abrupt end to the draconian zero-Covid system of controls. Internal Chinese government estimates suggested that hundreds of millions of people may have been infected by late December. Yet China had as of Tuesday officially reported only 5,258 deaths from Covid nationwide, including 25 since December 1, despite projections of as many as 1mn deaths during this wave. Some regions have reported zero deaths despite an explosion in cases. A growing number of China’s celebrities have been lost to Covid-19, from academics to opera singers, whose deaths have complicated the government’s efforts to minimise the scale of the unfolding outbreak sweeping across the country. Want more on China? Explore our China hub for the latest news and analysis.Opinion: We may be entering Covid’s least predictable year yet, writes Anjana Ahuja.Five more stories in the news1. US to send delegation of trade and economic officials to Taiwan The office of the US trade representative has announced that Terry McCartin, its top official responsible for trade with China, would lead a US delegation to Taiwan from January 14-17 as the administration of Joe Biden seeks to bolster America’s commercial relationship with the island.2. China and Philippines vow to have ‘friendly consultations’ Chinese president Xi Jinping and his Philippine counterpart Ferdinand Marcos Jr agreed to strengthen economic ties and handle maritime issues in the South China Sea through consultations, as Beijing seeks to salvage a relationship undermined by their territorial dispute. After reports that China had started building up unoccupied land features in the South China Sea, the meeting is seen as a test for whether Manila can bolster ties with Beijing.3. McCarthy loses sixth Speaker vote despite Trump intervention Kevin McCarthy’s dreams of becoming Speaker of the House were fading fast, as the California congressman lost a sixth ballot amid sustained opposition within his own party. Despite an eleventh-hour intervention from former president Donald Trump encouraging Republicans to support McCarthy, 20 Republicans voted against him in the fifth ballot.

Republican lawmakers’ opposition has deprived Kevin McCarthy of the simple majority required to take hold of the Speaker’s gavel © Getty Images

4. Salesforce to cut 10% of staff Co-founder and chief executive Marc Benioff blamed the retrenchment on worsening business conditions, but admitted to misreading the strength of demand as the US software company becomes the latest tech group to reverse a hiring binge in the face of slowing demand and growing unrest on Wall Street.5. Japan’s nuclear restart at risk Japan’s ambitions to reboot its nuclear industry risk being set back by a shortage of engineers and manufacturing capacity that has atrophied in the decade following the Fukushima nuclear disaster. Japan sourced about a third of its electricity from 54 nuclear reactors before the Fukushima disaster. Now, only nine are operational. The day ahead Economic indicators S&P’s purchasing managers’ index figures will be published for Australia, China, Hong Kong and Singapore today. Singapore’s retail sales figures from the Department of Statistics are also due today. Funeral of former Pope Benedict The funeral of the first pontiff in 600 years to resign from his post, who died Saturday at the age of 95, will be held in the Vatican today. Pope Francis will preside over the event. French inflation figures While inflation is falling elsewhere in the eurozone, figures out today in France are expected to show a small uptick in price growth. French inflation is expected to peak in the first quarter of 2023, according to the French central bank.What else we’re reading The new Gulf sovereign wealth fund boom From Qatar and Saudi Arabia to the United Arab Emirates, the Gulf is increasingly viewed as one of the world’s last remaining sources of abundant capital. For many of those beating a path to its door, there is one thing on their minds — striking deals with sovereign wealth funds — as the region enjoys its first petrodollar-fuelled boom in a decade. Opinion: A new world energy order is taking shape, writes Rana Foroohar, following President Xi Jinping’s visit to Saudi Arabia last month. Chinese battery makers strengthen grip on global supply Chinese battery manufacturers have extended their dominance over global supply, with the top two producers reaching a combined market share of 50 per cent, and leaving South Korean and Japanese rivals lagging behind.Russian army faces backlash over conscripts’ deaths The killing of scores of Russian conscripts in a Kyiv-led missile attack on their barracks in occupied eastern Ukraine has rekindled recriminations in Moscow over the conduct of the war — and raised fresh questions over the military’s capacity to learn from its mistakes.

People lay flowers near the Eternal Flame memorial in Samara, Russia. © Albert Dzen/Reuters

Israel’s rightward shift stokes alarm over West Bank stability Israeli proposals for far-reaching changes to the administration of the occupied West Bank prompted warnings even before Benjamin Netanyahu officially returned as prime minister last week. But an intervention by the head of the Israel Defense Forces underscored how those anxieties have reached the top echelon of the Jewish state’s military.Resurgent Chinese travel would reset nation’s global image On top of the direct financial impact, the return of Chinese travellers to the global stage could have a meaningful effect on businesses and contribute to a subtle geopolitical nudge. It’s not only the spending power of tourism that matters — views of China will change, writes Leo Lewis. Take a break from the news The London-based Korean-American chef, restaurateur and author Judy Joo shares her gastronomic guide to New York, including the Jazz Club at the new Aman hotel and some old favourites.

Tuscan restaurant Fresco by Scotto is one of Joo’s longstanding favourites © Eric Striffler More

NEW YORK (Reuters) – Federal Reserve officials may be starting to come to terms with the fact that massive inflows of cash into one of the central bank’s rate-control tools are proving more enduring than they once thought, a phenomenon that is also inflating a rapidly growing IOU to the U.S. Treasury. In the minutes for the mid-December Federal Open Market Committee meeting, released on Wednesday, Fed staffers told policymakers usage of reverse repos had declined a bit as some took money out of the Fed in favor of higher-yielding private market investments.Looking forward, staffers said that banks’ expectations that they would raise deposit rates could also draw some cash out of reverse repos, with the minutes noting, “over time, greater competition among banks for funding could contribute to drawdowns” in the overnight reverse repo facility. But that conditionality – first hinted at in minutes from the prior meeting in November – points to the possibility that officials are now growing less confident of their pre-existing view reverse repo usage would shrink as the Fed presses forward with lowering the size of its massive balance sheet. In contrast, the September minutes reported that Fed staff “continued to anticipate that [reverse repo] take-up would decline in coming quarters from its currently elevated levels as money market participants responded to shifting conditions.” Meanwhile, in a speech in September, Patricia Zobel, now serving as the interim official in charge of managing the central bank System Open Market Account, said the Fed’s drawdown of its balance sheet “should result in [reverse repo} balances declining from currently elevated levels over time.”There’s been little indication of that since, however. On Dec. 30, the last trading day of the year, reverse repo usage hit a record of $2.554 trillion. On Wednesday, inflows stood at $2.3 trillion and they’ve been consistently above $2 trillion daily since June, coming from near zero levels in the spring of 2021. The Fed’s reverse repo facility is one of the tools the central bank uses to help keep the interest rate target, the federal funds rate, at the desired level. The funds rate is currently supposed to range between 4.25% and 4.5% after the Fed’s December half percentage point increase. The reverse repo facility, which currently pays money funds and other eligible funds 4.3% to park cash at the Fed, is designed to help put a floor underneath short-term rates. Persistently large reverse repo inflows have been challenging to explain. In part, they are driven by a dearth of private sector investments that make it more lucrative and easier just to park cash overnight at the Fed. At the same time, some have pointed to regulatory issues that give financial firms incentives to continue investing at the Fed. Large reverse repo usage is unlikely to thwart the Fed’s monetary policy mission. But paying all that interest to financial firms has already put the Fed in a net negative income situation – essentially deferred income owed to the Treasury – that is very likely to grow worse over time given the Fed’s expectation it will raise rates further and maintain them there until it’s confident inflation is cooling off. More

Investing.com — Stocks rallied on Wednesday, taking back earlier losses as investors got to pore over the Federal Reserve’s meeting minutes from December.Fed officials agreed that a sustained period of restrictive policy would be needed to cool “unacceptably high” inflation, the minutes said. Fed members favored a “restrictive policy stance for a sustained period,” until inflation was on a sustained downward path to 2%. The officials said that was likely to take “some time.”  Investors are anticipating continued rate hikes this year, but at a slower pace. The betting is that the Fed will raise rates another quarter point at its next meeting in February, which is slower than the increase in December and the previous four meetings.The Fed wants to tame inflation while avoiding a major recession that would result in steep job losses, though it has acknowledged that some rise in unemployment would probably be in the cards this year. Later this week will come a key report on labor: the December jobs report, which will include labor force participation and the unemployment rate. Analysts expect the economy to add 200,000 jobs, which is lower than the prior month, but a steady 3.7% unemployment rate for the month.Factory orders and services data are also due out on Friday and could factor into future Fed moves on rates.Here are three things that could affect markets tomorrow:1. Constellation BrandsSpirits and beer maker Constellation Brands Inc (NYSE:STZ) is seen reporting earnings per share of $2.91 on revenue of $2.4 billion.2. Walgreens earningsDrug store chain Walgreens Boots Alliance Inc (NASDAQ:WBA) is seen reporting earnings per share of $1.12 on revenue of $32.8B.3. ConAgra FoodsPackaged food provider ConAgra Foods Inc (NYSE:CAG) is expected to report earnings of 66 cents on revenue of $3.26B. More