Aurelia Butler

Investors do not appear to be waiting for the barrage of central bank meetings this week before making moves.While holidays in Tokyo and London may have meant global trading was somewhat subdued, that did not stop rates from continuing to ascend to new peaks on Monday. The yield on the U.S. benchmark 10-year note hit its highest level since 2011, touching 3.518% although it then pulled back. Despite the fresh milestone for bonds, stocks managed gains, with the S&P 500 lodging a 0.7% increase and bouncing back after shedding 4.8% last week.Euro Zone bond yields also were rising with the German 10-year yield hitting its highest since June. Investors are girding for central bank action. The Fed’s meeting starts Tuesday, although the big news will come on Wednesday with its statement and Chair Jerome Powell’s press conference. A rate hike of 75 basis points is expected, with markets pricing in roughly one-in-five odds of a full percentage point hike.Meanwhile in Japan, the BoJ is seen keeping its loose policy when it meets later this week, which could further pressure the weakening yen. The currency has recently slid to 24-year lows against the dollar.Focus in Asia on Tuesday turns to China, where a decision is due on benchmark lending rates. In a Reuters poll, 75% of market participants predicted no change to either the one-year loan prime rate or the five-year.Authorities are seen holding off monetary easing in order to avoid more depreciation pressure on the yuan. The currency ended at a fresh 26-month low on Monday and traded below the psychologically critical 7-per-dollar level. Key developments that should provide more direction to markets on Tuesday: China 1-yr, 5-yr loan prime rate decision Japan CPI (August)Taiwan Export orders (August)US housing starts (August) More

(Reuters) -Chevron Corp is marketing its interest in more than 2,000 oil and gas wells in Alaska, the company told Reuters on Monday, in a move that could mark the oil major’s second exit from oil production in the state in three decades.One of the earliest companies to prospect for oil in Alaska, Chevron (NYSE:CVX) helped develop the state’s oil industry last century but later exited output there in 1992. It returned a decade later with its $20 billion purchase of Unocal.The company is offering stakes in three oilfields, it confirmed. It holds around 10% in Alaska’s Endicott field, 5% in Kuparuk field and 1.2% in Prudhoe Bay. Bids are due this month. The stakes are non-operating interests that provide a share of profits.Chevron estimates the proved and developed portion of these assets is worth $655 million, and including future development, it could be worth $926 million, according to a marketing document the company shared.However, at current oil prices, a sale would likely fetch between $450 million and $550 million, according to a Rystad Energy analyst using comparable transactions. If a sale materializes, Chevron would follow in the steps of BP (NYSE:BP) Plc, which in 2020 sold its producing assets to closely-held Hilcorp for $5.6 billion and exited. Exxon Mobil (NYSE:XOM) separately transferred operations of Point Thomson oilfield to Hilcorp last year but retains a majority stake. The properties offered include interests in pipelines in the Kuparuk and Endicott fields, according to the marketing document. ConocoPhillips (NYSE:COP) operates the Kuparuk field, while Hilcorp operates Prudhoe Bay and Endicott, and either could bid on the assets, two people familiar with the companies said, requesting anonymity to discuss private plans.ConocoPhillips declined to comment. Hilcorp did not immediately respond to requests for comment.The oilfields that Chevron is offering produce around 9,400 barrels of oil and gas per day. Overall production in the state has been declining since a peak in 1988 when output exceeded more than 2 million barrels of oil a day. In 2021, Alaska produced 437,000 barrels of oil a day, the lowest since 1976, according to U.S. government data. More

Yields on US government debt reached the highest levels in over a decade on Monday as investors braced for a third consecutive jumbo 0.75 percentage point rate increase from the Federal Reserve on Wednesday. The yield on 10-year US government debt, a benchmark for global borrowing costs, pushed above 3.5 per cent for the first time since April 2011 as investors sold the bonds. The yield on the two-year Treasury note rose to a 15-year high of 3.94 per cent. While the two-year yield tracks interest rate expectations particularly closely, the entire spectrum of yields has rocketed higher as expectations for a longer period of high borrowing costs have set in.On Wall Street, the broad S&P 500 closed 0.69 per cent higher while the technology-heavy Nasdaq Composite gained 0.76 per cent on Friday. Europe’s region-wide Stoxx 600 slipped 0.1 per cent. The subdued performance on Monday comes after MSCI’s broad index of developed and emerging market stocks shed 4 per cent last week in its biggest weekly fall since June. Concerns about the health of the global economy and the spectre of further big rate rises from major central banks have spooked investors. “This feels like a make-or-break week. There is the residual anxiety of the repricing we went through last week and there is no sense at all that the sentiment is turning for something better,” said Samy Chaar, chief economist at Lombard Odier.In currencies, the dollar rose around 0.1 per cent against a basket of other currencies, extending a powerful surge in recent months that had been fuelled by rising US interest rates.“The currency market is probably summarising best how close we are to some kind of breaking point,” said Chaar. “The big question will be whether we will get some positive signal from central banks about when their hiking cycle will peak . . . You don’t see many paths through which the Fed could be reassuring.”The consensus expectation on Wall Street is that the Fed will boost interest rates by 0.75 percentage points at the end of its two-day meeting on Wednesday. Market forecasts for a third consecutive rise of that magnitude were bolstered last week by data showing US consumer price inflation cooled less than expected in August.Pricing based on federal funds futures suggests the Fed will lift its main interest rate to 4.4 per cent in the early months of 2023, from the current range of 2.25 per cent to 2.5 per cent, as policymakers attempt to cool inflation.Fears are mounting among investors that the central bank’s efforts to subdue inflation with monetary tightening will pull the US economy into recession as debt servicing costs rise for companies and individual borrowers. The yield on 10-year, inflation-linked US notes, which indicate the returns investors can expect to receive after accounting for inflation, reached a peak of 1.16 per cent, the highest since 2018. So-called real yields were around minus 1 per cent at the beginning of the year, flattering the valuations of fast-growing tech companies that make up a big weight on US stock indices.The Japanese yen slipped 0.3 per cent to ¥143 against the dollar after last week reaching a 24-year low before the government stepped up its verbal intervention aimed at soothing the country’s currency market.The Bank of Japan is set to make its latest policy decision on Thursday. Most economists expect the BoJ to stick with holding 10-year bond yields near zero as it attempts to stoke more durable inflation in an economy that has gone through decades of tepid price growth.The Bank of England is also set to announce its decision on interest rates on Thursday, with the consensus forecast among City of London analysts pointing to a 0.5 percentage point rise. Asian stocks also declined, with an MSCI gauge of shares in the region falling around 0.4 per cent. Equity markets in the UK and Japan were closed for public holidays. More

BUDAPEST (Reuters) -Hungary’s government has submitted the first of several anti-corruption bills to parliament on Monday as Budapest scrambles to avoid losing billions of euros in European Union funding.The European Union executive recommended on Sunday suspending funds worth 7.5 billion euros ($7.48 billion) for what it sees as Hungary’s failure to combat corruption and uphold the rule of law.The European Commission also set out requirements for Hungary to keep access to the funding, including new legislation, which Hungary said it would meet.Justice Minister Judit Varga said on her Facebook (NASDAQ:META) page that she had submitted the first bill to parliament as the government “will focus on drafting and implementing the commitments (to the EU) in coming weeks and months.””Hungary could enter the year 2023 without losing any EU funds,” Varga said.The bill modifies legislation relating to Hungary’s cooperation with the EU anti-fraud office OLAF, ensuring that OLAF gets support from Hungarian tax authority officials in its investigations of EU-funded projects and gets access to data and documents on the scene. In addition, it changes rules governing state asset management foundations, obliging them explicitly to issue public procurement tenders for projects and tightening conflict of interest rules in their management.Hungary’s case is the first in the EU under a new sanction meant to better protect the rule of law and combat corruption in the 27-nation bloc. Nationalist Prime Minister Viktor Orban, in power since 2010, has clashed with Brussels repeatedly over his policies that it sees as eroding democracy in Hungary.However, with big challenges over rising energy costs and double-digit inflation, a weak forint and a slowing economy, the veteran prime minister looks willing to fulfil EU demands to finally create institutions that would cut corruption risks in EU-funded projects.”The latest developments in Brussels certainly come at a bad time for Orban, who is struggling with a swath of political and economic problems brought about by both global issues, most notably rising energy prices, so he is likely to go further to satisfy Brussels’ demands,” said Mujtaba Rahman, Managing Director Europe at Eurasia Group.He said Budapest would likely secure the pending deal but that would not resolve all the outstanding disagreements over other chunks of EU funds. “The bigger problem for Orban is the money tied up in the Recovery Fund, because the Commission has more discretion over whether it gives that the green light or not,” Rahman said.Like most EU countries, Hungary last year submitted its blueprint on how it would use EU grants to make its economy more environmentally friendly and high-tech after the COVID-19 pandemic. It has yet to receive approval on that as well. If Budapest does not get the EU funds, the forint – which has lost 8% this year – will almost certainly fall further, complicating efforts to curb inflation and exposing Hungarian assets to any negative shift in global sentiment.Development Minister Tibor Navracsics, in charge of negotiations with the EU, said on Sunday that Hungary would meet all 17 of its commitments made to the commission to stave off the loss of any funding.($1 = 1.0025 euros) More