Aurelia Butler

Investors were also wary ahead of the Federal Reserve’s annual Jackson Hole symposium, which could offer insights into the central bank’s future policy path.According to Refinitiv Lipper, investors disposed of a net $10.48 billion worth of global equity funds in the week, which compares with just $3.15 billion worth of purchases in the previous week. Fund flows: Global equities bonds and money market https://fingfx.thomsonreuters.com/gfx/mkt/zjpqkbrkmpx/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg Fed Chair Jerome Powell is due to deliver his keynote speech to the symposium on Friday, and investors are likely to scrutinize the comments for any indication on how steep future interest rate hikes would be.All major regions witnessed equity fund outflows with investors exiting a net $5.17 billion, $2.19 billion and $2.11 billion from Europe, the United States and Asia, respectively.Among sector funds, tech, industrials and consumer discretionary faced outflows of $2.04 billion, $735 million and $595 million, respectively. Financials sector funds obtained $1.85 billion, while utilities received $588 million. Fund flows: Global equity sector funds https://fingfx.thomsonreuters.com/gfx/mkt/xmpjomaoxvr/Fund%20flows-%20Global%20equity%20sector%20funds.jpg Bond funds also recorded withdrawals, amounting to $8.41 billion, the biggest for a week since June 29.Investors sold high yield funds of $5.98 billion, marking their biggest weekly net selling since June 15, while government and short- & medium-term funds saw outflows of $894 million and $153 million, respectively. Global bond fund flows in the week ended Aug 24 https://fingfx.thomsonreuters.com/gfx/mkt/zdpxozmomvx/Global%20bond%20fund%20flows%20in%20the%20week%20ended%20Aug%2024.jpg Meanwhile, weekly net selling in money market funds eased to a three-week low of $375 million.Commodities funds’ data showed precious metal funds suffered outflows of $354 million in a ninth straight week of net selling, while energy funds had a second weekly outgo, although a marginal $5 million.An analysis of 24,457 emerging market funds showed investors sold equity funds of $1.34 billion, posting the biggest outflow in five weeks, while also exiting bond funds to the tune of $1.05 billion, after three weeks of buying in a row. Fund flows: EM equities and bonds https://fingfx.thomsonreuters.com/gfx/mkt/mopangengva/Fund%20flows-%20EM%20equities%20and%20bonds.jpg More

It is the first time authorities have set a formal cap on the numbers of tables and a minimum income requirement, as the government looks to tighten control of casino operators who raked in $36 billion in 2019, before COVID-19 disruptions.With contracts set to expire at the end of the year, the territory’s six licensed operators, Sands China (OTC:SCHYY), Wynn Macau (OTC:WYNMF), Galaxy Entertainment, MGM China (OTC:MCHVY), SJM Holdings (OTC:SJMHF), Melco Resorts have to rebid for their spots.The highly anticipated bidding process kicked off in July, when the government said global gaming operators could submit bids for new licenses from July 29 until September 14. “The new gaming operation from early next year will … cap the total amount of all gaming tables and gaming machines to ensure orderly and healthy development,” the government said in a statement on its website.Minimum annual gross income from each gaming table is set at 7 million patacas ($866,122) while the figure for each gaming machine is 300,000 patacas ($37,120), the government said.Such figures of minimum gross revenue guarantee a minimum level of tax for the government, with the operator having to make up the gap if revenues fall short.The rules aim to spur licensed companies to make good use of approved tables and machines, the government said.A nominal cap on table games set by the government in 2012 allowed for compound annual growth of 3% on the number of tables available for all casinos. By the end of 2021, Macau had a total of 6,198 gaming tables and 11,758 machines in operation. That was down from a high of 6,739 tables in 2019, prior to the COVID-19 outbreak.The rebidding takes place amid Macau’s worst outbreak of COVID-19, which led to a 12-day closure of casinos in July. While they have re-opened, there is no business, as curbs are only being lifted slowly.At a time when other gambling centres in the world are getting busy again, Macau’s COVID-19 curbs are burning through about $600 million a month. The casinos are expected to have little to no income for months, analysts say.($1=8.0820 patacas) More

UK bus users face “significant” price rises in 2023 since operators expect to lock in fuel purchases for next year at high rates, a senior executive at one of the largest companies has warned, a move that would add to the cost of living squeeze for millions who rely on the transport.Diesel and petrol have risen close to £2 per litre since March following Russia’s invasion of Ukraine, pushing the cost of filling an average car tank to more than £100.Early signs are that bus use has increased since March, as some commuters switch away from car travel. Large bus companies have so far avoided passing on higher fuel prices because they buy diesel in advance.However, Go Ahead’s Phil Southall, a senior bus director, said that it, and other operators, typically buy fuel in bulk in advance to shelter themselves from price fluctuations.So far, only half of the company’s fuel for 2023 had been secured, meaning that it may be forced to increase fares if it locks in higher rates in the months ahead.“If things don’t stabilise there is a cliff edge where we may have to increase fares significantly,” he told the Financial Times.Go Ahead, which operates 6,000 buses in the UK, usually secures half of its supply a year in advance, a quarter three years out and the final quarter four years early.The strategy means that it will be locking in prices for 2023 fuel later this year.“That’s when it will hit us, when you come to negotiate the price, then the only option is to pass that on to customers,” he said. “It will be at least a 10 per cent increase in fares, because you have no other option.”Around two-thirds of a bus operator’s costs are drivers, while fuel typically accounts for 15 per cent of operating expenditure, making it hard for businesses to absorb high increases.“Any significant increase in that would have to be passed on to customers,” said Southall. “If you are hedged at a lower price, then you are not getting the hit this year, but when it comes to hedging fuel for next year, you might pay twice the price,” he added. “All we can say at this point is it is a risk on the horizon.”Estimates from the Transport Focus watchdog indicate that more than 1mn additional passengers have started using buses since the beginning of March, while Go Ahead said it had also seen a sharper increase in travel in the past three months.Rising transport costs are already filtering through into higher food and goods prices, as haulage companies pass on costs of refuelling. The cost of running a single long-distance lorry has increased by £20,000 a year, haulage group Freight Link Europe warned last week. More

Jay Powell will make a much-awaited speech on Friday as the Federal Reserve seeks to battle the worst inflation in four decades without tipping the world’s biggest economy into recession.The Fed chair will deliver his remarks at 10am Eastern Time at the first in-person gathering of the annual Jackson Hole conference since the start of the coronavirus pandemic. The event, which brings together central bankers from around the world, comes as the Fed grapples with questions about its resolve to squeeze the US economy sufficiently to root out inflation.Powell devoted last year’s Jackson Hole speech to backing the Fed’s argument that the consumer price surge was a temporary phenomenon resulting from supply chain-related issues. But it has since become clear that price pressures are more demand-driven and therefore likely to persist for longer.The Fed, which has now embarked on the most aggressive tightening cycle since 1981, must decide whether it should maintain such a pace or instead begin to reduce the size of its interest rate increases, as concerns grow over the risks of heavy-handedness.Financial markets have rallied in recent weeks amid expectations the Fed could ease up on its efforts to reduce demand as incoming economic data deteriorate further.Last month the central bank delivered its second consecutive 0.75 percentage point rate rise, bringing the federal funds rate to a new target range of 2.25 per cent to 2.50 per cent.Fed officials are debating whether a third such adjustment will be necessary at its meeting in September, or if a half-point adjustment is more appropriate.Atlanta Fed president Raphael Bostic said the decision amounted to a coin toss, in an interview on Thursday with The Wall Street Journal.Officials maintain that their commitment to restoring price stability is “unconditional”, suggesting a willingness to tolerate higher unemployment.

James Bullard, president of the St Louis Fed and a voting member on the Federal Open Market Committee this year, warned in an interview with CNBC on Thursday that the Fed may have to keep interest rates higher for longer than initially expected, given that elevated inflation looks likely to linger.He added that he supported the fed funds rate reaching between 3.75 per cent and 4 per cent by the end of the year.Most officials still maintain they can bring inflation under control without causing a painful recession. However, this runs counter to the consensus view among Wall Street economists, who predict at least a mild recession some time in the next year. Economists also expect the unemployment rate to rise beyond the 4.1 per cent broadly anticipated by FOMC members and regional bank presidents in June. The unemployment rate, the current bright spot in the US economy, hovers at a multi-decade low of 3.5 per cent. More

The typical UK household gas and electricity bill will rise to £3,549 a year from October from £1,971 at present, the sector’s regulator confirmed on Friday, as consumers grapple with a cost of living crisis driven by soaring energy costs.Ofgem said the 80 per cent increase in the so-called price cap, which governs the maximum a household will pay for typical energy use from October, was due to the rise in wholesale gas and electricity prices caused by Russian restrictions on supplies to EuropeThe latest industry forecasts suggest the price cap could rise to over £6,600 a year by the spring, a more than fivefold increase on the £1,277 price cap in October last year.The UK government has faced growing calls for the next prime minister, who is due to take office early next month following the conclusion of the Conservative leadership campaign, to provide additional support for households to stave off a deep recession.Foreign secretary Liz Truss and former chancellor Rishi Sunak, the two candidates in the race, have been warned the crisis could extend for several years, since Russia has cut gas supplies to Europe in the aftermath of its invasion of Ukraine.Jonathan Brearley, chief executive of Ofgem, said the £15bn in government support that was announced in May, which will provide £400 to every household and more to those on benefits, would no longer be enough. In May the price cap was forecast to reach about £2,800 a year by October.“The government support package is delivering help right now, but it’s clear the new prime minister will need to act further to tackle the impact of the price rises that are coming in October and next year,” Brearley said. “We are working with ministers, consumer groups and industry on a set of options for the incoming prime minister that will require urgent action. The response will need to match the scale of the crisis we have before us.”

The UK business department said it was making “appropriate preparations . . . to ensure that any additional support or commitments on cost of living can be delivered as quickly as possible when the new prime minister is in place”.Chancellor Nadhim Zahawi, who was appointed by outgoing prime minister Boris Johnson last month, acknowledged the increase would cause “stress and anxiety for many people”.“I am working flat out to develop options for further support,” he said. “This will mean the incoming prime minister can hit the ground running and deliver support to those who need it most, as soon as possible.”Truss, the favourite to be the next prime minister, said she would “immediately take action to put more money back in people’s pockets by cutting taxes and suspending green energy tariffs”.But her allies said “it would not be right” for Truss to set out detailed plans before she was elected prime minister “or seen all the facts”, but pledged that she would make energy affordable for households.Her leadership campaign said her long-term plan included maximising North Sea oil and gas production.While the sector is likely to welcome her support, senior figures in the industry have questioned whether the UK can drill its way to energy security. The UK imports about 75 per cent of its gas on the coldest days and about 50 per cent on average over the year.Rachel Reeves, the shadow chancellor, said the latest figures would “strike fear in the heart of many families”, adding that the public deserved a government that could “meet the scale of this national emergency”.Labour has said it would cap bills at the existing level below £2,000. It has suggested raising funding for such action by tightening offsets and discounts for oil and gas companies in the windfall tax that Sunak introduced in spring. Cornwall Insight, an energy consultancy that has been one of the most accurate predictors of future price caps, said on Friday its latest forecasts showed an expected increase to £5,386.71 for the first quarter of next year. The cap will next be adjusted in January, since Ofgem now carries out reviews every three months rather than six.By the second quarter of next year the price cap was expected to reach £6,616.37, Cornwall Insight said, before easing slightly to below £6,000 in the third and fourth quarters of next year. The consultancy warned that a significant overhaul of UK energy policy was required to deal with the long-term crisis.“Today should be seen as a wake-up call to policymakers that short-term thinking and triage of the energy system is not enough,” the consultancy said. “Without real change to the energy system in this country it is consumers, suppliers and the economy that will all continue to suffer the consequences.”The government is considering several proposals including one from Scottish Power, one of the largest UK energy retailers, which could involve price cuts for the majority of households, though no decision has yet been made.The Scottish Power proposal is forecast to require funding of at least £100bn over the next two years, with costs spread over household bills for the next 10 to 15 years, absorbed into general taxation, or a combination of the two. That £100bn figure could rise, however, if wholesale energy costs keep going up. More

Would you wince at paying £33 for a pint of beer? How about £28 for a coffee, a tenner for a cheeseburger, or £102 for 20 Marlboro Lights?That’s roughly what these items would cost if they had risen in line with the wholesale gas price this year. The boss of Octopus Energy started the trend of using familiar items to put soaring energy bills into perspective. Following Friday’s energy price cap announcement, I’m afraid the “price shock” of an 80 per cent increase to average household bills is just the start. Annual bills of £3,549 for the average dual-fuel user from October 1 are nearly one-third higher than the £2,800 estimate the government’s £15bn energy support package was based on, and are set to soar further. Quarterly price cap reviews means average bills could hit £5,300 in January and £6,600 by the spring as soaring wholesale costs get passed on to customers more quickly.

To say current energy help measures are inadequate is an understatement. Without further help, suppliers warn the majority of customers will be plunged into fuel poverty by Christmas. Citizens Advice estimates 18mn people — one in three UK households — simply won’t be able to pay. Yet as consumers panic, the silence from Westminster is deafening. In his final days in office, Boris Johnson — a man who has never had to worry about paying a gas bill — said the British public would have to endure soaring energy prices in order to resist Russian president Vladimir Putin.But on the home front, politicians must offer more than warm words. The personal finances of millions of people stand to be nuked this winter. There is so much that can be done now to manage the crushing financial blows we know are coming, and the Conservative leadership contest simply does not excuse the lack of government action to manage the devastating effects of these price rises. Amid calls to freeze the price cap and extend existing support packages, here are some big issues MPs and regulators must address urgently as they draw up policy solutions. Manage payment shockIf you’re among the 86 per cent of UK households on tariffs governed by the price cap, expect your energy supplier to ask to increase your direct debit before the next prime minister takes office. For the average user, the £3,549 cap boils down to energy bills of around £300 a month from October 1. Depending on your usage and credit, your supplier may demand much more. Never mind the growing Don’t Pay campaign — customers who can’t pay are already panicking and cancelling direct debits, says Gemma Hatvani, founder of the Facebook group Energy Support and Advice UK. Cancelling immediately raises bill costs by 6 per cent, rips up any existing repayment plan and could quickly lead to bad debts, damaging people’s credit scores for years. As we wait for news of further help measures, how many more will cancel? Without more support, unprecedented numbers stand to run up huge energy debts this winter — suppliers and regulators must work urgently to manage this. End the prepayment premium Indebted customers are commonly switched to prepayment meters. However, the charity Fuel Bank Foundation estimates average monthly costs of £480 this December for 4.5mn UK households charged up front for energy usage, as they pay proportionally more in colder months.This is a horrific example of the “poverty premium” and so too is the higher price cap of £3,608 for prepayment customers. In any case, the rising cost of living means the budgets of the poorest have been crushed before October’s price rises take effect.Fuel poverty charities are already overwhelmed with requests for emergency vouchers from customers who cannot afford to top up, and have no electricity, heating or hot water. “Debt, destitution and ultimately, death . . . that’s absolutely what we see ahead this winter,” says Gareth McNab, director of external affairs at Christians Against Poverty, one of the UK’s biggest providers of free debt advice. He stresses it is not just the cold that will kill this winter, but the huge impact of indebtedness on people’s mental health. “People turning to us for help are terrified,” he says. “The cost of living crisis is costing lives. An agenda item at a recent meeting was ‘suicides in the past week’. We urgently need a powerful and impactful intervention.”CAP is calling for a moratorium on government debts being deducted at source from benefit claims — a problem affecting nearly half of those who approached the charity for help. Up to 25 per cent of benefits can be clawed back to repay historic tax credit debts or universal credit advances, and no affordability checks are required. This must stop. Launch a social tariff A discounted social tariff to protect the poorest households from being bankrupted by huge energy bills is rapidly gaining credence (even suppliers support it). These already exist for broadband customers on low incomes, but time is running out to launch one before energy prices soar. Social tariffs would limit the unfairness of standing charges, which are set at a fixed daily rate no matter how little power you use, and have ballooned with the cost of energy company failures.By October, prepayment customers who have not used a penny of gas since April will have to load nearly £70 on to meters to get the heating back on just to cover the build up of standing charges. In a fix The lack of further help combined with scarily high future price cap predictions is pushing more consumers to consider paying over the odds for a fix — although deals are shockingly expensive. “I’ve got a three-bedroom rural bungalow, not a cannabis farm!” one angry customer wrote on Twitter at Scottish Power this week after she was quoted just under £17,000 a year for a fixed-rate tariff. Right now, it’s likely you’ll only be able to get a fix from your existing supplier. If energy prices fall in future — or more support is forthcoming — expect to pay a £300 exit penalty. Not in debt to your supplier? You can ask for a variable direct debit where you only pay for the energy used that month, although these tariffs are not openly advertised. Hatvani’s Facebook group is a gold mine of energy saving ideas (air fryers, installing thermostatic radiator valves and lining curtains with old fleeces) to cut bills. Initiatives to incentivise off-peak usage with bill rebates are welcome, but with the crisis expected to last for years, green energy subsidies for home insulation and renewable generation are also needed. Finally, ministers cannot ignore the cost of doing business as commercial energy contracts expire. The pub selling you a pint; the café where you buy coffee; even corner shops selling ciggies. Small businesses can’t quadruple their prices, but in many cases, their energy bills already have.October’s cap announcement is a final reminder, flashing red, for urgent political intervention. Claer Barrett is the FT’s consumer editor: [email protected]; Twitter @Claerb; Instagram @Claerb More