Aurelia Butler

MEXICO CITY (Reuters) – A Mexican union on Tuesday said it will request a U.S. labor complaint over alleged worker rights violations at a BBB Industries auto-parts plant in northern Mexico, the latest effort to leverage the terms of a regional trade deal.U.S. labor authorities have filed five complaints since last year – all in the autos sector – irritating parts of the Mexican government which has complained that the mechanism is being applied before states have time to implement workplace reforms.Under the 2020 United States-Mexico-Canada Agreement (USMCA), which has tougher worker rights rules than its 1994 predecessor free-trade agreement, activists have increasingly flagged alleged misconduct around union representation amid demands for higher wages after years of stagnate pay.In a petition to U.S. labor officials, Mexican union SNITIS said workers were intimidated and threatened among other irregularities during a contract vote by union members last month at BBB Industries in the border city of Reynosa. BBB, a privately held Alabama-based company which refurbishes car parts, did not immediately reply to a request for comment. Such contract votes by union members are required under a labor reform that underpins the USMCA, and are geared at wiping out the once widespread practice of deals struck between companies and business-friendly unions behind workers’ backs.The petition noted various procedural flaws: The vote tally exceeded the number of workers; the ballots were not numbered; neutral observers were absent; workers were not given copies of their contract until voting day.Workers also alleged that company representatives inside the plant and on the production lines pressured them to vote in favor of the contract at risk of losing their benefits, the type of intimidation tactic long prevalent in Mexican workplaces.CTM, a powerful union that holds the BBB contract and many more across Mexico’s autos sector, did not immediately reply to a request for comment. More

Domestic energy bills in Britain will remain at “devastating” levels into 2024 and potentially beyond, analysts are predicting, adding pressure on the government to provide further financial aid to cash-strapped households.Energy consultancy Cornwall Insight has warned there is little relief in sight for households struggling with soaring electricity and gas costs as it forecast Britain’s energy price cap was likely to remain “significantly” above £3,000 a year on average until “at least 2024”. The group, which has been among the most accurate forecasters of British energy prices, is estimating the cap will hit nearly £3,360 a year in October when it is next altered by the regulator Ofgem, and will remain relentlessly high throughout 2023 and into 2024. The energy price cap dictates bills for more than 23mn households and provides an estimate based on average use. October’s forecast marks a 70 per cent increase on the current level of £1,971 a year and would represent a 163 per cent rise in bills compared with last winter. Ofgem is due to announce the October level at the end of August.Cornwall Insight believes the cap could exceed £3,600 in January before hitting a peak of nearly £3,730 in the second quarter of 2023. It is likely to remain elevated, at around £3,470 a year, at the end of 2023, according to the group’s latest forecasts, as forward energy contracts suggest there will be little let-up in the high wholesale gas and electricity prices that have been driving domestic bills higher, particularly following Russia’s invasion of Ukraine.“While the rise . . . for October and January is a pressing concern, it is not only the level — but the duration — of the rises that makes these new forecasts so devastating,” said Craig Lowrey, principal consultant at Cornwall Insight. “Given the current level of the wholesale price, this level of household energy bills currently shows little sign of abating into 2024.”Although some of Cornwall Insight’s forecasts for October and January are lower than other recent estimates, the group is among the first to predict that soaring energy prices will continue to hit consumers’ pockets until 2024 and possibly even longer. The warning triggered fresh pleas from fuel poverty campaigners and opposition politicians to boost financial aid for households already struggling with a surge in the cost of living. Conservative leadership contender Rishi Sunak in May announced a fresh package of support for households to be delivered in the autumn, including £400 off all households’ energy bills. However, critics pointed out on Tuesday that forecasts for October’s price cap had risen by more than £500 since that £400 relief was announced.

Based on Cornwall Insight’s latest estimates, the charity National Energy Action said a further 2mn households could be plunged into fuel poverty this winter, where surging energy bills mean people cannot afford to live in a warm, dry home.Opposition MPs and environment groups pressed the Conservative party leadership contenders to increase the government’s windfall tax on oil and gas producers after BP reported its highest quarterly profit in 14 years on Tuesday.“We need to see urgent changes now to help people with their bills this winter and the government’s windfall tax must cover these profits to help fund it,” said Sarah Olney, business spokeswoman for the Liberal Democrats. More

NEW YORK (Reuters) – The trillions of dollars in overnight cash tucked away daily at the Federal Reserve could turn into a major headache for banks that could squeeze their balance sheets and impair their ability to lend.The Fed’s reverse repurchase facility (RRP) has attracted a wide array of market participants, helping mop up excess liquidity in the financial system. Led by money market funds, volume at the reverse repo window has topped $2 trillion for 39 straight days. The Fed is paying a record reverse repo rate of 2.3% following its 75-basis-point interest rate hike last week. Barclays (LON:BARC) expects daily reverse repo levels to hit between $2.8 trillion and $3.0 trillion by the end of the year.Investors are effectively taking deposits away from banks and putting them into government money market funds, which invest mainly in Treasuries and repos. These money funds, in turn, funnel the cash to the Fed’s overnight window. Repo allocations from government money market funds have increased to nearly 40% of their assets currently, from around 30% at the start of the year, Barclays said.The Fed will shrink its balance sheet by $95 billion per month from September, accelerating “quantitative tightening,” which started in June. The concern is that the outflow of deposits from banks into money market funds could reduce bank reserves at a rapid pace that could hinder lending activities to financial markets and the broader economy. GRAPHIC: Fed Balance Sheet and Bank Reserves (https://fingfx.thomsonreuters.com/gfx/mkt/byprjwzxbpe/Fed%20balance%20and%20bank%20reserves.PNG) The decline in bank reserves could also lead to a spike in the repo and effective fed funds rate similar to what happened in September 2019 when bank reserves dwindled due to heavy withdrawals for tax payments and settlement of Treasury purchases at auctions. That forced the Fed to provide additional reserves to the banking system. “The drift of reserves into money market funds and away from banks constitute movement of money away from financial markets,” said Matt Smith, investment director at asset manager Ruffer in London, which has $31 billion in assets under management.For now, bank reserves are still considered abundant at $3.3 trillion, but the decline has been rapid, some market participants said. From a peak of nearly $4.3 trillion in December last year, bank reserves have declined about 23%. In the Fed’s previous quantitative tightening (QT), $1.3 trillion in liquidity was withdrawn in five years.To be sure, there are other factors that have contributed to the decline in bank reserves, such as asset re-allocations and loan demand, analysts said.MONEY MARKET FUND ASSETSGovernment money market fund assets have been fairly steady as of July 27, at $4.025 trillion, up about 0.1% from a week earlier, data from the Investment Company Institute showed. The shift of deposits to money funds has been a slow process.”The Fed’s QT will shrink its balance sheet quickly. But bank reserves are set to fall much faster as cash shifts out of bank deposits to government-only money funds. We expect money funds to put this cash in the RRP,” wrote Joseph Abate, managing director at Barclays, in a research note.Expectations that the U.S. Treasury will increase bill issuance for fiscal year 2023, which starts in October, could help ease the surfeit of inflows into the reverse repo window, analysts said.Abate estimated that bank reserves will fall to $2.3 trillion this year, perilously near what he termed banks’ “minimally ample level” of $2 trillion, as the exit of deposits starts to weigh on their balance sheets.Yet for many big banks, those deposits are unwanted anyway.As the Fed’s balance sheet increased with quantitative easing during the pandemic, so did bank reserves deposited at the central bank. Once reserves reached a level at which banks were not willing to absorb the regulatory costs on their balance sheets, they started turning deposits away.The Fed in April 2020 temporarily excluded Treasuries and central bank deposits from the supplementary leverage ratio (SLR), a capital adequacy measure, as an excess of bank deposits and Treasury bonds raised bank capital requirements on what are viewed as safe assets.But the Fed let that SLR exclusion expire and big banks had to resume holding an extra layer of loss-absorbing capital against Treasuries and central bank deposits.”Banks are still not keen to increase deposits due to regulatory costs in the absence of SLR relief and want to free up their balance sheet,” said Imran Siddiqui, portfolio manager at Mosaic Capital. “In a subtle way, they are sending a message to the Fed to provide some form of permanent SLR relief.”Should the Fed tweak the SLR and give banks breathing room on regulatory costs, that should push these financial institutions to accept more deposits and help stabilize reserves. The Fed earlier this year said it would review this leverage ratio, but has yet to publish a proposal. More