Aurelia Butler

(Reuters) -Citigroup Inc is in talks with Russian private lender Expobank over a possible sale of some of its operations in the country, the latest attempt by a Western bank to quit sanctions-hit Russia, a source familiar with the matter told Reuters.Discussions between Expobank and Citi are at an advanced stage and are focused on finding a price that would work for both parties, the source said on condition of anonymity. Expobank and Citi declined to comment.Igor Kim, Expobank’s key shareholder, is seeking to expand the lender’s investment banking business and has been luring clients from other Russian banks hit by sanctions, the source said.If the deal goes ahead, Citi would become the second Western lender to hand over the keys of its Russian business after French bank Societe Generale (OTC:SCGLY) clinched a deal in April to sell Rosbank to Interros Capital, a firm linked to Russian oligarch Vladimir Potanin.Citi’s Russian consumer banking franchise had first-quarter revenue of $32 million, down 6% from a year earlier due to the impact of sanctions against Russia.The bank said in a quarterly securities filing in May that discussions to sell its Russian consumer business were underway in line with recent comments by Chief Executive Jane Fraser.The filing said Citi was also looking to sell its Russian commercial banking business, which caters to smaller firms, and was no longer taking any new clients after Moscow’s invasion of Ukraine.The Financial Times, which was first to report discussions with Expobank, said Rosbank and Russian insurance company Reso-Garantia had also expressed interest in Citi’s Russian assets. More

Copper dropped below $8,000 a tonne for the first time in almost 18 months on Friday as mounting fears of recession weigh on the world’s most important industrial metal. Widely regarded as a gauge of economic activity because of its use in everything from household appliances to electric vehicles, the metal fell as much 3 per cent to $7,959 a tonne, leaving it on course for its fourth consecutive weekly decline. Other metals also opened the third quarter on a gloomy note, with nickel down 3 per cent and aluminium off 2 per cent despite data that showed a pick-up in factory activity in China, the world’s biggest consumer of raw materials.“This suggests the market views the improvement as not enough to offset the potential slowdown in developed economies,” strategists at ANZ said in a report.Concerns that demand will be crimped by central banks rapidly raising interest rates to curb inflation and, in turn, slowing economic growth, saw London Metal Exchange’s six main contracts register in the April to June period their worst quarter since the global financial crisis in 2008. That was a marked change from conditions earlier in the year when copper traded at a record above $10,600 a tonne on the back of supply disruptions and booming demand as lockdown restrictions eased.Before and during that period many generalist investors bought copper, believing that prices would be underpinned by a lack of new supply projects in the pipeline and rising demand from the electric vehicle industry and also from the makers of wind turbines and solar panels. While that narrative is still expected to play out — albeit later in the decade — the prospect of a hard economic landing in the US and Europe has investors running scared.In a report, Marex, a major commodities brokerage, said “money flows” were the main factor driving losses across the industrial metals landscape. That view was echoed by analysts.“It is a sell-off by macro funds,” said Tom Price, head of commodities strategy at Liberum. “We are seeing a similar pullback across energy, metals and gold has gone below $1,800 an ounce. It’s across the board. People are withdrawing money from the sector.”Despite the storm clouds gathering above the global economy, Colin Hamilton, commodities analyst at BMO Capital Markets, said copper market fundamentals were still healthy with the latest industry surveys pointing to end-user demand in developed markets remaining robust, for now. Price agreed: “If I just look at trade flows, particularly into China, consumption rates, premium signals, inventory levels I would say this looks like a tight, balanced market. But that’s not what the price is telling you.”Copper bulls are now pinning their hopes on China and a pick-up in demand as Covid-19 cases decline and policymakers look to boost economies through stimulus packages. “There is always hope that China will save the day through a massive infrastructure stimulus package,” said Jean-Sébastien Jacques, former chief executive of Rio Tinto on LinkedIn. ”“It has happened a few times in the past, but is hope a strategy? No must be the answer. In any case the timing of such a stimulus package is highly uncertain and would likely require some material debt increase at a local or provincial level.” More

UK mortgage rates rose at their fastest pace for a decade in the six months to May according to data from the Bank of England, fuelling expectations that the country’s housing market is cooling after a pandemic-induced boom.Figures published on Friday showed that the average interest rate on newly drawn mortgages increased by 13 basis points to 1.95 per cent in May. This is 46 basis points above the rate in November, marking the fastest six-month increase since 2012.The average quoted rate for a two-year fixed-rate mortgage with a 75 per cent loan to value ratio surged to 2.63 per cent in May, from a low of 1.2 per cent eight months earlier — the fastest increase over such a period since records began in 1995. The rate on existing mortgages also ticked up 2 basis points to 2.07 per cent in May. The data confirm that mortgage providers are passing on the interest rate rises implemented at the BoE’s last five meetings.Markets expect the BoE to continue to raise rates from their current 1.25 per cent to 3 per cent by February next year as the central bank confronts the fastest pace of inflation in four decades, suggesting the housing market will soon lose its momentum.With interest rates increasing and the cost of living soaring, consultancy Oxford Economics predicts that from the end of next year house price growth will drop from its current 10 per cent into negative territory, and will contract through 2024.Rising mortgage rates coupled with record house prices mean the share of new buyers’ incomes devoted to monthly mortgage repayments “will rocket,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.Separate data from mortgage provider Nationwide show that payments have already risen relative to pay, hitting 32 per cent in the second quarter of this year, up from 27 per cent in the third quarter of 2020.Given the intense pressure on households’ disposable incomes from the jump in the cost of essentials, and the current record low level of consumer confidence, “homebuyer numbers surely will dwindle in the second half of this year,” added Tombs.For now, however, house prices are supported by the UK’s strong labour market, low housing supply and by buyers rushing to secure mortgage deals before rates rise even further.“With the prospect of higher mortgage rates on the cards, buyers are taking advantage of the last remaining lower rates before the inevitable spike, with those remortgaging desperate to lock into a fixed-term mortgage for as long as possible,” said Tomer Aboody, director of property lender MT Finance.This is borne out by BoE data, which showed net mortgage borrowing rose to £7.4bn in May, up from £4.2bn in April, and above the £4.3bn 12-month pre-pandemic average to February 2020.The data also showed that approvals for house purchases ticked up to 66,200 in May from 66,100 in April — only slightly below the pre-pandemic average of 66,700 in the 12 months to February 2020.“Rates are rising at a rate of knots and people are getting in while they can, and fixing for as long as they can, whether through a house purchase or a remortgage,” said Andrew Montlake, managing director of mortgage broker Coreco. More

June saw the U.S. Federal Reserve upping rates by 75 basis points and the Swiss National Bank surprise with a half-point hike. That means the Bank of Japan is the only major developed world central bank still chanting the inflation-is-transitory mantra. Here’s a look at where policymakers stand in the race to contain inflation. Rate hike checklist Rate hike checklist https://graphics.reuters.com/GLOBAL-CENTRALBANKS/zdvxowbjbpx/chart.png 1) UNITED STATES The Federal Reserve vaulted to the top-hawk spot on June 15, raising the target federal funds rate by three quarters of a percentage point to a 1.5%-1.75% range. It acted days after data showed 8.6% annual U.S. inflation, triggering a market frenzy over potentially even more aggressive responses in the coming months.The Fed is also reducing its $9 trillion stash of assets accumulated during the pandemic. Major central banks are hiking rates https://fingfx.thomsonreuters.com/gfx/mkt/xmvjowkqjpr/rates1606.PNG 2) NEW ZEALAND The Reserve Bank of New Zealand raised its official cash rate by 50 basis points (bps) to 2% on May 25, a level not seen since 2016. That was its fifth straight rate hike.It projected rates to double to 4% over the coming year and stay there until 2024. New Zealand inflation reached a three-decade high of 6.9% in the year to Q1, versus a 1-3% target. New Zealand among the most aggressive central banks https://fingfx.thomsonreuters.com/gfx/mkt/jnvwezdkqvw/NZ0706.PNG 3) CANADAThe Bank of Canada delivered a second consecutive 50 bps rate increase to 1.5% on June 1, and said it would “act more forcefully” if needed. With April inflation at 6.8%, Governor Tiff Macklem has not ruled out a 75 bps or larger increase and says rates could go above the 2%-3% neutral range for a period. Deputy BoC governor Paul Beaudry has warned of “galloping” inflation and markets price an unprecedented third consecutive 50 bps increase in July. Sterling https://fingfx.thomsonreuters.com/gfx/mkt/dwpkrmdqzvm/Pasted%20image%201655378626194.png 4) BRITAINThe Bank of England (BoE) raised interest rates by 25 bps on June 16, its fifth rate rise since December, taking rates to the highest since January 2009. Given that it sees UK inflation heading above 11%, it might well have to fulfil its promise to act “forcefully” if needed. Central bank balance sheets are starting to shrink — slowly https://fingfx.thomsonreuters.com/gfx/mkt/akvezrwyzpr/balancesheets070622.PNG 5) NORWAY Norway, the first big developed economy to kick off a rate-hiking cycle last year, raised rates by 50 bps on June 23 to 1.25%, its largest single hike since 2002. The Norges Bank plans to raise rates by 25 bps at each of its four remaining policy meetings in 2022, although larger increments are also possible, Governor Ida Wolden Bache said.6) AUSTRALIA With the economy recovering smartly and inflation at a 20-year high of 5.1%, the Reserve Bank of Australia (RBA) raised rates by a surprise 50 bps on June 6. It was the RBA’s second straight move after insisting for months policy tightening was way off.Money markets price in another 50 bps rise in July.7) SWEDENAnother late-comer to the inflation battle, Sweden’s Riksbank delivered a half percentage point interest rate hike on June 30 to 0.75%.The move was Sweden’s biggest in more than 20 years.As recently as February, the Riksbank had forecast unchanged policy until 2024, but governor Stefan Ingves now expects rates to hit 2% in early-2023 and said 75 bps moves are possible.8) EURO ZONE With euro zone inflation hitting 8.6% in June, the European Central Bank (ECB) will raise interest rates by 25 bps on July 21 for the first time since 2011 and again in September . The bank is also accelerating work on a tool to contain bond market fragmentation within the bloc. From July 1 it will also use proceeds from maturing German, French and Dutch bonds to buy debt from weaker markets such as Italy . Euro zone inflation is at record highs https://fingfx.thomsonreuters.com/gfx/mkt/egpbkwxeovq/ecb0706.PNG 9) SWITZERLANDOn June 16, the Swiss National Bank (SNB) unexpectedly raised its -0.75% interest rate, the world’s lowest, by 50 bps, sending the franc soaring.Recent franc weakness has contributed to driving Swiss inflation towards 14-year highs and SNB governor Thomas Jordan said he no longer sees the franc as highly valued. That has opened the door to bets on more rate hikes; a 100 bps move is now priced for September. 10) JAPANThat leaves the Japan as the holdout dove. On June 18, it maintained ultra-low interest rates and vowed to defend its cap on bond yields with unlimited bond-buying. It holds 10-year yields in a 0%-0.25% range. BoJ boss Haruhiko Kuroda stressed commitment to maintaining stimulus though, in a nod to yen weakness, Kuroda called its rapid decline to 24-year lows “undesirable” as it heightened uncertainty. Hedge funds, meanwhile, are betting it can’t maintain huge bond-buying for ever. The BoJ may also face political pressure, given inflation may exceed the 2% target for the second straight month and elections loom in July. BOJ is the last dove standing https://fingfx.thomsonreuters.com/gfx/mkt/klvykrzggvg/Pasted%20image%201655441669556.png More