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The MoF flagged plans to issue more debt- specifically 400 billion yuan ($56 billion) in new local government bonds- aimed at supporting regional spending. The ministry flagged plans for a one-off increase in debt quotas to support local governments, but did not specify a size. The MoF also said that 2.3 trillion yuan left over from a prior LGB issuance would be deployed towards the economy in the coming months.“Although the specific new funding of this year seems to be only RMB 400bn, if the RMB 2.3 trn available resources can be fully used by end of 2024, this would be more and faster than we had assumed in our baseline,” UBS analysts said. They also noted that the measures, along with more property market support, could help bring economic growth closer to the government’s 5% annual target. Beijing also outlined plans for a new issuance of special central government bonds to inject capital into major state-run banks, although the exact size and timing was left out. But the MoF, contrary to expectations, did not outline any plans to boost private consumption in the country, which has been viewed as crucial for an economic recovery. A lack of clear details on several fronts was also attributed to the MoF needing approval from the National People’s Congress for any major spending ventures. The NPC is set to meet later in October, with the meeting likely to provide more cues on the planned fiscal measures. “The MoF is not in the capacity of announcing any budget revisions before receiving greenlights from the NPC. Near-term attention is likely shifting towards the NPC Standing Committee meeting in coming weeks,” BofA analysts said in a note. Analysts said that more details on the stimulus would likely be revealed in the coming months.China is grappling with a prolonged downturn in economic growth, which is driven chiefly by weak private spending and a property market crash. Recent data showed that a deflationary trend in the country also remained largely in play. While Beijing has doled out a string of monetary stimulus measures to help support growth, investors have called for more targeted, fiscal measures, as seen in the MoF briefing.But investors are still seeking more details on China’s plans for stimulus. Stretched government debt levels have also raised doubts over just how much headroom Beijing has to roll out more support. More
Elevated demand for gold from central banks underpinned the price of the non-yielding gold when the global interest rates were high in 2022-2023 and then slowed down with this year’s 28% spot gold price rally. China’s central bank held back on buying gold for a fifth straight month in September.Despite the gold rally, representatives of central banks of the Czech Republic, Mongolia and Mexico told the conference that having gold in reserves still matters to them, even though each one of them has their own reasoning.The importance of gold as a secure asset is increasing for Mongolian reserves, Enkhjin Atarbaatar, head of the financial markets department at the Central Bank of Mongolia, told the conference.For the Czech National Bank (CNB), gold is viewed as a pure diversifier of reserves, Marek Sestak, deputy executive director of the risk management department at the CNB, said. All three said that they were not currently active in gold derivatives and that London remained the main storage location for their gold as a trading hub, while only Mongolia had limited appetite for repatriation of gold to store it at home.Global central banks increased purchases for their reserves by 6% to 183 tons in the second quarter, according to the World Gold Council, and are on track to slow buying in full 2024 by 150 tons from 2023. More
Palo Alto, California (Reuters) – Citing a recent uptick in inflation and data showing the U.S. economy and labor market are stronger than previously thought, Federal Reserve Governor Christopher Waller on Monday called for “more caution” on interest-rate cuts ahead. “Whatever happens in the near term, my baseline still calls for reducing the policy rate gradually over the next year,” Waller said at a Shadow Open Market Committee conference at Stanford University’s Hoover Institution, noting that there is “considerable” room for easing the Fed’s restrictive policy rate. The labor market remains healthy, he said, even as labor demand is moderating, and inflation is “in the vicinity” of the Fed’s 2% target. “We are in the sweet spot right now, we got to keep it there, that’s our job,” he said. But after cutting the policy rate by a bigger-than-expected half-of-a-percentage point in September, the Fed should now proceed at a “deliberate pace” as long as the labor market doesn’t deteriorate suddenly and inflation continues to head downward as he expects, Waller said. “I view the totality of the data as saying monetary policy should proceed with more caution on the pace of rate cuts than was needed at the September meeting,” Waller said, noting recent revisions in the economic data show households still spending resources and that lower rates may release “pent-up demand” for big-ticket items. “I will be watching to see whether data, due out before our next meeting, on inflation, the labor market and economic activity confirms or undercuts my inclination to be more cautious about loosening monetary policy.” Asked to specify what pace of rate cuts he envisioned with the modifier “gradually,” Waller demurred.”It’s in the eye of the beholder,” he said. “That’s for you guys to figure out.”Recent hurricanes and the strike at Boeing (NYSE:BA) Inc could make job market readings difficult, stripping perhaps more than 100,000 from monthly job gains in October, he estimated. But looking ahead, he predicted, job growth should moderate gradually, with the unemployment rate drifting upward but staying historically low. If inflation rises unexpectedly, he said, the Fed could pause rate cuts; if it falls below the Fed’s 2% target or the job market cracks unexpectedly, the Fed could front-load rate cuts. But if all goes as he expects, “we can proceed with moving policy toward a neutral stance at a deliberate pace” so as to avoid slowing the economy unnecessarily. More
(Reuters) -Insurer Blue Cross Blue Shield has agreed to pay $2.8 billion to resolve antitrust class action claims by hospital systems, physicians and other health providers alleging they were underpaid for reimbursements, the plaintiffs said in an Alabama federal court filing on Monday.The settlement is the largest ever for a healthcare antitrust case, they added.Blue Cross Blue Shield denied the allegations in a statement, but said it agreed to the settlement and make operational changes to “put years of litigation behind us.”The providers’ lead attorneys, Joe Whatley and Edith Kallas, said in a statement the proposed settlement would “transform” the BlueCard program through which providers submit claims.The agreement is subject to approval from U.S. District Judge R. David Proctor.The health providers first sued in 2012, claiming Blue Cross and its affiliates divided the country into exclusive areas where they did not compete with each other. The lawsuit said the nationwide conspiracy increased the cost of insurance and drove down reimbursements.Under the settlement, Blue Cross will create a system-wide information platform facilitating member benefits, eligibility verification and claims tracking that the attorneys said would lead to more transparency, efficiency and accountability.The settlement will also give providers more contracting opportunities with Blue Cross.Blue Cross will spend hundreds of millions of dollars implementing the non-monetary part of the settlement, the filing said.The settlement covers U.S. healthcare service providers, including hospitals and some doctors, with Blue plan patients between July 2008 and October 2024.The lawyers said they would ask for up to $700 million in legal fees from Blue Cross.Blue Cross agreed in 2020 to pay $2.7 billion to resolve related antitrust claims from commercial and individual subscribers. The U.S. Supreme Court upheld that deal in June. More
The joint venture operates 324 retail sites and petrol stations across Switzerland.”This transaction marks significant progress in delivering on our commitment of over $3 billion in divestitures,” Phillips 66 (NYSE:PSX) CEO Mark Lashier said in a statement.The company said it would receive $1.17 billion as sales price and $70 million as assumed dividend for the current year to be paid at or prior to closing.Phillips 66 had said last year it would monetize $3 billion in non-core assets in 2024 as part of a plan to boost returns by cutting costs and assets.The company last month sold its natural gas gathering and processing assets in East Texas to Voyager Midstream.Earlier this year, it agreed to sell 25% stake in the Rockies Pipeline, which would provide it $685 million in after-tax proceeds.The refiner said on Monday proceeds from the transaction, which is expected to close in the first quarter of 2025, “will support the strategic priorities of Phillips 66, including returns to shareholders.” More
The cosmetics maker projected sales growth on a like-for-like (LFL) basis of between 4% and 5% for the three months ended September, compared to 6% it previously forecast.Coty said very tight order and inventory management by retailers resulted in weakness in certain markets such as the U.S., Australia and China.The company and rivals including Estee Lauder (NYSE:EL) and L’Oreal have signaled strained consumer spending for beauty and cosmetics products, widely considered an affordable luxury and recession-proof.Coty now expects second-quarter LFL sales to grow moderately with some acceleration in the second half of the year.The company said it was re-accelerating its cost-reduction efforts to deliver savings well above the initial target of about $75 million in fiscal 2025 in anticipation of “a more uncertain demand backdrop, including cautious retailer behavior and a complex macroeconomic environment.”The company, which maintained its annual core profit target, will report first-quarter results on Nov. 6. More
(Reuters) – A look at the day ahead in Asian markets. While Chinese shares did not quite know how to react to Beijing’s weekend stimulus update, Wall Street extended its breakneck rally to give Tokyo something to key off when it reopens on Tuesday from a three-day weekend.While the Treasury market and U.S. government offices were closed on Monday for America’s Columbus Day holiday, the S&P 500 and Dow roared to record high closes led by chip stocks and high hopes for the third-quarter earnings season that kicked off in earnest on Friday with beats by JP Morgan and Wells Fargo.On Tuesday, other big money-center banks including Citi, Bank of America and Goldman Sachs report quarterly results. Later this week, earnings from American Express (NYSE:AXP), Netflix (NASDAQ:NFLX), United Airlines and Procter & Gamble (NYSE:PG) will show any resilience in consumer spending, which dominates U.S. economic activity, before the release of retail sales data on Oct. 17, the main indicator for U.S. investors this week. The dollar index hit its highest since mid August in holiday thinned trade, buoyed by the conviction that the Fed would choose its smaller rate cut option next month, given that the economy continues to grow and create jobs, without overheating. The dollar may have been the only safe-haven beneficiary of China’s “Joint Sword 2024B” war games around Taiwan, which the Pentagon called “destabilizing” on Monday. Gold and crude ended down. The U.S. rate futures market has priced in an 87% chance the Fed will ease by 25 bps at the November meeting, and a 13% chance it will pause and keep the fed funds rate at the target range between 4.75% and 5%, where it has stood since last month’s outsized 50-basis-points cut. The greenback also rose against the onshore yuan after investors found China’s weekend announcements that it would increase debt to revive its economy fell short on detail. The yuan ended at its low for the day at 7.09 per dollar, also its lowest since Sept 19. It is down about 1% against the dollar since Sept. 24, when the People’s Bank of China kicked off China’s most aggressive stimulus measures since the pandemic.The dollar closed in on 150 yen, ending Monday up about half a percent as the Japanese currency continued to grind lower.MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.02% lower late on Monday, with trading in Asia thinned by Japan’s holiday and a weaker Hang Seng Index close offset by rallies in the CSI300 blue-chip index and Shanghai Composite Index.Numerous U.S. listed shares of Chinese firms fell on Monday, including ADRs from Alibaba (NYSE:BABA), PDD Holdings, NIO and Baidu (NASDAQ:BIDU). The S&P 500 ended up 0.77%, the Dow up 0.47% and the Nasdaq 0.87%, with the Philadelphia Semiconductor Index up almost 2%. Shares of Nvidia (NASDAQ:NVDA) closed at record highs, putting the heavyweight AI chipmaker on the brink of dethroning Apple (NASDAQ:AAPL) as the world’s most valuable company. All that leaves signals positive, although not uniformly so, for Tokyo’s Nikkei to keep the party going, top Friday’s two-week high and extend the already 27% advance since it bottomed in early August.Here are key developments that could provide more direction to markets on Tuesday:- Japan industrial production (Aug)- South Korea unemployment (Sept)- Citi, Bank of America, Goldman Sachs report Q3 earnings More
