Aurelia Butler

Wednesday’s inquiry, targeting cheese, milk and cream meant for human consumption, came after the EU amended proposed punitive duties on Chinese EV imports to 36.3% from an initial 37.6%. Beijing had urged Brussels to abandon the tariffs.DAIRY PRODUCER ARLA FOODS:The CEO of Arla Foods, one of the world’s biggest dairy producers owned by more than 9,000 dairy farmers in Denmark, Sweden, Britain, Germany, Belgium, Luxemburg and the Netherlands, said the company is not directly impacted by China’s anti-subsidy probe.”I’m confident that the EU and the system can handle this, and that it doesn’t necessarily have to become as dramatic as it initially seems,” Peder Tuborgh said.”(China is) far from self-sufficient, and the exports to China are still reasonable, but they are able to meet their growth consumption nicely through the development they are undergoing themselves… (I see this) as a normal market mechanism, more than being a specifically protectionist thing.EUROPEAN UNION CHAMBER OF COMMERCE IN CHINA:”Regrettably, the use of trade defence instruments by one government is increasingly being responded to seemingly in kind by the recipient government.”The chamber will be monitoring the investigation and hopes it will be conducted fairly and transparently. We expect our affected member companies to co-operate to the fullest with the investigation.”FRIESLANDCAMPINA:Dutch dairy cooperative FrieslandCampina, whose specialised nutrition business sells infant nutrition products in China and which has a small business selling condensed milk products and creamers for the business-to-business market, said it was aware of the announcement of the anti-subsidy investigation. “Naturally, we will provide the necessary information related to the investigation, if requested, in accordance with laws and regulations,” a spokesperson said.THE IRISH FARMERS ASSOCIATION:Tadhg Buckley, director of policy and chief economist at Ireland’s largest farming lobby group the Irish Farmers’ Association, said Chinese authorities are looking predominantly at “cheese, cream and other related processed cheese, blue cheeses and cheeses of that type”.He said that would account for about 45 million of 430 million euros ($478.55 million) worth of Irish exports last year. Specialised powders used for nutritional purposes make up the bulk of exports to China, he added. “If the investigation… expanded outside into powders, it would certainly be a much different and much more significant issue for Ireland,” he said, adding that a trade delegation was heading to China at the end of the month.IRISH MINISTRY FOR AGRICULTURE, FOOD AND THE MARINE:”I will be engaging with the EU Commission to ensure that it has all of the data necessary in so far as Ireland is concerned to resolve any issues raised in the proposed investigation,” Charlie McConalogue, Ireland’s Minister of Agriculture, Food and the Marine, said. JACOB GUNTER, LEAD ECONOMY ANALYST AT MERCATOR INSTITUTE FOR CHINA STUDIES:”EU dairy exports to China come out to around 1.7 billion euros, which is less than 1% of total EU exports to China, so even if tariffs go so high as to de facto block all dairy trade, it will have a relatively small impact on EU exports. “Nevertheless, the pain will be felt more acutely in the biggest exporters to China, from Irish butter to Finnish milk powder to Spanish Manchego to Italian Parmigiano Reggiano.”China has been ramping up its own dairy production for years, and only a small portion of all dairy products consumed in China are imported.”China is important for butter and cheese exports, but considering the size of the country, it is still a minor player.”I expect that more ‘replaceable’ dairy products will be most affected by tariff hikes, as alternatives from the U.S., Canada, Australia, and New Zealand will be more cost competitive – think butter, milk, milk powder, cream, and the most common types of cheese. “For less ‘replaceable’ product types – many of Europe’s high-end and specialized cheeses, for example – the main question will be at (what) point a given product just becomes cost prohibitive.”($1 = 0.8986 euros) More

The average contract rate on a 30-year fixed-rate mortgage fell 6 basis points in the week ended Aug. 23, to 6.44%, the Mortgage Bankers Association said on Wednesday. That was the lowest since April 2023.The decline in mortgage rates, by 38 basis points in four weeks, has kept refinancing applications elevated, as homeowners who bought when rates were even higher moved to lock in lower monthly payments. The MBA 30-year average rate topped out at 7.9% last October.Mortgage applications and purchase applications edged up just 0.5% and 1% respectively, as would-be homebuyers hold out for a further drop in rates.Interest-rate futures reflect bets the Fed will cut short-term rates by a full percentage point by the end of this year.Rising borrowing costs and a limited number of new and existing homes offered for sale have helped make home ownership increasingly out of reach for many. Democratic presidential nominee Kamala Harris and her Republican rival Donald Trump have made housing affordability integral to their pitch to voters in the November presidential election, with both promising to reduce costs for Americans in different ways. More

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LONDON (Reuters) -The U.S. Treasury has a lot of debt to place in the next year, but its active management of the maturity profile shows why the oft-heralded U.S. debt “crisis” is unlikely to occur anytime soon.Treasury funding math currently is quite daunting, with more than half a trillion dollars of bills and bonds under the hammer this week alone. But almost three-quarters of this week’s deluge is in bills, which mature in 12 months or less, and these will roll over at progressively lower rates if U.S. interest rates decline as expected.While huge weekly Treasury sales are by now familiar, many investors continue to circulate notes expressing concern about the mounting levels of government debt that need to find willing buyers.Torsten Slok, the chief economist at Apollo Global Management (NYSE:APO), is the latest to warn of potential danger ahead with his “Top 10” list of Treasury factoids. Slok notes that $9 trillion of government debt is maturing over the next year, debt servicing costs have hit 12% of government outlays, trillion-dollar-plus deficits are projected over the next decade, and the debt/GDP ratio is expected to double to 200% by mid-century.His conclusion is simple: Watch out for bumpy auctions, possible credit rating downgrades, and the persistent threat that long-term bond investors will begin to demand a hefty “term premium” to hold long-dated Treasuries.But by front-loading the maturity profile of the debt, the Treasury is revealing one of its main tools to circumvent a debt crunch over the coming year or more.Even though the weighted average maturity of the entire marketable debt stock is still above pre-pandemic levels at close to six years, bills maturing in one year or less make up 22% of the total – well up from the 10%-15% seen both 18 months ago and typical for much of the decade before COVID-19 hit.With policy rates currently more than 5%, that short-term issuance will be costly. But the picture changes considerably if the Federal Reserve moves into rate-cutting mode next month and lops more than 200 basis points off rates over the next year, as the futures markets currently expect.BUILDING BILLSDoes this mean the Treasury is deliberately distorting the U.S. government debt market? Analysts at CrossBorder Capital argue the Treasury is doing just that through a policy of “active duration management” (ADM) designed to suppress yields. In a piece headlined “US Treasury Bribes World’s Smartest Investor,” CrossBorder models what that bill-heavy maturity profile might mean for debt tenors currently receiving less attention, such as the benchmark 10-year Treasury note. The analysts compare the yield on the latter with the much-higher yield on equivalent U.S. mortgage-linked bonds, adjusted for interest rate sensitivity and the related “convexity.”Their model shows a whopping 100-basis-point-plus gap between the two, which they suggest is wholly due to this unofficial ADM policy.CrossBorder says a funding discount of that size knocks a full 35 percentage points off the U.S. 2050 debt/GDP ratio forecast.So win-win? Perhaps not entirely.The negatives are less obvious, but no less meaningful. If 10-year yields are suppressed to the degree suggested, then that’s one reason why the shape of the yield curve has been persistently inverted for more than two years without the recession many say that predicts actually unfolding. But there are costs to losing such a useful tool in forecasting the future course of the economy and inflation.Also, further reduction in the average maturity profile of the entire debt stock from here makes rollover risk a greater concern. Periodic “accidents,” such as debt ceiling rows or temporary default threats in the bill market, could have a disproportionate impact if exposure to bills keeps rising. And even though continuing to jam the bill markets with new paper may reduce debt servicing costs in the near term, what happens when the Fed cycle turns again or the economy truly is in a new world in which higher inflation and elevated rates persist?That risk is especially pertinent given current political realities. Absent a shift in fiscal policy over the coming years, the U.S. debt profile will eventually require some painful adjustments. And, ironically, the lack of market ructions in the interim could actually lessen the chance of political action to rein in the deficits and debt, which will only compound the problem.But what’s also clear is government debt managers have multiple tools and sleights of hand to help them navigate this current period without generating the sort of crisis so many forecast.Whether such moves are just temporary stopgaps is another question. But, given recent history, it would seem dangerous to bet that the Treasury and Fed will fail to keep this particular show playing for the foreseeable future.The opinions expressed here are those of the author, a columnist for Reuters.(by Mike Dolan; Editing by Paul Simao) More

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Market darling Nvidia (NASDAQ:NVDA) is set to report its latest quarterly results Wednesday, and these numbers could be key in determining market sentiment going forward.Nvidia’s market value has ballooned thanks to its dominance of the computing hardware behind artificial intelligence (AI), resulting in its market capitalization soaring to $3.2 trillion, briefly becoming the world’s most valuable company in June.The chipmaker’s market value was around $390 billion on the eve of the launch of AI chatbot, ChatGPT, less than two years ago.Its sheer size and position as an industry bellwether mean its earnings, due after the U.S. close, can move the entire market.Options pricing shows that traders anticipate a move of around 9.8% in the company’s shares on Thursday, a day after it reports earnings, data from analytics firm ORATS showed. Given Nvidia’s market capitalization, a 9.8% swing in the shares would translate to over $300 billion, likely the largest expected earnings move for any company in history, analysts said.Nvidia is expected to have recorded a year-over-year jump of about 112% in second-quarter revenue to $28.68 billion, according to LSEG data. But its adjusted gross margin likely dropped more than 3 percentage points to 75.8% from the first quarter, burdened by the cost of a production ramp-up to meet growing demand.It remains to be seen whether even a doubling of revenue, if it was to occur, will be sufficient to impress the market given investors have tended to take a less forgiving view this season of big tech companies whose earnings failed to justify rich valuations or prodigious spending on AI. U.S. stock futures were largely unchanged Wednesday, with investors warily awaiting the release of the latest quarterly results from chipmaking giant Nvidia. By 04:00 ET (08:00 GMT), the Dow futures contract was 35 points, or 0.1%, higher, S&P 500 futures climbed 2 points, or 0.1%, while Nasdaq 100 futures fell by 3 points, or 0.1%.The results from AI darling Nvidia are due after the close [see above], and could determine whether investor enthusiasm for all things artificial intelligence continues into the fall.Aside from Nvidia, investors will also have the chance to study quarterly results from the likes of Bath & Body Works (NYSE:BBWI), Foot Locker (NYSE:FL) and Kohl’s (NYSE:KSS) before the open, while Salesforce (NYSE:CRM) releases its earnings later in the session.Elsewhere, Nordstrom (NYSE:JWN) stock gained strongly premarket after the retailer beat earnings expectations in the second quarter, helped by its crucial Anniversary Sale event.Semiconductor developer Ambarella (NASDAQ:AMBA) stock jumped over 18% after hours on upbeat revenue guidance in the third quarter, while PVH (NYSE:PVH), owner of Calvin Klein, slumped more than 7% after reporting a drop in second-quarter sales.The day after Apple (NASDAQ:AAPL) announced the departure of its long-standing chief financial officer Luca Maestri, Bloomberg has reported that the tech giant has also cut about 100 jobs in its digital services group amid shifting priorities in the company.The biggest cuts were in teams working on Apple’s bookstore services, Bloomberg reported, and the move marks a rare instance of job cuts by the company which has tended to retain staff amid a growing wave of layoffs across its major tech peers. The firm is set to unveil the latest iteration of its flagship iPhone in early-September, and will also start rolling out a slew of artificial intelligence features in its devices. This event will initiate the “biggest upgrade cycle” in Apple’s history, “with AI now on the doorstep,” said analysts at Wedbush, in a note.“In our view Apple could sell north of 240 million iPhone units in FY25 as this AI-driven upgrade cycle takes hold,” the analysts continued. “China remains the linchpin of growth for Apple and now this key region is set to see improving growth once again starting with iPhone 16 heading into fiscal 2025.”Bitcoin, the world’s largest cryptocurrency, fell on Wednesday, extending a sharp downturn from the prior session, dropping below the key $60,000 level.By 04:00 ET, Bitcoin fell 6.7% to $58,806.0, down more than 3% on the week and over 11% lower this month. Whale Alert, an X profile that tracks large crypto transactions using on-chain data, said about 30,000 Bitcoin tokens, worth $1.88 billion at current rates, were transferred from a cold wallet to crypto exchange Binance on Tuesday.This transfer raised the possibility of a large sale given that it showed a large amount of Bitcoin being moved onto an exchange. A report from blockchain research firm Glassnode also showed that net capital inflows into Bitcoin had “markedly cooled” in recent months, suggesting investor optimism over the launch of spot Bitcoin exchange-traded funds had cooled.There could also be a political element to the recent weakness, with the race for the White House now looking a lot tighter than a few months ago after President Joe Biden withdrew his candidacy. Trump has positioned himself as the pro-crypto candidate in the upcoming U.S. presidential election. Vice President Kamala Harris, the Democratic candidate, has yet to share a public view on the industry, but Biden’s administration has tended towards a heavy-handed regulatory view.Crude prices edged slightly lower Wednesday, struggling for support despite another outsized draw in U.S. inventories. By 04:00 ET, the U.S. crude futures (WTI) dropped 0.2% to $75.38 a barrel, while the Brent contract fell 0.2% to $78.47 a barrel.Data from the American Petroleum Institute, an industry body, showed U.S. oil inventories fell 3.4 million barrels in the week to August 23, more than expectations for a draw of 3 million barrels.The data also showed sustained draws in gasoline and distillate stockpiles.If confirmed by the official inventory data, which is due later on Wednesday, U.S. inventories have fallen for eight of the past nine weeks, driving hopes that demand in the world’s biggest fuel consumer remains strong despite recent signs of cooling in the economy. But with September comes the end of the travel-heavy summer season, which could see some cooling in U.S. fuel demand. Prices fell more than 2% on Tuesday, snapping a three-day streak of gains of more than 7%, amid lingering concerns over a global economic slowdown. 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They believe that this uncertainty, coupled with stronger supply, “should both work to shake the Fed from its gradualist guidance, even before this uncertainty is resolved.”JPMorgan argues that a reduction in labor market pressure could boost confidence that service price inflation will decline, reinforcing the belief that the Fed’s current policy stance is sufficiently restrictive.“Importantly, it reduces lingering concerns that inflation salience and elevated wage inflation could generate a feedback loop that entrenches inflation and undermines Fed credibility,” the bank’s economists explain.Recent comments by Fed officials, including the FOMC minutes and Chair Powell’s Jackson Hole speech, signal that the Fed may respond by reducing rates by approximately 100 basis points by the end of the year.However, JPMorgan notes that while the U.S. might experience easing job growth and a supply-side boost that raises unemployment rates, this trend is not as apparent in other economies.They caution that, based on previous instances, the impact of Fed policy changes on other economies tends to be limited unless there is a synchronized shift in macroeconomic fundamentals or financial market conditions. Therefore, economists believe the Fed’s expected shift away from gradualism will not be mirrored more broadly.While the growing uncertainty around the sources of what JPMorgan describes as “new US exceptionalism” might lead to a roughly 100 basis point easing in the coming months, it leaves the outlook for 2025 unclear, the note continues.Economists argue that how this uncertainty plays out—whether it stems from weakened demand or an ongoing supply boost—could result in very different policy directions.For instance, if labor demand weakens significantly and pushes the economy toward a recession, it could lead to outsized cumulative Fed rate cuts of at least 300 basis points.Such reductions “would almost certainly have broad global repercussions,” economists emphasize.“Alternatively, stabilization in labor demand at a still solid pace would likely moderate Fed growth concerns and reinforce a view that the near-term neutral rate is elevated,” they added.Together with the growth boost expected from the initial easing, intended to counter risks that don’t materialize, the policy adjustment may slow and possibly stall as rates approach 4%. More