Economy

The one-year loan prime rate (LPR) was kept at 3.65%, while the five-year LPR was unchanged at 4.30%.In a Reuters poll of 22 market watchers conducted last week, all respondents predicted no change to the one-year LPR. However, five participants expected a reduction to the five-year tenor.Most new and outstanding loans in China are based on the one-year LPR, while the five-year rate influences the pricing of mortgages. China last cut both LPRs in August to boost the economy. More

SYDNEY (Reuters) – Asian share markets turned hesitant on Monday as investors fretted about the economic fallout from fresh COVID-19 restrictions in China, while bonds and the dollar braced for more updates on U.S. monetary policy.Beijing’s most populous district urged residents to stay at home on Monday as the city’s COVID case numbers rose, while at least one district in Guangzhou was locked down for five days.]The rash of outbreaks across the country has been a setback to hopes for an early easing in strict pandemic restrictions, one reason cited for a 10% slide in oil prices last week.It also dragged MSCI’s broadest index of Asia-Pacific shares outside Japan off a two-month high, though it still ended firmer on the week. Early Monday, the index was down 0.1%. Japan’s Nikkei added 0.3%, while South Korea eased 0.4%.S&P 500 futures were down 0.2%, while Nasdaq futures slipped 0.1% in quiet trade. The Thanksgiving holiday on Thursday combined with the distraction of the soccer World Cup could make for thin trading, while Black Friday sales will offer an insight into how consumers are faring and the outlook for retail stocks.Minutes of the U.S. Federal Reserve’s last meeting are due on Wednesday and could sound hawkish, judging by how officials have pushed back against market easing in recent days.Atlanta Federal Reserve President Raphael Bostic on Saturday said he was ready to step down to a half-point hike in December but also underlined that rates would likely stay high for longer than markets expected.Futures imply a 76% chance of a rise of 50 basis points to 4.25-4.5% and a peak for rates around 5.0-5.25%. They also have rate cuts priced in for late next year.”We are comfortable that the deceleration under way in U.S. inflation and European growth produces a moderation in the pace of tightening starting next month,” said Bruce Kasman, head of research at JPMorgan (NYSE:JPM). “But for central banks to pause they also need clear evidence that labour markets are easing,” he added. “The latest reports in the U.S., euro area, and U.K. point to only a limited moderation in labour demand, while news on wages points to sustained pressures.”There are at least four Fed officials scheduled to speak this week, a teaser ahead of a speech by Chair Jerome Powell on Nov. 30 that will define the outlook for rates at the December policy meeting. PRICED FOR RECESSIONBond markets clearly think the Fed will tighten too far and tip the economy into recession as the yield curve is the most inverse it has been in 40 years.On Monday, 10-year note yields of 3.84% were trading 71 basis points below the two-year.The Fed chorus has helped the dollar stabilise after its recent sharp sell-off, though speculative positioning in futures has turned net short on the currency for the first time since mid-2021.Early Monday, the dollar was a touch softer at 140.26 yen, after last week’s bounce from a low of 137.67. The euro held at $1.0327, and short of the recent four-month top of $1.1481. [FRX/]The U.S. dollar index stood at 106.900, off last week’s trough of 105.300.”Given how far U.S. bond yields and the dollar have dropped in the past couple of weeks, we think there is a good chance that they rebound if the Fed minutes are in line with the recent hawkish language from members,” said Jonas Goltermann, a senior markets economist at Capital Economics.Meanwhile, turmoil in cryptocurrencies continued unabated with the FTX exchange, which has filed for U.S. bankruptcy court protection, saying it owes its 50 biggest creditors nearly $3.1 billion.In commodity markets, gold was a fraction firmer at $1,751 an ounce, after dipping 1.2% last week. [GOL/]Oil futures were trying to find a floor after last week’s drubbing saw Brent lose 9% and WTI roughly 10%.Brent edged up 18 cents to $87.80, while U.S. crude added 10 cents to $80.18 per barrel. [O/R] More

The country’s imports fell 5.5%, bringing the trade balance to a $4.42 billion deficit, on track for an eighth straight month in the red.Shipments to China dropped 28.3%, while those to the United States and European Union were up 11.0% and down 1.5%, respectively.By product, sales of semiconductors fell 29.4% and wireless communication devices lost 20.6%, but those of cars and petroleum products gained 28.6% and 16.1% each.Exports shrank 11.3% on average per working day.Full Monthly trade data will be available on Dec. 1. More

Sovereign investors, which now manage some $33 trillion in assets, have also seen a rapid rise in allocations to private markets, though this development might start to slow with fixed income back in favour, the Invesco Global Sovereign Asset Management Study said.”Over the last 10 years sovereign investors have invested with the wind at their backs thanks to the secular bull market that emerged from the global financial crisis,” said Rod Ringrow, Invesco’s head of official institutions. Average annual returns for sovereign investors over the past decade stood at 6.5% and, for sovereign wealth funds alone, at 10% in 2021, Invesco found. However, 2022 could prove to be a turning point with higher inflation and tighter monetary policy hitting long-term expected returns. While the United States remained the top destination, some sovereign investors were keen to rebalance portfolios, fearing they had become overly reliant on U.S. markets which left them vulnerable to the correction in equity markets seen this year, Invesco said. Back in 2014, the UK was the most desirable destination. Emerging markets were set to benefit from the latest shift, the study predicted. Among developing nations, India has overtaken China as the most popular emerging market, having climbed to No. 2 in 2022 from No. 9 in 2014. “While this is partly because funds with dedicated Asian allocations are trimming their China exposure, investors have commended India’s positive economic reforms and strong demographic profile,” the study found.China currently ranks in sixth place.The past decade had also seen a steady increase in the creation of sovereign wealth funds with a dozen established in Africa, of which 11 have a strategic mandate to develop local economies, Invesco found. More

The Credit Union Consumer Sentiment index fell to 45.3 from 46.1 in October, having recorded a 14-year low of 42.1 in September even as the economy continued to grow in the face of the rising cost of living. Foreign-owned companies employ more than 275,000 people in Ireland, or one in nine workers, and the survey’s authors believe that recent job losses in the large multinational tech sector are adding to consumer caution.But they also detected an element of resilience in the Irish reading when compared with the United States, where many of the tech layoffs have been announced. The United States suffered a significant and unexpected drop in consumer sentiment this month.The health of the Irish jobs market in recent years, coupled with reports of significant unfilled vacancies and skill shortages in tech-related areas, is producing “a more measured if still material immediate reaction to the spate of job losses seen during the November survey period,” the authors said. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.Reports of the dollar’s decline may have been greatly exaggerated, and if that turns out to be the case, it’s bad news for Asia.World stocks have rebounded strongly, bond yields and the dollar have fallen, and financial conditions eased significantly over the last month as investors bet that the Fed is preparing the ground for the much-vaunted ‘pivot’. The MSCI World Index is up 15% from its Oct. 13 low, while the MSCI Asia ex-Japan index is up 15% in the last four weeks and on course for its best month since May, 2009.The big banks are starting to publish their 2023 outlooks, and FX analysts at HSBC and Morgan Stanley (NYSE:MS) are among those who reckon that the dollar is peaking and will weaken next year.But recent rhetoric from Fed officials has been flat out hawkish – even from former ‘doves’ like San Francisco Fed President Mary Daly – and it would not be a surprise if the dollar were to resume its 2022 rally into the year end. This deepens the problems that Asian markets and policymakers have been facing all year – historically low exchange rates, FX market intervention, rising inflationary pressures, and raising domestic interest rates into weak growth. If the Fed is not as close to ending its hiking cycle as previously thought, most Asian central banks won’t be either. Asia’s powerhouses Japan and China are loosening policy, of course, and their currencies and FX reserves are taking a hit. This is the broad context in which the Bank of Korea meets later this week. All but one of the 25 forecasts in a Reuters poll is for a 25 basis points hike to 3.25%.BOK policymakers and others in the region will take comfort from the fall in global oil and commodities prices. But if Fed hawks and dollar bulls set the market tone, they may have to tighten more than they had envisaged. Emerging market FX rates https://fingfx.thomsonreuters.com/gfx/mkt/gkvlwgdrwpb/EMFX.jpg Three key developments that could provide more direction to markets on Monday: – Fed’s Daly speaks – U.S. Treasury auctions 2-year, 5-year notes- Germany PPI inflation (October) More

Sam Bankman-Fried’s businesses owe more than $3bn to their largest creditors, according to court filings, as the cryptocurrency group’s huge bankruptcy process gets under way. The crypto exchange FTX and linked companies founded by Bankman-Fried filed a list of their 50 largest creditors yesterday, all of which are customers and owed more than $20mn, with two of them due more than $200mn. The companies’ total liabilities are estimated at more than $10bn, according to earlier filings, and it may have more than 1mn creditors. Publication of the list as part of Chapter 11 bankruptcy proceedings in Delaware had been delayed as bankruptcy practitioners struggled to locate reliable records at FTX group, which collapsed this month after a liquidity crisis and accusations it mishandled client funds. The collage of the crypto exchange caused former FDIC head Sheila Bair to call for crypto regulation under existing law.John Ray III, the bankruptcy expert who has taken control of the business and who oversaw the liquidation of Enron, said in earlier filings he had never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information”. Ray also noted that the group will prioritise pursuing a reorganisation or sale.Join leaders including Singapore’s minister of trade and industry, the deputy chair, CEO and executive director of Mewah International Inc. and more on November 23 in Singapore at The Westin and online to speak about the future of the commodities industry. Register here for your in person or digital pass today.Five more stories in the news1. Malaysian elections produce first hung parliament Rival political leaders are fighting to secure a majority after this weekend’s election produced Malaysia’s first hung parliament. Nonagenarian ex-prime minister Mahathir Mohamad lost his seat and the lack of a clear winner will complicate efforts by the south-east Asian economy to tackle slowing growth and rising inflation.2. Elizabeth Holmes sentenced to over 11 years for Theranos fraud In what prosecutors called one of the “most substantial” white collar crimes in the US, the disgraced founder of failed blood-testing start-up Theranos has been sentenced to 135 months in prison. Holmes, who is 38 and pregnant with her second child, will begin serving her sentence in April.

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3. Turkish jets strike Kurdish militants after Istanbul bombing Turkey launched air strikes in Syria and Iraq on Saturday night, targeting Kurdish militants in attacks that risk escalating tensions in the volatile region. The operation came a week after Turkey blamed the Kurdistan Workers’ party for a bomb attack in Istanbul, killing six people, and the ministry’s statement cited Ankara’s right to self-defence in carrying out the assault.4. Qatar’s World Cup preparations run into extra time Construction workers were rushing to apply the finishing touches to temporary accommodations for football fans over the weekend as the Gulf state of just 3mn people gets ready to host 1.5mn visitors for the tournament, which kicked off yesterday.Further reading: European teams to defy Fifa with rainbow armbands5. Dollar tumbles from 20-year high as US inflation eases The US dollar has fallen in the past fortnight, fuelling speculation that the Federal Reserve will soon slow down its interest rate rise and offering early indication that inflation may finally be easing. The greenback has fallen more than 4 per cent against a basket of six peers so far in November, leaving it on track for the biggest monthly fall since September 2010.The day aheadCBI conference British business leaders will be able to have their say about UK politics at the Confederation of British Industry conference, which starts today in Birmingham. Speakers include a “senior cabinet minister”, John Lewis Partnership chair Sharon White and BT Group chief executive Philip Jansen.Economic indicators China releases its monthly interest rate decision, Germany releases its October producer price index (PPI) inflation rate data, Hong Kong publishes October consumer price index (CPI) inflation rate data and Thailand also has its Q3 GDP figures today.Corporate results Urban Outfitters and Zoom will have their Q3 results today; Agilent Technologies releases its Q4 results; Compass Group and Virgin Money release their FY results.American Thanksgiving ceremony President Joe Biden will pardon the National Thanksgiving turkey in the annual ceremony at the White House.What else we’re readingRussians struggle to make sense of Ukraine war after Kherson retreat After nine months of war, Russia still describes its activity in Ukraine as a “special military operation”. Amid the drumbeat of state propaganda, the mood among Russian citizens is one of low-level anxiety, according to independent polls, and many are left with more questions than answers.Coinbase’s Brian Armstrong: ‘I’m just as bullish on crypto as ever’ Amidst a severe downturn in crypto, the founder-CEO of crypto exchange Coinbase has lunch with the FT to discuss his enduring belief in blockchain, his “no politics in the workplace” policy, and why the solution to crypto chaos is . . . more crypto.When your boss becomes your banker Inevitably, employees bring their financial concerns into the workplace. And as people’s financial concerns grow amid the cost of living crisis, more companies are finding ways to offer financial services such as loans or pay advances to their staff. What is the risk?How to succeed with a family business succession Succession is the most emotionally taxing question facing entrepreneurs, writes John Gapper. And, after years of observing how businesses operate, many of the emerging generation must have noticed that being publicly responsible for everything has drawbacks.Lessons from a decade of ‘Candy Crush’ The addictively casino-esque puzzle game has generated billions of dollars in revenue since its launch in 2012 and its reach is huge — so why isn’t it more talked about culturally? The fault might lie in its format and its lack of a central protagonist.TravelFrom the balmy weather and romantic plazas to its residents’ easy-going turns of phrase, Simon Kuper found much to love about his year in Madrid.

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The COP27 climate summit in the Egyptian resort of Sharm el-Sheikh was always going to struggle. War in Europe, soaring inflation, an energy crisis, debt piles, food shortages and sour US-China relations were never going to favour global collaboration on the daunting task of cutting greenhouse gases.Yet the two-week Egyptian COP managed to sink below even the meagre expectations held for it on the most crucial test. At a meeting held in the shadow of floods in Pakistan that Islamabad has called “the climate event of the century”, this was the moment to send a vivid political signal that the world is ready to crack down faster on the fossil fuels driving up global temperatures.Many nations wanted to build on an agreement reached after much wrangling a year ago at COP26 in Glasgow to phase down unchecked coal use. Yet a proposal led by India to agree to wind down consumption of all fossil fuels, not just coal, foundered after opposition from oil and gas producers such as Saudi Arabia and Russia. These nations undoubtedly feel emboldened to resist international pressure to cut the global use of fuels that underpin their economies. The loss of fossil fuel supplies from Russia following the invasion of Ukraine has led a series of western leaders to seek new energy deals with Riyadh. The consequences of such geopolitical realities are one reason COP27 did secure a breakthrough that has eluded every UN climate summit since the first in 1995. An agreement to set up a loss and damage fund to help poor countries most vulnerable to a rising toll of climate-fuelled disasters was overdue.Lives and livelihoods in these nations are already under threat in a world that is steadily warming because of greenhouse gases historically emitted by wealthy countries. There is clearly a moral case for classing payments from the new fund as a form of reparations, but this is not what has been agreed. Wealthy nations would never have signed off on a deal amounting to an admission of liability, or open-ended compensation claims, and many will face a domestic backlash for agreeing to the new financing body.Decisions on who will cough up the money for the fund and who will receive it have been deferred to future COPs after a failed but necessary effort to ensure countries such as China helped to shoulder the financial burden. The world’s second-largest economy has traditionally avoided taking on such responsibilities in UN climate talks, where it has long been classified alongside other developing countries. But its rapidly rising wealth and the fact it is by far the world’s largest carbon polluter means it must take on more responsibility for a climate problem that cannot be fixed without it.The new fund was not COP27’s sole achievement. Countries also agreed to back reforms at multilateral development banks to scale up climate finance and make these bodies fit for purpose in a warming world. In addition, wealthy countries launched a plan to deliver $20bn of public and private finance to help Indonesia cut its heavy reliance on coal. This builds on an $8.5bn initiative announced last year in Glasgow to help South Africa shift away from most polluting fossil fuel. There were advances, too, on steps launched in Glasgow to halt forest loss, expand zero emissions vehicles and ensure the net zero pledges of businesses and financial bodies are robust. Each underlines the fact that these sprawling UN summits can still make progress in some areas. But on the central challenge of reducing fossil fuel use and carbon emissions, COP27 has left an alarming hole that future gatherings will have to work even harder to fill. More