Economy

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(Reuters) – A look at the day ahead in Asian markets. Asian markets on Tuesday will be hoping to rebound from Monday’s fairly lackluster start to the week, with Japanese equities particularly well-positioned to move up a gear or two after the yen slid to its lowest level in nearly three months.The dollar leaped nearly 1% to 150.90 yen, its highest since Aug. 1. It was the most notable aspect of the greenback’s broad rise on Monday to its strongest level against a basket of major currencies in nearly three months.The yen’s correlation with Japanese stocks has turned deeply negative over the past month or so, meaning when the yen weakens stocks tend to rise, and vice versa.The simple rolling 25-day correlation between dollar/yen and the Nikkei 225 index is now the most inverse since 2005. On that basis, the yen’s latest dip should mean a leg up for the Nikkei, right?A buoyant dollar, however, is not good news for emerging markets, especially when accompanied by rising Treasury yields. And U.S. bond yields are rising.The 10-year yield rose 11 basis points to a three-month high of 4.19% on Monday. Inflation concerns? Debt and deficit concerns? Election concerns? Strong growth? Whatever the mix, it is a tightening of financial conditions that is often a red flag for emerging markets.According to Bespoke Investment Group, of the 35 times the Fed has cut rates since 1994, the increase of more than 50 bps in the 10-year yield after the most recent cut ranks as the third largest. Chinese markets have had a positive start to the week after the People’s Bank of China cut benchmark lending rates by 25 bps and after Beijing flagged new measures to support innovative tech companies.Export figures from Taiwan were a reminder, however, of China’s economic predicament. Export orders in September fell short of expectations due to faltering demand from top trading partner China. Tuesday’s calendar in Asia is light, with Hong Kong consumer inflation, South Korean producer price inflation and New Zealand trade the main highlights. Pipeline price pressures in South Korea appear to be cooling pretty rapidly. Annual PPI in August slumped to 1.6% from 2.6% in July – the steepest month-to-month fall since May last year – and monthly PPI has been negative in two of the last three months.The International Monetary Fund and World Bank October meetings get underway in Washington, with finance ministry and central bank officials from around the world descending on the U.S. capital to discuss economic and policy issues. There will be a flurry of press conferences, panel discussions and bilateral meetings over the coming days that will undoubtedly yield market-moving headlines.Here are key developments that could provide more direction to markets on Tuesday:- Hong Kong consumer price inflation (September)- South Korea producer price inflation (September)- Reserve Bank of New Zealand assistant governor Karen Silk speaks More

WASHINGTON (Reuters) – Higher prices are here to stay, which adds to economic pain also stemming from slow growth and high debt, the International Monetary Fund’s managing director, Kristalina Georgieva, said on Monday.”The pain we all feel because prices have gone up is here to stay, and a higher level of prices makes many people around the world quite angry too,” she said in a speech at the Bretton Woods Conference.”We are faced with this unforgiving combination of slow growth and high debt.”She said the world economy is performing reasonably well, but cautioned that concerns remain. “Trade is growing slightly slower than global growth,” she added.The IMF will update its global growth forecasts on Tuesday. While Georgieva did not specify, she said growth is expected to be above 3%.The IMF’s 2024 global real gross domestic product growth forecast is at 3.2% and for 2025 it stands at 3.3%.She added that climate risks are hurting some countries’ economic prospects.The IMF and World Bank annual meetings which started on Monday are expected to draw more than 10,000 people from finance ministries, central banks and civil society groups. Topics under discussion include ways to boost patchy global growth, deal with debt distress and finance the transition to green energy. More

BOGOTA (Reuters) – During this month’s U.N. Biodiversity Summit, known as COP16, in the Colombian city of Cali, nearly 200 countries will be debating how they can save nature from the current rapid rate of destruction.Here is what to watch for:NATIONAL ACTION PLANSTwo years after brokering the world’s landmark Kunming-Montreal Global Biodiversity Framework, countries now must spell out how they plan to meet more than two dozen globally agreed goals. They include setting 30% of their territories aside for conservation, slashing subsidies for businesses that harm nature, and mandating that companies report their environmental impact.Countries are expected to submit those national biodiversity plans, known as NBSAPs, by the start of the Cali summit that runs from Oct. 21 to Nov. 1.Delegates will use the submissions to gauge how much progress has been made since the COP15 summit in 2022 and what needs to be prioritized going forward.GENETIC INFORMATIONGenetic information taken from plants, animals and microbes can be used in researching and developing new medications, cosmetics or other commercial compounds.Historically, national laws and the 2010 Nagoya Protocol focused on how to pay the country of origin for the sharing of physical samples. But now that genomes can be sequenced in hours, rather than years, the amount of digital genetic information shared online has exploded and is increasingly divorced from original samples.The summit aims to establish a global multilateral system for paying for access to that data, called digital sequence information (DSI), with negotiators telling reporters in August that they expect an agreement during COP16.A deal would likely spell out when payments are required, by whom, and where the money should go. Companies are hoping that the possible deal will eliminate the legal uncertainties of working with DNA sequences.INDIGENOUS COMMUNITIESCOP16 host country Colombia has put the inclusion of Indigenous and traditional communities at the center of its agenda in Cali. The U.N. office for the Convention on Biodiversity – which oversees implementation of the original 1992 nature pact – has called for special protections to be given to Indigenous groups in voluntary isolation, stressing these communities’ role in protecting nature.COP16 will look to finalize a new program for including traditional knowledge in national conservation plans and decisions.Summit negotiators will also discuss the possible creation of a permanent body on Indigenous issues to ensure that these groups are represented in the U.N. decision-making on biodiversity.BOOSTING FINANCEWealthy nations agreed at COP15 in Montreal in 2022 to contribute at least $20 billion annually starting in 2025 toward helping developing countries meet their nature goals, with the target rising to $30 billion by 2030.Up to now, biodiversity aid has fallen short of those levels. Governments provided about $15.4 billion to helping developing countries on biodiversity in 2022, up from $11.4 billion in 2021, according to the Organisation for Economic Co-operation and Development (OECD).In Cali, both governments and companies are expected to announce further funding efforts, while also discussing new mechanisms for channeling money toward nature.OVERLAPS WITH CLIMATE CHANGE While countries have traditionally discussed global climate efforts separately from biodiversity, leaders are increasingly looking at ways of addressing both sets of goals simultaneously. After all, the two issues – climate change and nature loss – are deeply interrelated. Safeguarding nature helps to curb climate change, while global warming is also destroying biodiversity and driving extinctions. Experts say that COP16 must raise pressure ahead of November’s COP29 climate summit in Baku, Azerbaijan, for better recognition of the role of nature in fighting climate change. More

Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

Save over 65%$99 for your first yearFT newspaper delivered Monday-Saturday, plus FT Digital Edition delivered to your device Monday-Saturday.What’s included Weekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysis More

MOSCOW (Reuters) – The Russian central bank is expected to hike the key interest rate by 100 basis points (bps) to 20%, the same level as at the start of what Russia calls a “special military operation” in Ukraine, according to a majority of analysts polled by Reuters.Twenty-five analysts out of 30 who participated in the poll anticipate the interest rate will be at 20% after the Oct. 25 meeting of the regulator’s board. Five analysts expect an even larger hike of 200 bps to 21%, marking a new historic high.”Most likely, a 20% rate with strong rhetoric aiming for 21% in December,” said Anton Tabakh from Expert RA credit rating agency, adding that a rise in the population’s inflationary expectations and an inflationary budget were the main culprits.Russia unveiled a new draft budget this month with a higher-than-expected deficit for this year, higher-than-expected utilities tariff hikes next year, and increased military spending.Central bank officials said some parts of the draft budget came as a surprise. Meanwhile, inflationary expectations among Russian households for the year ahead rose to 13.4% in October, up from 12.5% in September.These expectations, which the central bank sees as important a gauge as actual inflation, have been rising steadily since April, dropping slightly only in September. They are currently at the highest level since the start of the year.President Vladimir Putin’s economic aide, Maxim Oreshkin, said earlier that inflation, currently running at 8.5%, has peaked and is slowing down, but stressed that more effort to slow inflation is needed.Some analysts also argue that the weak Russian currency, which lost 10% against China’s yuan in September alone and has been weakening against all major currencies since early August, is another reason for the hike.”Two pro-inflationary factors have emerged since the last meeting: currency depreciation and the new budget figures,” said Natalya Orlova from Alfa Bank, arguing that the rouble’s weakness is temporary.The central bank, which sees inflation at 7.7% by the end of the year, is also under pressure from influential businessmen who say that high rates are painful for the economy, but analysts say such pressure will not deter the regulator.”At the moment, its mandate is very strong, after the country’s leadership, having faced a shock stronger than those in 2014 and 2020, has once again been convinced of its ability to ensure stability,” said Oleg Kuzmin from Renaissance Capital.The central bank argued that the reasons for hiking the rate to 20% in March 2022 — and keeping the rate high now — are different. In 2022, the regulator wanted to calm markets spooked by the events in Ukraine, while now it is fighting inflation. More

NEW YORK (Reuters) – Federal Reserve Bank of Dallas President Lorie Logan said Monday she sees more rate cuts ahead for the central bank and suggested she sees no reasons why the Fed can’t also press forward with shrinking its balance sheet.“If the economy evolves as I currently expect, a strategy of gradually lowering the policy rate toward a more normal or neutral level can help manage the risks and achieve our goals,” Logan said in the text of a speech to be delivered before the Securities Industry and Financial Markets Association annual meeting in New York. “The economy is strong and stable,” Logan said, but, “meaningful uncertainties remain in the outlook” around rising risks for the labor market and ongoing risks to the Fed’s inflation objectives. The Fed “will need to remain nimble and willing to adjust if appropriate,” she said. Logan spoke as market participants are currently debating whether the Fed will be able to deliver the half percentage point worth of rate cuts into year-end it penciled in at its September policy meeting. While inflation has been retreating, recent jobs data has suggested a stronger-than-expected labor sector, which to some suggests the Fed may not need to be as aggressive with cutting rates. Logan devoted much of her remarks to the Fed’s ongoing balance sheet drawdown process known as quantitative tightening, or QT. Since 2022 the Fed has been shedding mortgage and Treasury bonds it purchased to provide stimulus and to smooth markets during the onset of the pandemic. It has reduced holdings from a peak of $9 trillion to the current $7.1 trillion mark and Fed officials have suggested this process has room to run further. Logan indicated she doesn’t see any need to stop soon and noted QT and rate cuts both represent a normalization of monetary policy and are currently working in the same direction. “At present, liquidity appears to be more than ample,” Logan said, noting “one sign liquidity remains in abundant supply, and not merely ample, is that money market rates continue to generally run well below” the Fed’s interest on reserve balances rate. Logan said recent volatility in money markets isn’t surprising and shouldn’t vex the Fed, noting “I think it’s important to tolerate normal, modest, temporary pressures of this type so we can get to an efficient balance sheet size.” Logan said that longer run she expects there will be only negligible balances in the Fed’s reverse repo facility. If some money is still in the facility in the future, she added, “reducing the (reverse repo) interest rate could incentivize participants to return funds to private markets.” Logan said longer run it’s likely money market rates should be close to or just above the interest on reserve balances rates. She also said the Fed selling mortgage bonds it owns to move them off the balance sheet faster is “not a near-term issue in my view.” Logan also reiterated “all banks” should have plans to meet liquidity shortfalls and be ready to use the Fed’s Discount Window liquidity facility if needed. More