JPMorgan Chase & Co. strategists recommended selling two-year US Treasuries as a “tactical” trade, citing a resilient growth outlook that will make it hard for the Federal Reserve to cut interest rates aggressively. “The underpinnings of the economy are strong and it will be challenging for nominee Kevin Warsh to bend the FOMC to his will once he is confirmed and takes over as chair,” strategists ...
JPMorgan Chase & Co. strategists recommended selling two-year US Treasuries as a “tactical” trade, citing a resilient growth outlook that will make it hard for the Federal Reserve to cut interest rates aggressively. “The underpinnings of the economy are strong and it will be challenging for nominee Kevin Warsh to bend the FOMC to his will once he is confirmed and takes over as chair,” strategists led by Jay Barry wrote in a note, referring to the Federal Open Market Committee. The Wall Street bank’s view comes ahead of Friday’s crucial US inflation report that may provide fresh clues on the Fed’s next steps, with any sign of easing price pressures likely to fuel demand for shorter-dated, policy-sensitive government debt. Treasury yields have whipsawed this week, influenced by a technology stock selloff and strong US jobs data that helped spur debate about how Warsh — President Donald Trump’s pick to become the next Fed chair — will handle policy. Traders are now pricing a quarter-point Fed rate cut in July and another by the end of the year. Prior to the stronger-than-expected employment numbers earlier this week, they’d virtually priced in a reduction in June. The two-year Treasury yield edged up two basis points to 3.47% in Asia Friday trading, after declining about five basis points in the prior session. Some others disagree with JPMorgan. Hedge fund manager David Einhorn is betting that a Warsh-led Fed will lower interest rates “ substantially more ” than markets are currently predicting. The co-founder of Greenlight Capital said he has bought Secured Overnight Financing Rate futures on expectations of a rally if the Fed reduces borrowing costs more aggressively. JPMorgan expects US core CPI, which strips out food and energy, to have risen a “firm” 0.39% in January, due to early-year price pressures and the fading of lingering effects from the federal government shutdown. Bloomberg Economics’ estimate is for a 0.31% gain, matching consensus. “We think it will be...
US secretary of state says ahead of Munich Security Conference appearance that ‘we live in a new era of geopolitics’; Ukrainian cities pounded in latest attacks. What we know on day 1,451 The US secretary of state, Marco Rubio, has said he will have a chance to meet Volodymyr Zelenskyy at this week’s Munich Security Conference . A year after the vice-president, JD Vance, stunned assembled dignitar...
US secretary of state says ahead of Munich Security Conference appearance that ‘we live in a new era of geopolitics’; Ukrainian cities pounded in latest attacks. What we know on day 1,451 The US secretary of state, Marco Rubio, has said he will have a chance to meet Volodymyr Zelenskyy at this week’s Munich Security Conference . A year after the vice-president, JD Vance, stunned assembled dignitaries with a verbal assault on many of the US’s closest allies in Europe, Rubio plans to take a less contentious but philosophically similar approach when he addresses the annual gathering on Saturday, US officials say. Before boarding his flight on Thursday evening, Rubio used reassuring words as he described Europe as important for Americans. “We’re very tightly linked together with Europe,” he told reporters. But he also made clear it wouldn’t be business as usual, saying: “We live in a new era in geopolitics, and it’s going to require all of us to reexamine what that looks like.” The war in Ukraine is on the conference’s agenda , and the French president, Emmanuel Macron – who is making the trip to Germany – has said he hopes for a resumption of talks with Russia’s Vladimir Putin. Macron said on Thursday he did not expect to speak with Putin in the coming days, and that European nations first needed to agree what they wanted from Russia. “It’s not a matter of days, there are preparations involved,” he told reporters after EU leaders’ talks. Russia pounded Ukraine with ballistic missiles and drones overnight on Thursday, further battering its energy system and leaving tens of thousands in the capital, Kyiv, and the cities of Dnipro and Odesa without heat, power and water, officials said. In Kyiv alone, about 3,500 apartment buildings were without heating on Thursday after the latest winter attack on Ukraine’s power grid knocked out supplies to nearly 2,600 high-rises, on top of the 1,100 already affected by previous strikes, said mayor Vitali Klitschko. More than 100,000 f...
Brazilian sugar and ethanol producer Raízen SA booked a steep 11 billion reais ($2.1 billion) in impairment charges, as mounting debt poses a risk to the company’s ability to continue operating. The charges, reflecting items including goodwill on future profitability, signal how urgent it is for the company to raise fresh capital as talks among top shareholders Shell Plc and Brazilian conglomerate...
Brazilian sugar and ethanol producer Raízen SA booked a steep 11 billion reais ($2.1 billion) in impairment charges, as mounting debt poses a risk to the company’s ability to continue operating. The charges, reflecting items including goodwill on future profitability, signal how urgent it is for the company to raise fresh capital as talks among top shareholders Shell Plc and Brazilian conglomerate Cosan SA drag on without a definitive outcome. “In terms of capital structure, we got to an inflection point,” Chief Executive Officer Nelson Gomes told analysts on a Friday conference call. “All of our operational transformation plan has not been enough to mitigate the imbalance we have in the company’s capital structure.” Raízen ended the past year with total net debt of 55.3 billion Brazilian reais, up 43% from a year earlier. That’s pushed the company’s leverage to an equivalent of 5.3 times earnings before items such as interest and taxes, up from 3 times in the previous year. “The main negative highlight was the fact that the high interest payments and the disbalanced capital structure increase the risk of operational continuity of the company,” analysts at Citibank led by Gabriel Barra wrote in a Friday note. Raízen’s rising debt has rattled investors, and the lack of progress on talks aimed at securing funds has fueled a selloff in the company’s bonds. Earlier this week, Raízen’s credit rating was slashed to junk grade by Fitch Ratings and S&P Global Ratings. Executives on the earnings call did not provide details on the plans for a capital injection, with Gomes saying the management cannot “speculate” on the potential structures. Still, in a letter attached to its earnings release, Raízen said controlling shareholders “have committed to contributing capital as part of a consensual, structural, and definitive solution.” That helped Raízen bonds climb on Friday. Dollar notes gained across the curve, with notes due in 2032 gaining almost 13 cents to trade at 48 cents...