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Blackstone (BX.N) limited withdrawals from its $69 billion unlisted REIT on Thursday after redemption requests hit pre-set limits amid investor concerns it was slow to adjust valuations as interest rate surged, a source close to the fund said. The development is yet another reminder of the risks facing not just sectors that are sensitive to higher interest rates but also broader financial markets, which have rallied sharply on hopes that interest rate hikes will slow. "REITS had a fantastic performance for a couple of months but when you have that outperformance, investors don't react to traditional fundamental signals such as rising rates," she said. But in recent weeks expectations have risen that the Fed will "pivot" from aggressive tightening, prompting investors to price in lower peak interest rates. Blackstone has reported a 9.3% year-to-date net return for the REIT, while the publicly traded Dow Jones U.S.
Prior to Powell's speech, markets had been pricing in a peak in interest rates at 5.05%, according to data from Refinitiv. Jefferies interest rate strategist Mohit Kumar said Powell's appearance on Wednesday was dovish compared to his last post-decision press conference. "The dovish element was his view that the terminal rates would be 'somewhat' higher than the September projections, while the market has been viewing terminal rates as substantially higher than the September dot plot of 4.4%," Kumar added. Germany's 10-year yield, the benchmark for the euro area, dropped 11 basis points (bps) to 1.839%. Italy's 10-year yield was down 15 bps to 3.74%, pushing the closely watched spread between Italian and German 10-year yields tighter by around 8 bps to 189 bps.
For the coming months, though, investors fear euro zone equities could lag other markets. "The economic outlook looks challenging as our economists forecast a recession in the euro zone," said Marc Haefliger, Head of Global Equity Strategy at Credit Suisse in Zurich. The economic slowdown will hit the cyclical euro zone market disproportionately," he added. The STOXX index of the euro zone's top 50 blue chip stocks (.STOXX50E) is seen falling another 7.9% from Friday's close to 3,650 points by mid-2023. Among country benchmarks, Germany's DAX (.GDAXI) is seen ending the first half of 2023 at 13,209, down 9.2% from Friday's close.
LONDON, Nov 28 (Reuters) - Paris' luxury-laden stock exchange is now worth more than London's. France's CAC All Shares index (.PAX) is now worth almost $3 trillion, making it Europe's largest stock market by value thanks to demand for its luxury-retailer blue chips. Reuters GraphicsFUND FLOWSSo far in 2022, funds investing in UK stocks have seen record outflows of 23 billion euros, according to Refinitiv Lipper, up from almost 18 billion euros last year and the 14.6 billion euros shed in 2016, when Britain voted to leave the European Union. Annual outflows from French equity funds are much smaller - at 2 billion euros this year. FX MATTERSIt's also worth noting that currency comes into play when measuring the size of London's market against Paris' in dollar terms.
Nov 28 (Reuters) - Euro zone government bond yields were higher on Monday after rare protests in China over the country's strict zero-COVID policies clouded the outlook for global growth and inflation. "The market is more concerned about the impact on inflation than the impact on growth," he added. Germany's 10-year government bond yield was up 4 basis points (bps) at 2.008%, after rising 12 bps on Friday. The gap between the 2-year and 10-year government bond yields rose to -20 bps. Italy's 10-year yield rose 8 bps to 3.94% pushing the closely watched spread between Italian and German 10-year yields wider by 5 bps to 191 bps.
"As long as the Fed see a stronger labour market, they don't have a big concern about tightening," Christensen said. The dollar index , which measures the greenback against six major peers, was down 0.2% at 105.75, after sliding 1.1% on Wednesday. The euro held onto gains after the account of the European Central Bank's October meeting showed policymakers feared that inflation may be getting entrenched, justifying their outlook for further rate hikes. Meanwhile, billionaire investor Bill Ackman said he's betting the Hong Kong dollar will fall and that its peg to the U.S. dollar could break. The Japanese yen was one of the strongest gainers among major currencies, climbing 0.9% against the dollar to 138.285.
LONDON, Nov 24 (Reuters) - The U.S. dollar held onto losses on Thursday after the minutes from the Federal Reserve's November meeting supported the view that the central bank would downshift and raise rates in smaller steps from its December meeting. "As long as the Fed see a stronger labour market, they don't have a big concern about tightening," Christensen said. The dollar index , which measures the greenback against six major peers, was little changed at 105.93, after sliding 1.1% on Wednesday. The euro was up 0.3% against the Swedish krone after Sweden's Riksbank raised rates by 75 basis points, in line with expectations in a Reuters poll. The Japanese yen was one of the strongest gainers among major currencies against the dollar, climbing 0.6% to 138.77.
LONDON, Nov 15 (Reuters) - The moment of truth is almost here for Britain's new prime minister Rishi Sunak and finance minister Jeremy Hunt. British markets have regained some poise after the carnage triggered by September's fiscal statement, but as the UK slips into recession, the outlook is far from rosy. Here's a look at some of the likely winners and losers from Thursday's budget. "Domestic UK equities are being treated with caution by investors both domestically and internationally," he said. snapshotA CRUDE TARGETEnergy companies have reported bumper profits this year, thanks to soaring crude oil and gas prices.
LONDON, Nov 9 (Reuters) - Goldman Sachs analysts have revised up their projections for the dollar versus the Japanese yen , mainly to reflect a "more persistent U.S. hiking cycle than initially anticipated. The U.S.-based bank now expects the U.S. dollar at 155 yen in three months (previously 150), 155 in six months (135) and 140 in 12 months (125). The yen is particularly sensitive to moves in U.S. rates as Japanese authorities have stuck firmly to their ultra-dovish monetary policy stance, causing the gap between U.S. and Japanese benchmark yields to widen. The dollar, on Wednesday, was last at 145.7 yen having hit 151.9 in October, its highest since 1990. Reporting by Samuel Indyk, editing by Alun JohnOur Standards: The Thomson Reuters Trust Principles.
LONDON, Oct 27 (Reuters) - Germany, considered Europe's most reliable debtor, is having trouble selling its bonds, just as it seeks billions to tackle the energy crisis. Hit hard by its over-reliance on Russian energy, Germany intends to borrow particularly large amounts in the coming years, with Parliament last week voting to suspend the constitutional debt brake that limits new borrowing. France's finance agency, in contrast, issued 10 billion euros of medium term bonds on Oct. 20 into strong demand. VOLATILITY HURTS AUCTIONSThe uncertainty around borrowing and QT has increased volatility in euro zone bond markets, already rocked by the knock-on effects from Britain's now-scrapped plans for large unfunded tax cuts. Volatility is deterring the banks that act as dealers for German bonds from bidding in debt auctions, Tammo Diemer, head of the country's finance agency, said at an event on Tuesday.
LONDON, Oct 27 (Reuters) - The European Central Bank delivered a second straight 75-basis-point interest rate hike on Thursday, the latest sign that major central banks are serious about curbing hot inflation. Central banks in the 10 big developed economies have raised rates by a combined 2,165 basis points (bps) in this cycle to date, with Japan the holdout "dove." But the pace of these rate rises is starting to slow - Canada just delivered a smaller-than-anticipated rate hike. That would be the fourth straight rate increase of that magnitude, bringing the policy rate to the 3.75%-4.00% range as part of what has been the sharpest set of U.S. rate increases in about 40 years. Reuters Graphics7) SWEDENSweden's central bank raised its key rate on Sept. 20 by a larger-than-expected one percentage point to 1.75%.
VIEW Rishi Sunak to become Britain's new PM, UK markets rally
  + stars: | 2022-10-24 | by ( )   time to read: +8 min
LONDON, Oct 24 (Reuters) - Former British finance minister Rishi Sunak will be Britain's next prime minister after his rivals quit the race, which analysts said had relieved some of the nervousness around the outlook for the UK economy, boosting domestic markets. The new Prime Minister needs to confirm their leadership team as soon as possible and provide clarity on their strategy for stabilising the economy and their policy priorities. ART HOGAN, CHIEF MARKET STRATEGIST, B. RILEY WEALTH, NEW YORK:"Coming to a very rapid decision on who the prime minister is going be certainly breathes a sigh of relief into the markets. RUTH GREGORY, SENIOR UK ECONOMIST, CAPITAL ECONOMICS, LONDON:"The fall in gilt yields on the news today that Rishi Sunak will become the UK’s next Prime Minister has reduced the chances of a significant fiscal consolidation. With the pound, just because we have a new Prime Minister in place, all of the issues don't just go away and we still have remarkable strength being enjoyed by the dollar."
The fragile yen briefly weakened past 150 per dollar for the first time since August 1990. It was last trading at 149.76 yen per dollar. This has sent U.S. yields and the dollar higher, particularly against the yen as the Bank of Japan is committed to keeping interest rates near zero. The pound rallied ahead of the announcement, before paring gains and then again moving higher. The dollar index dipped 0.50% against a basket of major currencies to 112.40, which analysts said was likely due to consolidation.
The blue-chip FTSE 100 index (.FTSE) ended 0.9% higher, while the domestically focussed FTSE 250 index (.FTMC) closed 2.8% up. Both the indexes logged their third-straight day of gains, with the latter up more than 5%. Under the new policy, most of Truss's 45 billion pounds of unfunded tax cuts will go and a two-year energy support scheme for households and businesses - expected to cost well over 100 billion pounds - will now be curtailed in April. Register now for FREE unlimited access to RegisterHunt, who replaced Kwasi Kwarteng, said halting the planned tax cuts would raise 32 billion pounds ($36 billion) every year. Traders are now seeing a 68.2% chance of a 100 basis points hike at the central bank's Nov. 3 meeting.
The ECB, which bought 5 trillion euros of bonds ($4.9 trillion) over the past decade to lift low inflation, now finds itself battling record high inflation at 10%. "This consideration also makes the practical implementation of ECB QT significantly harder," BofA said. That would reduce its balance sheet by a "manageable" 155 billion euros in 2023 and 300 billion euros in 2024, ING reckons. An eventual wind-down of PEPP holdings could add to balance sheet reductions in 2025 worth a total 388 billion euros, ING said. AllianceBernstein portfolio manager Nick Sanders said he was "sceptical" how the ECB could achieve QT with those protections in place.
Sterling choppy as BoE sends mixed messages
  + stars: | 2022-10-12 | by ( Samuel Indyk | )   time to read: +3 min
By 0746 GMT, the British pound was up 0.1% against the dollar to $1.0969, snapping five days of losses. Until the market gets that I think any Sterling rallies are ripe to be sold into," Brown added. "Further rises in Bank Rate are warranted," Lloyds Bank senior economist Hann-Ju Ho said in a note, even as he expects the economy to contract in the third quarter. Looking ahead, the BoE's Financial Policy Committee is scheduled to publish its latest financial policy summary and record at 0930 GMT. Meanwhile, BoE policy makers Jonathan Haskel (0800 GMT), Huw Pill (1135 GMT) and Catherine Mann (1700 GMT) are all scheduled to speak later in the day.
Earlier in the day the British central bank said it would continue to buy bonds this week. The pan-European STOXX 600 index (.STOXX) lost 0.56% and MSCI's gauge of stocks across the globe (.MIWD00000PUS) shed 0.97%. Emerging market stocks (.MSCIEF) lost 2.28% after hitting an April 2020 low and were set for a near-30% tumble year-to-date, their biggest decline since 2008. read moreGILT RESPITEBonds globally have been sideswiped by the rout in UK government bonds, known as gilts, pushing yields on U.S. Treasuries up sharply. Bond market trading was volatile with longer-dated U.S. Treasury yields hitting multi-year highs.
"I can see it propelling the dollar higher still, even though people think it's a crowded trade. Overall, dollar sentiment remained positive as worries about rising interest rates and geopolitical tensions unsettled investors, while the yen hovered near the level that prompted last month's intervention. In afternoon trading, the U.S. dollar index rose 0.2% to 113.25, not far from a 20-year high of 114.78 it touched late last month. The dollar touched a three-week high against the yen of 145.895 , just shy of the 24-year peak of 145.90 hit before the Japanese government stepped in to prop it up three weeks ago. Meanwhile, the risk-sensitive Australian dollar hit a 2-1/2-year low of $0.6248 and was last down 0.4% at US$0.6270.
Investors were also digesting the latest moves by the Bank of England, which continued to support its bond market. read moreIn addition, the International Monetary Fund on Tuesday warned of a disorderly repricing in markets, saying global financial stability risks have increased. "Nothing has happened," to cause the rebound said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. The pan-European STOXX 600 index (.STOXX) lost 0.56% and MSCI's gauge of stocks across the globe (.MIWD00000PUS) shed 0.79%. 1/5 A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 11, 2022.
LONDON, Oct 11 (Reuters) - The U.S. dollar edged back towards September's multi-year highs on Tuesday as worries about rising interest rates and geopolitical tensions unsettled investors, while the yen hovered near the level that prompted last month's intervention. "There are the Fed minutes and U.S. CPI this week that will be quite important for strengthening hawkish Fed expectations and could continue to support the dollar," Pesole added. "It's not that easy to gauge at which level the Bank of Japan will intervene," ING's Pesole said. "It's mostly a matter of how orderly the depreciation in the yen is," Pesole added, although he doubts the BoJ would be comfortable with the yen at 150 per dollar. Adding to the BoE's headaches was labour market data that showed Britain's unemployment rate fall to its lowest since 1974 in the three months to August, but the drop was driven by a record jump in the number of people leaving the labour market.
Oct 10 (Reuters) - German government bond yields jumped while yield spreads between core and periphery tightened on Monday after a media report saying Germany's Chancellor Olaf Scholz supported joint-debt issuances to tackle the energy crisis. Italy's 10-year bond yield fell 2.5 bps to 4.67% , with the spread between Italian and German 10-year yield tightening to 233 bps . Bond yields edged lower earlier in the session after blasts rocked the Ukrainian capital Kyiv and other major Ukrainian cities, prompting a move into traditional safe-haven assets such as core government bonds. Euro zone bond yields had jumped on Friday after strong U.S. jobs data dampened expectations that the Federal Reserve will slow the pace of interest rate hikes. Among euro zone bond sales, the European Union has mandated banks for a 20-year benchmark bond and a tap of its December 2029 bond, scheduled to be launched tomorrow, according to a memo seen by Reuters.
Sterling higher as BoE, Treasury seek to calm markets
  + stars: | 2022-09-27 | by ( Samuel Indyk | )   time to read: +3 min
UK pound coins plunge into water coloured with the European Union flag colours in this illustration picture, October 26, 2017. The BoE "will not hesitate" to raise interest rates if needed to meet its 2% inflation target, governor Andrew Bailey said on Monday. "The BoE saying it won't change course has helped the recovery in sterling as it conveys a message that there's no sense of panic at the central bank," Cole added. "UK markets will now be hyper-sensitive to any communication from UK policymakers," said ING head of markets Chris Turner in a note. Pill voted with the majority to raise interest rates by 50 basis points at last week's policy meeting.
Register now for FREE unlimited access to RegisterSwitzerland's national flag flies in front of the headquarters of Swiss bank Credit Suisse in Zurich, Switzerland July 27, 2022. REUTERS/Arnd Wiegmann/File PhotoLONDON, Sept 23 (Reuters) - Credit Suisse (CSGN.S) shares dropped to a record low on Friday after a Reuters report said the company is looking to raise fresh cash. Shares in Credit Suisse (CSGN.S) fell over 7% in early trade to a record low of 4.26 francs. Including Friday's move, shares are down over 50% this year and are on track for their worst yearly performance since 2008. Register now for FREE unlimited access to RegisterReporting by Samuel Indyk; Editing by Dhara RanasingheOur Standards: The Thomson Reuters Trust Principles.
Central banks in the 10 big developed economies have raised rates by a combined 1,965 basis points in this cycle to date, with Japan the holdout "dove", sticking on Thursday with its ultra-low rates policy. read moreThe Fed's new projections showed its policy rate rising to 4.4% by year-end, before peaking at 4.6% in 2023. read moreOn Sept. 7, the BoC hiked its policy rate to 3.25%, its highest level in 14 years. Canada was the first among the world's advanced economies in the current policy-tightening cycle to deliver a 100 bps rate. That implies at least one more 50 bps rate hike at upcoming meetings.
Register now for FREE unlimited access to RegisterA general view of the Bank of England (BoE) building, the BoE confirmed to raise interest rates to 1.75%, in London, Britain, August 4, 2022. REUTERS/Maja SmiejkowskaLONDON, Sept 22 (Reuters) - CitiFX has entered into a short position in the British pound against the Swiss franc following the Bank of England's and Swiss National Bank's latest policy announcements. The pound was last at 1.1031 francs, and Citi said the trade was also "to take opportunity of today’s sharp rally". Sterling has lost 10% of its value against the franc so far this year. Register now for FREE unlimited access to RegisterReporting by Samuel Indyk; Editing by Alun John and Andrea RicciOur Standards: The Thomson Reuters Trust Principles.
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