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☆ D.E. Shaw, Mantle Ridge zero in on key fixes to build shareholder value at Air Products
▼ + stars: | 2024-10-19 | by ( Kenneth Squire | ) www.cnbc.com time to read: +12 min

Air Products provides industrial gases and related equipment in end-markets such as refining, chemicals, metals, electronics, manufacturing and food. These long-term contracts functionally guarantee an unlevered double-digit return before Air Products even needs to put a dollar into the ground. Investors appreciate companies like Air Products for their low-risk and highly stable cash-flowing operations. On Oct. 4, Mantle Ridge announced a more than $1 billion position in Air Products, and echoed a similar sentiment and identified similar issues as D.E. We strongly expect that many of Air Products' other shareholders are concerned about the same issue.

Persons: It's, Shaw, unadulterated, Praxair, Seifi, Linde, D.E, Seifi Ghasemi, Ghasemi, Samir Serhan, Mantle, Paul Hilal, Scott Sutton, Olin, Russell, Ken Squire Organizations: Air Products, Chemicals, Air Liquide, Linde, Products, Air, D.E, Technologies, Fidelity National Information Services, FedEx, Verisk, Healthcare Trust, 13D Locations: Saudi Arabia, Louisiana, Texas, D.E, Air

☆ Why a key borrowing rate is above 4% again
▼ + stars: | 2024-10-07 | by ( Krystal Hur | ) edition.cnn.com time to read: +1 min

New York CNN —A key borrowing rate for American consumers has jumped to a level not seen in months. The yield on the benchmark 10-year US Treasury note breached 4% on Monday for the first time since August. The 10-year yield closed at 3.98% on Friday, up from 3.85% on Thursday. The 10-year yield tracks the rate on everything from mortgages to student loans to car loans, leaving consumers looking to borrow for big-ticket purchases with elevated costs. Investors will parse the Consumer Price Index report for September and wholesale inflation figures.

Persons: ”, Karl Schamotta Organizations: New, New York CNN, Treasury, Federal Reserve, Solutions, Fed Locations: New York

The dollar index , which measures its value against six major currencies, fell as far as 102.89, the lowest since Aug. 31. The index is on track for a loss of more than 3% in November, its worst performance since November 2022. The Conference Board said its consumer confidence index increased to 102.0 this month from a downwardly revised 99.1 in October. In other currencies, the euro rose to a 3-1/2-month peak of $1.0985 . The dollar fell 0.2% to 148.33 yen , with the Japanese currency continuing its recovery from the brink of 152 per dollar earlier in the month.

Persons: Dado Ruvic, Sterling, Karl Schamotta, underscoring, Gertrude Chavez, Dreyfuss, Alun John, Brigid Riley, Ed Osmond, Mark Potter, Kevin Liffey Organizations: REUTERS, U.S, Federal Reserve, Board, Federal Housing Finance Agency, Traders, Australian, New Zealand, Reserve Bank of New, Thomson Locations: Swiss, U.S, Toronto, OPEC, Reserve Bank of New Zealand, New York, London, Tokyo

☆ Dollar climbs after U.S. labor, consumer sentiment data
▼ + stars: | 2023-11-22 | by ( Chuck Mikolajczak | ) www.reuters.com time to read: +4 min

"The fact that we are seeing a drop definitely suggests that the labor market is not cooling as quickly as markets or the Fed might have been expecting there," said Karl Schamotta, chief market strategist at Corpay in Toronto. Schamotta also said market participants were maintaining relatively high dollar positions before liquidity dries up before the U.S. Thanksgiving holiday on Thursday. The greenback extended gains after the University of Michigan's survey of consumer sentiment showed U.S. consumers' inflation expectations rose for a second straight month in November. UMich inflation expectationsThe dollar index rose 0.37% to 103.9, on track for its biggest one-day percentage gain since Nov 9. The Japanese yen weakened 0.82% to 149.61 per dollar, while Sterling was last trading at $1.249, down 0.37% on the day.

Persons: Karl Schamotta, Schamotta, CME's, policymaker Mario Centeno, Joachim Nagel, Sterling, Jeremy Hunt, Changpeng Zhao, Zhao, Chuck Mikolajczak, Will Dunham, Richard Chang Organizations: Labor Department, Reuters, United Auto Workers, UAW, Detroit's Big, Federal, Fed, University of Michigan's, European Central Bank, Investors, Thomson Locations: Toronto, U.S

☆ Dollar strengthens after U.S. labor, consumer sentiment data
▼ + stars: | 2023-11-22 | by ( Chuck Mikolajczak | ) www.reuters.com time to read: +3 min

Schamotta also said market participants were maintaining relatively high dollar positions before liquidity dries up before the U.S. Thanksgiving holiday on Thursday. The Fed minutes showed Fed officials said inflation remained well above their target but noted that rates would need to be raised only if new data showed insufficient progress on reducing price pressures. The greenback extended gains after the University of Michigan's survey of consumer sentiment showed U.S. consumers' inflation expectations rose for a second straight month in November. The dollar index rose 0.64% at 104.17 and was on track for its biggest one-day percentage gain since Oct 24. The Japanese yen weakened 0.86% versus the greenback at 149.66 per dollar, while Sterling was last trading at $1.246, down 0.65% on the day.

Persons: Karl Schamotta, Schamotta, CME's, Mario Centeno, Sterling, Chuck Mikolajczak, Will Dunham Organizations: Labor Department, Reuters, United Auto Workers, UAW, Detroit's Big, Federal, Fed, University of Michigan's, European Central Bank, Thomson Locations: Toronto, U.S

☆ Downturn in Canada's economy seen deepening if US growth fades
▼ + stars: | 2023-11-20 | by ( Fergal Smith | ) www.reuters.com time to read: +3 min

The Canadian central bank expects that the economy will avoid a recession, and last month forecast growth of 0.8% for both the third and fourth quarters. Since then, preliminary data has indicted a shallow economic contraction for a second straight quarter in the third quarter. Analysts say that if U.S. activity slows, then the Canadian economy could shrink in the current quarter as well. BMO projects that U.S. growth will slow to 0.9% in the fourth quarter and that Canada's economy will shrink 1%. The potential for further weakening in the Canadian economy is already evident in money markets.

Persons: Chris Helgren, Karl Schamotta, Sal Guatieri, Stephen Brown, Brown, Fergal Smith, Jonathan Oatis Organizations: Roberts Bank, REUTERS, Rights TORONTO, Bank of, BoC, BMO Capital Markets, Federal Reserve Bank, Atlanta's, BMO, North, Capital Economics, Thomson Locations: Delta, British Columbia, Canada, United States, Bank of Canada, Canadian, U.S, sniffles, North America

☆ Asia stocks hit 2-week high as Fed talk turns dovish
▼ + stars: | 2023-10-11 | by ( Tom Westbrook | ) www.reuters.com time to read: +4 min

Bull statues are placed in font of screens showing the Hang Seng stock index and stock prices outside Exchange Square, in Hong Kong, China, August 18, 2023. The S&P 500 (.SPX) gained overnight and MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 1.3% to a two-week high in morning trade. "I actually don't think we need to increase rates anymore," Atlanta Fed President Raphael Bostic told the American Bankers Association, to applause, in Nashville on Tuesday. On Wednesday the Australian and New Zealand dollars hit their highest levels on the dollar since the end of September, while sterling hit a three-week peak. European gas prices, which had jumped on news of the Middle East violence, surged further on Tuesday on concern a gas pipe in Finland was sabotaged.

Persons: Tyrone Siu, Raphael Bostic, Peter Dragicevich, Brent, Vivek Dhar, Sam Rines, Sam Holmes Organizations: REUTERS, Federal Reserve, paring, Japan's Nikkei, Atlanta Fed, American Bankers Association, Treasury, New Zealand, U.S, CPI, Fed, Bloomberg, HK, Benchmark, Samsung, Pepsi, Thomson Locations: Exchange, Hong Kong, China, SINGAPORE, paring U.S, Asia, Pacific, Japan, Nashville, Tuesday's, Israel, Finland, Estonia, Europe, Texas

The dollar index , which measures the currency's strength against a basket of six rivals, was down 0.31 % to 106.03 . The index rose as high as 106.98 earlier in the session after data showed U.S. nonfarm payrolls increased by 336,000 jobs last month. The numbers for August were revised higher to show 227,000 jobs added instead of the previously reported 187,000. Economists polled by Reuters had forecast September payrolls rising by 170,000 jobs. The payrolls data showed monthly wage growth remained moderate, with average hourly earnings rising 0.2% after a similar gain in August.

Persons: Dado Ruvic, nonfarm, Karl Schamotta, Tony Welch, Helen, Corpay's Schamotta, Saqib Iqbal Ahmed, Gertrude Chavez, Dreyfuss, Chuck Mikolajczak, Rae Wee, Alun John, Marguerita Choy, Susan Fenton, Andrew Heavens Organizations: REUTERS, U.S, Reuters, Thomson Locations: U.S, Toronto, Atlanta, New York, Singapore, London

☆ US dollar's rally supercharged by soaring real yields on Treasuries
▼ + stars: | 2023-10-05 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +4 min

At the same time, climbing real yields make it more expensive to bet against the dollar. With real yields pushing higher, "only the bravest of traders are willing to bet against the greenback," he said. That, combined with a deceleration in inflation, has sent real yields soaring. The dollar has tracked real yields in recent years, with peaks and troughs closely aligned. Still, high real yields make him hesitant to short the U.S. currency.

Persons: Dado Ruvic, Karl Schamotta, Aaron Hurd, Hurd, Corpay's Schamotta, Saqib Iqbal Ahmed, Chuck Mikolajczak, Ira Iosebashvili, David Gregorio Our Organizations: REUTERS, U.S . Treasury Department, Futures Trading Commission, UBS Global Wealth Management, State Street Global Advisors, Thomson Locations: Toronto, U.S, Europe, China

☆ Dollar higher as Fed skips rate hike but stiffens hawkish stance
▼ + stars: | 2023-09-20 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +4 min

As they did in June, Fed policymakers at the median still see the central bank's benchmark overnight interest rate peaking this year in the 5.50%-5.75% range, just a quarter of a percentage point above the current range. But from there, the Fed's updated quarterly projections show rates falling only half a percentage point in 2024 compared with the full percentage point of cuts anticipated at the meeting in June. Interest rate sensitive two-year Treasury yields hit 17-year highs on Wednesday after the Fed decision. "It looks as though the Fed is trying to send as hawkish a signal as it possibly can," said Gennadiny Goldberg, interest rate strategist at TD Securities. The yen was down 0.13% versus the greenback at 148.05 per dollar after the Fed decision.

Persons: Dado Ruvic, Karl Schamotta, Schamotta, Jerome Powell, Gennadiny Goldberg, Dominic Bunning, BoE, Masato Kanda, Janet Yellen, bitcoin, Saqib Iqbal Ahmed, Herbert, Joice Alves, Brigid Riley, Marguerita Choy, Jonathan Oatis Organizations: REUTERS, U.S, Federal Reserve, TD Securities, Bank of England, Reuters, FX Research, HSBC, Washington, Treasury, Thomson Locations: Toronto, Japan, U.S, New York, London, Tokyo

☆ Analysts react to Federal Reserve leaving interest rates unchanged
▼ + stars: | 2023-09-20 | by ( ) www.reuters.com time to read: +8 min

Fed policymakers at the median still see the central bank's benchmark overnight interest rate peaking this year in the 5.50%-5.75% range, just a quarter of a percentage point above the current range. I do think that they'll remain data dependent and you'll probably hear that from Powell at the 2:30 press conference and going forward as well. So yes, they're talking about higher rates for longer, but it's really the economy that matters. This is because when the Fed announces an interest rate increase, credit card interest rates typically follow shortly thereafter, which may result in larger minimum monthly payments for credit card holders. While the decision not to raise interest rates this time round mitigates that for now, more interest rate increases may be on the horizon.

Persons: Jerome Powell, GARRETT MELSON, presser, GINA BOLVIN, Powell, BRIAN JACOBSEN, MENOMONEE, KARL SCHAMOTTA, GENNADIY GOLDBERG, it's, TOM MARTIN, MICHELE RANERI Organizations: Federal Reserve, U.S, Treasury, Fed, PPI, OF, TOM, Global Finance, Markets, Thomson Locations: BOSTON, Powell, WISCONSIN, TORONTO, U.S, ATLANTA, CHICAGO

☆ Canadian dollar gives back earlier gains on hawkish Fed
▼ + stars: | 2023-09-20 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. The Fed held interest rates steady but projected another rate increase by the end of the year and monetary policy kept significantly tighter through 2024 than previously expected. "The U.S. dollar is climbing against its major rivals as Treasury yields push higher across the front-end of the curve, and risk-sensitive assets - from equities to the Canadian dollar - are weakening," Karl Schamotta, chief market strategist at Corpay, said in a note. The Canadian dollar was trading nearly unchanged at 1.3450 to the greenback, or 74.35 U.S. cents, after trading in a range of 1.3396 to 1.3464. The price of oil, one of Canada's major exports, settled 1% lower at $90.28 a barrel, giving back some recent gains.

Persons: Mark Blinch, Price, Karl Schamotta, Fergal Smith, Nick Zieminski Organizations: REUTERS, Canadian, U.S, U.S . Federal, Fed, Bank of Canada, BoC, Thomson Locations: Toronto, TORONTO, Canadian

☆ Hot inflation data helps lift Canadian dollar to 6-week high
▼ + stars: | 2023-09-19 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto, January 23, 2015. The Canadian dollar was trading 0.3% higher at 1.3440 to the greenback, or 74.40 U.S. cents, after touching its strongest intraday level since Aug. 10 at 1.3383. Canada's annual inflation rate in August jumped to 4.0% from 3.3% in July on higher gasoline prices. "The oversold nature of the Canadian dollar going into the release suggests that exchange rate gains could be generated in the shorter term." Speculators have raised their bearish bets on the Canadian dollar to the highest since May, data from the U.S. Commodity Futures Trading Commission showed on Friday.

Persons: Mark Blinch, Karl Schamotta, Sharon Kozicki, Fergal Smith, Nick Zieminski, Sandra Maler Organizations: REUTERS, greenback, Canadian, U.S, Bank of Canada, Reuters, Bank of Canada's, U.S . Commodity Futures Trading, BoC, Thomson Locations: Toronto, TORONTO, Canadian

☆ Dollar steady as Fed's Powell says higher rates may be needed
▼ + stars: | 2023-08-25 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +4 min

[1/2] U.S. dollar banknotes are seen in this illustration taken March 10, 2023. The U.S. dollar index - which measures the currency against six major counterparts - was about flat at $104.06 after rising to 104.44, its highest since June 1. Interest rate futures tied to the Fed's policy rate on Friday priced in a more than even chance of tightening at either the November or December policy meetings. On Friday, the euro was 0.01% lower against the dollar at $1.08085. Against the yen , the dollar was up 0.31% to 146.28.

Persons: Dado Ruvic, Jerome Powell, Powell, Karl Schamotta, Ben, Bernanke, Mario, Draghi, Schamotta, bitcoin, Saqib Iqbal Ahmed, Dhara Ranasinghe, Ankur Banerjee, Kirsten Donovan, Christina Fincher, Nick Zieminski, Jonathan Oatis Organizations: REUTERS, U.S, Federal, European Central Bank, Global Research, Reuters, of, Thomson Locations: Jackson Hole , Wyoming, U.S, Toronto, Britain, London, Singapore

☆ Market reactions to Powell speech
▼ + stars: | 2023-08-25 | by ( ) www.reuters.com time to read: +8 min

"It is the Fed's job to bring inflation down to our 2% goal, and we will do so," Powell said. "August has been a difficult month for the market, so it is hungry for news that will help reverse the trend. Investors are hanging on to every word, but the main takeaway is that Powell signaled that the Fed would raise rates if needed. Rather than last year's short but brutal speech, Powell opted for a longer and calmer speech. KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO"On balance, this is a modestly less hawkish speech than markets had feared.

Persons: Jerome Powell, Powell, CHRISTOPHER HODGE, MICHAEL GREEN, ANDRE BAKHOS, CARSTEN BRZESKI, Ann Saphir, Christine, Lagarde, ” JOSEPH LAVORGNA, “, ” STUART COLE, ” QUINCY KROSBY, there's, DAVID WAGNER, Jackson, BRIAN JACOBSEN, patting, KARL SCHAMOTTA, Bernanke, Draghi Organizations: U.S . Federal, Federal, NFP, Fed, ING, Kansas City, REUTERS, CHIEF, CPI, Global Finance, Markets, Thomson Locations: U.S, JERSEY, FRANKFURT, Kansas, Jackson Hole , Wyoming, NIKKO, LONDON, CHARLOTTE, NORTH CAROLINA, CINCINNATI , OHIO, WISCONSIN, TORONTO

☆ US dollar slips as traders cautious before Fed's Jackson Hole symposium
▼ + stars: | 2023-08-21 | by ( Laura Matthews | ) www.reuters.com time to read: +3 min

The Japanese yen , which is on intervention watch, weakened 0.55% versus the greenback at 146.21 per dollar, with analysts now seeing the threshold for intervention at around 150 per dollar. Meanwhile, the offshore yuan , also on watch for intervention, rose 0.3% versus the greenback at 7.2853 per dollar. Jane Foley, head of FX strategy at Rabobank in London, said a firm dollar is problematic for both central banks since "it threatens to expose both currencies to undesirable weakness." His comments may set the direction for U.S. Treasury yields, which have driven the rise in the dollar in recent weeks. "If Powell stays on the theoretical side of things, that might lower implied volatility of the dollar and lead to a smaller reaction."

Persons: Dado Ruvic, Jackson, Sahota, Jane Foley, Jerome Powell, Karl Schamotta, Christine Lagarde, Powell, Laura Matthews, Samuel Indyk, Tom Westbrook, Kirsten Donovan, Mark Potter, Will Dunham, Jonathan Oatis Organizations: REUTERS, U.S, U.S . Federal, FX, Fed, Reuters, Rabobank, Treasury, European Central Bank, Thomson Locations: U.S ., , Wyoming, San Francisco, China, London, United States, Wyoming, Toronto, New York, Singapore

☆ BOJ tweak stirs yen volatility; dollar stays down after US data
▼ + stars: | 2023-07-28 | by ( Laura Matthews | ) www.reuters.com time to read: +4 min

[1/3] Banknotes of Japanese yen and U.S. dollar are seen in this illustration picture taken September 23, 2022. Whipsawing as traders digested the decision, the Japanese yen weakened 1.13% versus the greenback and was last at 141.05 per dollar in the New York afternoon session. U.S. annual inflation in June increased by the smallest amount in more than two years, with underlying price pressures moderating. CENTRAL BANK WEEKEarlier this week, the Fed and the European Central Bank announced interest-rate hikes, as expected. The ECB raised the possibility of a pause in September as inflation pressures show tentative signs of easing with recession worries mounting.

Persons: Florence Lo, Karl Schamotta, Adam Button, Jerome Powell, Sterling, bitcoin, Laura Matthews, Amanda Cooper, Alun John, Ankur Banerjee, Jonathan Oatis, Matthew Lewis Organizations: U.S, REUTERS, Bank of Japan, New York, Bank of, Federal Reserve, Commerce Department, ForexLive, Federal, CENTRAL, Fed, European Central Bank, ECB, Thomson Locations: Whipsawing, New, Corpay, Toronto, Japan, Bank of Japan, New York, London, Singapore

☆ Canadian dollar hits 2-week low as rate hikes 'begin to bite'
▼ + stars: | 2023-07-28 | by ( Fergal Smith | ) www.reuters.com time to read: +2 min

The loonie was trading 0.1% lower at 1.3240 to the greenback, or 75.53 U.S. cents, after touching its weakest intraday level since July 11 at 1.3249. The data suggests "that underlying momentum is weakening as higher borrowing costs begin to bite," Karl Schamotta, chief market strategist at Corpay, said in a note. Hopes of a soft landing for the U.S. economy boosted Wall Street and the price of oil, one of Canada's major exports. The 10-year was down 8.1 basis points at 3.536%, while it dropped 4.1 basis points further below the U.S. equivalent to a gap of 43.6 basis points. Reporting by Fergal Smith Editing by Alistair BellOur Standards: The Thomson Reuters Trust Principles.

Persons: Karl Schamotta, Fergal Smith, Alistair Bell Organizations: greenback, U.S, Bank, Federal Reserve, Thomson Locations: TORONTO, U.S

☆ Tumbling US dollar a boon to risk assets across the globe
▼ + stars: | 2023-07-14 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +5 min

NEW YORK, July 14 (Reuters) - Cooling U.S. inflation is accelerating a decline in the dollar, and risk assets around the world stand to benefit. Because the dollar is a linchpin of the global financial system, a wide range of assets stand to benefit if it continues falling. Raw materials, which are priced in dollars, become more affordable to foreign buyers when the dollar declines. "For markets, the weaker dollar and its underlying driver, weaker inflation, is a balm for everything, especially for assets outside the U.S.," said Alvise Marino, foreign exchange strategist at Credit Suisse. Reuters GraphicsIn the world of monetary policy, the dollar's decline may be a relief to some countries, as it removes the urgency for them to support their falling currencies.

Persons: Russell, Alvise Marino, Karl Schamotta, Paresh Upadhyaya, Upadhyaya, Kenneth Broux, Helen, pare, it's, Saqib Iqbal Ahmed, Dhara Ranasinghe, Ira Iosebashvili, Leslie Adler Organizations: YORK, U.S, Federal Reserve, Investment, Goldman Sachs, Credit Suisse, Treasury, Fed, Colombian, Kazakhstan tenge, Uruguayan, Reuters Graphics, Traders, Generale, stoke, Monex USA, Thomson Locations: U.S, Polish, Corpay, Kazakhstan, Japan, Swedish

The central bank is worried that the Canadian economy is running too hot for inflation to return to its 2% target and that if it waits to act, inflation expectations could rise, making matters worse. The central bank lifted its benchmark rate to a 22-year high of 4.75% this month and is expected to tighten further in July or September. A hard landing for the economy, or a recession, could raise unemployment, something the BoC has been hoping to avoid. "I'm not going to be betting against interest rates and I'm not going to be betting against policy lags." The data has left analysts pushing back their forecasts of a slowdown to later in 2023 or in 2024 but accompanied by higher than anticipated interest rates.

Persons: Karl Schamotta, David Rosenberg, I'm, Royce Mendes, Fergal Smith, Steve Scherer, Denny Thomas, Stephen Coates Organizations: TORONTO, Bank, Bank of Canada's, BoC, Bank of Canada, Rosenberg Research, Desjardins, Thomson Locations: United States, Data, Toronto, Ottawa

☆ Dollar dips as Powell testimony disappoints hawks
▼ + stars: | 2023-06-21 | by ( Saqib Iqbal Ahmed | ) www.reuters.com time to read: +4 min

Powell told lawmakers the fight against inflation still "has a long way to go" and that despite a recent pause in interest rate hikes officials agreed borrowing costs would likely need to move higher. While noting that inflation remains very far from the Fed's target, Powell said it may make sense to still raise rates, at a more moderate pace. The dollar index , which measures the currency against six rivals, fell 0.43% to 102.07 following Powell's testimony to the House Financial Affairs Committee. Investors broadly expect rate hikes to resume at the Fed's July meeting, though financial market indicators reflect doubts that the Fed will deliver more increases beyond that. YEN UNDER PRESSURE, STERLING SEESAWSThe euro was 0.62 % higher against the dollar at $ 1.0985 .

Persons: Jerome Powell's, Powell, Karl Schamotta, Schamotta, Michael Brown, STERLING, Kazuo Ueda, Charles Schwab, Saqib Iqbal Ahmed, Tom Westbrook, Farouq Suleiman, Sam Holmes, Kim Coghill, Sharon Singleton, Alex Richardson, Richard Chang Organizations: YORK, U.S, Fed, House Financial, Committee, Investors, Bank of Japan, Reserve Bank of Australia's, Fidelity, Citadel Securities, Thomson Locations: Beijing

☆ Cost of insuring vs US default increases before vote on debt ceiling bill
▼ + stars: | 2023-05-31 | by ( ) www.reuters.com time to read: +1 min

NEW YORK, May 31 (Reuters) - The cost of insuring exposure to a U.S. debt default rose on Wednesday, with investors focused on a debt ceiling vote in the House of Representatives later in the day. The U.S. one-year credit default swap (CDS) - a market-based gauge of the risk of default - climbed to 76 basis points (bps) from 56 bps late on Tuesday, data from S&P Global Market Intelligence showed. U.S. five-year CDS also edged up to 43 bps versus 42 bps the previous session. The House Rules Committee late on Tuesday, in the first procedural vote on the legislation, cleared the measure for debate in the full House on Wednesday. Speaker Kevin McCarthy predicted that the evening vote would succeed, telling reporters, "It's going to become law."

Persons: Kevin McCarthy, Karl Schamotta, Schamotta, Gertrude Chavez, Dreyfuss, Will Dunham Organizations: YORK, U.S, P Global Market Intelligence, Republicans, Republican Freedom Caucus, Democratic Party, Thomson Locations: U.S, Toronto

☆ Cost of insuring against US default contracts further on debt bill hopes
▼ + stars: | 2023-05-30 | by ( ) www.reuters.com time to read: +2 min

LONDON, May 30 (Reuters) - The cost of insuring exposure to a U.S. debt default fell further on Tuesday, reflecting investor optimism over a tentative deal by U.S. lawmakers to raise the $31.4 trillion debt ceiling. Trading picked up on Tuesday after much of Europe and the United States were closed on Monday for holidays. U.S. five-year CDS fell to 41 bps from 56 bps at Monday's close, the data showed. Some investors though remained apprehensive about the debt limit agreement, as some of the proposed bill's provisions could undermine economic growth. "We suspect these fears are likely overdone," wrote Karl Schamotta, chief market strategist at Corpay in Toronto.

Persons: Joe Biden, Kevin McCarthy, Karl Schamotta, Schamotta, Dhara Ranasinghe, Karin Strohecker Organizations: U.S, P Global Market Intelligence, Democratic, Republican, U.S . Treasury Department, Thomson Locations: U.S, Europe, United States, Monday's, ., Toronto

☆ Dollar notches biggest weekly rise since February
▼ + stars: | 2023-05-12 | by ( ) www.cnbc.com time to read: +3 min

The U.S. dollar rose against the euro and sterling on Friday, and notched its biggest weekly gain since February, as investors shifted to safe havens after consumer sentiment data fueled concern about the U.S. debt ceiling and monetary policy. A University of Michigan survey on Friday showed May U.S. consumer sentiment slumped to a six-month low on worries that political dispute over raising the federal government's borrowing cap could trigger a recession. "Rate differentials are continuing to tilt in the dollar's favor," said Karl Schamotta, chief market strategist of Corpay in Toronto. Recent data showing a slowing economy has boosted the case that the Fed will pause hiking rates at its June meeting. That left the dollar index up 0.63% at 102.70, notching a weekly gain of 1.4% — its biggest weekly rise since February.

Spreads on U.S. one-year credit default swaps (CDS) - market-based gauges of the risk of a default - widened to 172 basis points, an all-time high, according to S&P Global Market Intelligence data, up from a close of 163 on Tuesday. The cost of insuring U.S. debt against default for five years stood at 73 basis points, up from 72 basis points on Tuesday, touching the highest level since 2009. Due to the mechanics of a potential CDS payout, the probability of a default implied by the CDS could be lower than what current levels suggest, analysts said. As of last week, the spread on one-year CDS implied a 3.9% probability that the U.S. would default, according to MSCI Research analysts. "We found a lower market-implied default probability than in 2011 ... despite much wider CDS spreads today," they said.

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