As part of its Un-carrier Next event, T-Mobile's CEO says its no-contract Home Internet service is now available to 30 million US homes.
As part of its Un-carrier Next event, T-Mobile's CEO says its no-contract Home Internet service is now available to 30 million US homes.
The firm released $5.2 billion of credit reserves, bolstering EPS.
A gauge of global shares rose to record highs on Tuesday, led by surging technology-related stocks, as Treasury bond yields eased after U.S. consumer price data for March showed the pace of inflation was not rising wildly. The consumer price index rose 0.6%, the biggest gain since August 2012, as increased vaccinations and fiscal stimulus unleashed pent-up demand. "Fed comments continue to be conciliatory."
(Bloomberg) -- The Federal Reserve will likely scale back its bond purchases before considering raising interest rates, Chairman Jerome Powell said, hardening expectations on the sequence of its eventual exit from aggressive policy support.“We will reach the time at which we will taper asset purchases when we’ve made substantial further progress toward our goals from last December, when we announced that guidance,” Powell said Wednesday in a virtual event hosted by the Economic Club of Washington. “That would in all likelihood be before -- well before -- the time we consider raising interest rates. We haven’t voted on that order but that is the sense of the guidance.”The appearance was the latest of several by the Fed chair this month, including an interview on CBS’s “60 Minutes” show on Sunday in which he said the economy appears to have turned a corner toward faster growth amid widening vaccinations against Covid-19, but central bankers would not be in a hurry to remove their support.Policy makers will wait until inflation has reached 2% sustainably and the labor-market recovery is complete before considering lifting interest rates, and the combination is unlikely to happen before 2022, he said. Their forecasts last month signaled rates being held near zero through 2023.The U.S. central bank enters its traditional blackout period on public comment on Friday night ahead of the April 27-28 meeting of the Federal Open Market Committee.“When the purchases go to zero, the size of the balance sheet is constant, and when bonds mature you reinvest them,” Powell said. “And then another step -- and we took this late in the day in the last cycle -- was to allow bonds to start to runoff. And we haven’t decided whether to do that or not.”Powell added that he doesn’t think the Fed would actually sell bonds into the market, something it also didn’t do during the recovery from the 2008 financial crisis.Fed Vice Chair Richard Clarida made a similar point about the sequencing of the exit strategy in remarks later Wednesday.“We’re going to reduce the pace of purchases at some point and that would occur prior to any decision about lifting off,” he said in response to question during a virtual event hosted by the Shadow Open Market Committee. Noting that he has a “very robust” baseline outlook for U.S. growth in 2021 that could be the fastest in 35 years, Clarida added that policy makers were not going to act on a forecast.“This is going to be outcome based. We’re going to be looking at the labor market indicators and the inflation data as it comes in,” he said.Patience PledgedPowell and his colleagues have pledged to be patient and maintain aggressive monetary policy support, even as the economic recovery from the pandemic picks up speed. That dovish view has helped U.S. stocks reach fresh record highs. Recent data has also painted a brighter picture as vaccinations spread and the economy reopens, with employers adding 916,000 jobs in March.“Most members of the committee did not see raising interest rates until 2024, but that isn’t a committee forecast, it isn’t something we vote on or or act on as a group -- it really is just our assessment,” Powell said. “Markets focus too much on what we call the economic predictions, and I would focus more on on the outcomes that we’ve described.”Fed policy makers substantially lifted their growth and employment forecasts at the central bank’s meeting last month. Their median estimate sees the economy expanding 6.5% this year and the unemployment rate declining to 4.5% by the end of 2021.Powell said the U.S. is going into a period of faster growth and job creation, and that the main risk is another spike in Covid-19 cases due to virus strains that may be more difficult to treat.Minutes of the central bank’s March meeting released April 7 said policy makers expect it will likely be “some time until substantial further progress” was made on employment and inflation. That refers to the threshold they’ve set for scaling back bond purchases of $120 billion a month.(Updates with comments from Clarida in ninth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Billionaire Gautam Adani is likely to see three more companies from his coal mining-to-data centers conglomerate join the MSCI India Index after shares in each one of them more than doubled this year, according to analysts.The group’s flagship Adani Enterprises Ltd., gas supplier Adani Total Gas Ltd. and power distributor Adani Transmission Ltd. may get included in MSCI Inc.’s country benchmark after the index provider’s semi-annual review of its gauges in May, according to broker Edelweiss Financial Services Ltd. and independent research provider Smartkarma. Adani Green Energy Ltd. and Adani Ports & Special Economic Zone Ltd. are already there.The potential inclusions are seen further boosting wealth for Adani, who has added $20.2 billion to his net worth this year, the second-biggest increase among the world’s billionaires. The tycoon -- who started out as a commodities trader in the late 1980s -- has diversified from mines, ports and power plants into airports, data centers and defense. The rally in stocks shows investors have rewarded his strategy of interlocking his group’s interests with the Indian government’s infrastructure program.There is “very high probability of these Adani names to come in the index primarily due to the surge in their market capitalization,” Brian Freitas, a New Zealand-based analyst at Smartkarma, said by phone. “ETFs and other passive funds will have to buy, adding to Adani’s fortune.”Passive funds may have to buy shares worth about $830 million in total in the three companies after their inclusion, according to calculations by Freitas. Still, these stocks “trade much much higher than their global peers and longer-term returns may not be worth the risks involved,” he wrote in a note Wednesday.Meanwhile, S&P Dow Jones Indices said in a statement Monday that it will remove Adani Ports and Special Economic Zone from the Dow Jones Sustainability Indexes because of links to Myanmar military.A lack of analyst coverage for many of the Adani group’s companies hasn’t deterred MSCI from adding their stocks as the index provider’s focus is more on other factors such as market value. Adani Green, which was added to the MSCI India gauge end-November, still has no analysts covering it, according to data compiled by Bloomberg.Freitas also sees the possibility of Adani Green being included in the NSE Nifty 50 Index, the National Stock Exchange of India Ltd.’s benchmark gauge, once the bourse allows derivative contracts on the stock.Adani group shares traded mixed amid a broad decline in Indian equities on Thursday. Adani Transmission jumped 5%, Adani Total Gas climbed 2.3% while Adani Ports rose 0.2% as of 10:28 a.m. in Mumbai. Adani Enterprises and Adani Green fell about 1.2% each.MSCI is set to declare the results of its latest review on May 11 and changes will be effective from close of trading on May 28, according to an announcement by the index provider in February.“We do not comment on market speculation on index changes,” a spokeswoman for MSCI wrote in an emailed response.(Adds more details in the eighth paragraph, Thursday’s share performance in the ninth.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Chinese internet and social media giant Tencent Holdings Ltd plans to raise up to $4 billion in a bond launched on Thursday, two sources with direct knowledge of the matter said. The deal has been launched with 10-, 20-, 30- and 40-year tranches, according to a term sheet reviewed by Reuters. The deal sheet did not specify an exact figure but sources said the company was targeting to raise $4 billion from the issue, which would be its second major fundraising deal in a year.
JPMorgan Chase & Co's first-quarter results on Wednesday laid bare the challenge big banks face in this phase of the pandemic, where stimulus programs have left individuals and businesses in good financial shape but so flush with cash that few of them need loans. The biggest U.S. bank sailed past Wall Street expectations by reporting a nearly 400% increase in quarterly profit. The gains came from JPMorgan releasing more than $5 billion it had set aside to cover potential coronavirus loan losses that have not materialized, as well as a continued boom in capital-markets activity.
(Bloomberg) -- Turkey’s central bank is likely to leave its benchmark interest rate unchanged in the first monetary policy meeting of its newly appointed governor.Installed after President Recep Tayyip Erdogan abruptly fired his predecessor following a bigger-than-expected rate increase, Sahap Kavcioglu is under pressure to reduce rates but has so far signaled he would not rush to loosen the stance he inherited.All but two respondents in a Bloomberg survey of 25 analysts expect the central bank to keep the one-week repo policy rate at 19% on Thursday. The dissenters, HSBC Bank PLC and Capital Economics Ltd, predict the meeting will deliver a reduction of 50 and 200 basis points, respectively.“Kavcioglu’s initial communication to markets has done enough to alleviate apprehensions about a major policy reversal at the April meeting,” said Ehsan Khoman, Head of Emerging Market Research for Europe, Middle East and Africa at MUFG Bank in Dubai. Turkey “does not have the policy room to lower rates this year given the elevated inflation outlook” but Kavcioglu’s dovish views suggest the central bank will eventually take a more accommodative stance.In a written interview with Bloomberg after his appointment last month, Kavcioglu said markets shouldn’t view a rate cut at the April 15 Monetary Policy Committee meeting as a given, easing some concerns among investors.Turkey raised its benchmark one-week repo rate by 200 basis points on March 18, at Naci Agbal’s final rate-setting meeting as governor, citing concerns about inflation. A professor of banking, Kavcioglu was among the critics of that move, saying it could damage economic growth.Last week, Erdogan said the government was determined to both reduce inflation and cut interest rates to single digits, prompting a slide in the lira. The currency has weakened more than 10% against the dollar since the unexpected appointment of Kavcioglu.What Our Economists Say:“Turkey President Recep Tayyip Erdogan would like the new-look central bank to lower interest rates, but market forces will likely delay the delivery of his orders. With inflation rising and the lira weakening, we expect the monetary policy committee to keep rates on hold when it meets on Thursday.” --Ziad Daoud, Bloomberg Economics (Read More: Market Forces to Keep Turkey Central Bank on Hold)Inflation accelerated to an annual 16.2% through March, up from 15.6% the previous month because of a global oil rally and weaker currency, leaving the new central bank chief little room to enact the interest-rate cuts that would mollify Erdogan, who holds the unorthodox view that high interest rates cause inflation.Among the dissenters, Jason Tuvey, senior emerging markets economist at Capital Economics, said they are basing their forecast of a big rate cut more “on the basis of pressure from Erdogan.”“If I was governor, I would hike interest rates,” he said, “but I’d probably get sacked the next day.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- It’s just a quarter of the way through 2021 and stocks have already leaped past Wall Street’s year-end forecasts. They’ve jumped 10% and priced in so much optimism that it will take two more years for earnings to catch up.Is that enough for bulls? Nope. In a market that has plowed through records once every five days, the only things expanding faster than valuations are investor expectations. At Citigroup, an indicator that compares levels of panic to euphoria in the market has been pinned on elation all year, while a Bank of America model weighing optimism among sell-side analysts sits at a 10-year high.To be sure, animal spirits have calmed at the market’s loopiest edge, with penny-stock volume down and the meme craze receding. But robust appetite persists in its tamer -- and still speculative -- districts. And while fortunes would have been sacrificed repeatedly by anyone expecting this rally to overheat, the juxtaposition of stretched sentiment and a still-healing economy is a source of growing anxiety for professionals.“It is strange to see these sentiment measures elevated at the same time the economy is still recovering,” said George Mateyo, chief investment officer at Key Private Bank. “We’ve had a shot in the arm with respect to fiscal and monetary stimulus” and its impact on the economy “is likely to continue for a while longer, but at some point it’d fade.”Not that there aren’t a lot of reasons to stay optimistic, with many data points coming in stronger than expected, vaccine rollouts (mostly) continuing and earnings expected to buttress the bull case. Taking any single sentiment indicator at face value and relying on it as a sell signal could have meant missing out on one of the largest year-over-year rallies ever recorded.Sentiment readings “are hovering at extremely high levels and we could have been worried about them three months ago -- we could have been worried about them one month ago,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, told Bloomberg TV. “They are telling us that the gains are going to be harder to come by, that if we do get negative catalysts, we are vulnerable to the downside. But I think it’s hard to view any of this data as an automatic sell signal right now.”Doubters point to everything from potential Fed tapering and tax hikes to the potential for fatigue among retail investors. A look under the surface already shows a shift in leadership that’s tilting toward companies whose growth is seen as more resilient during an economic slowdown. The frenetic buying of cyclical shares like energy and banks has cooled during the past month. Vaulting back to the top of the leader board are defensive stocks like technology, real estate and utilities.Bank of America’s “sell side indicator,” which aggregates the average recommended equity allocation by strategists, has risen for a third month to a 10-year high. But the cyclical rebound, vaccines and stimulus are all largely priced in already, wrote strategists led by Savita Subramanian. Meanwhile, a record amount of equity funds is being absorbed: Inflows to stocks over the past five months, at $576 billion, exceed inflows from the prior 12 years, according to the bank.Citigroup’s panic/euphoria model, which tracks metrics from options trading to short sales and fund flows, has remained in “euphoric” territory for much of this year, “generating a 100% historical probability of down markets in the next 12 months at current levels,” according to the bank’s chief U.S. equity strategist Tobias Levkovich.Options traders are placing bets the calm won’t last. The middle part of the VIX curve shows many are expecting volatility to pick up, with the spread between the VIX -- the market’s fear gauge -- and futures on implied 30-day volatility four months from now near the highest level in about five years. One trader last week wagered that the fear gauge will rise toward 40, and won’t be lower than 25, in July. The trader appears to have bought a total of about 200,000 call contracts, an amount almost as big as the total daily volume of VIX calls, based on the 20-day average.“Sentiment -- it’s not usually enough on its own to tip a bull market over, but it does mean that if there is something that causes the broad market to flinch, it can sell off quicker and harder,” said Ross Mayfield, investment strategy analyst at Baird. “When sentiment is running this hot, you’re hitting a new all-time high every day, at some point there will be a correction. Paying up for protection, if you have short-term money, makes plenty of sense.”Going all-in on equities for fear of missing out -- while staying protected against any downturn -- is the preferred posture of hedge funds. Lured by an almost uninterrupted rally since November, the industry has boosted their net exposure to equities to multi-year highs. Meanwhile, they’ve stepped up hedging through macro products such as index futures and exchange-traded funds. Their short sales on ETFs, for instance, increased 11% this year through March 26, according to data from Goldman Sachs Group Inc.’s prime brokerage unit.The hedged-long approach has gained traction on Wall Street. On Friday, JPMorgan Chase & Co. strategists led by Nikolaos Panigirtzoglou recommended investors hold on to risky assets such as stocks but add hedges through options in credit and stocks. One looming risk for the market is a continuing retreat from retail investors, a steadfast driver behind the yearlong bull market, they said.“We don’t believe that the equity bull market is yet exhausted,” the strategists wrote in the note. But “there is clear evidence of elevated equity positioning by retail investors and thus a vulnerability for the equity market going forward,” they said.Gene Goldman, chief investment officer at Cetera Financial Group, says his firm is looking for ways to de-risk its portfolios. “People are seeing the recovery, they’re seeing good things happening today, which is great, but it’s a classic case of ‘buy the rumor, sell the news’ and what they should be doing is looking six-to-nine months from now,” he said. “There are many headwinds that are going to hit the market.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The S&P 500 hit a record high on Tuesday and the Nasdaq jumped as investors flocked to technology-related stocks after the United States' pause in the rollout of Johnson & Johnson's COVID-19 vaccine sparked fears of a delay in a broader economic rebound. The drugmaker's shares fell 2.7% to a one-month low as calls for pausing the use of its COVID-19 vaccine after six women developed rare blood clots dealt a fresh setback to efforts to tackle the pandemic. The technology and consumer discretionary sectors, which house high-flying technology names that flourished during coronavirus-induced lockdowns last year, rose 0.6% and 0.4%, respectively.
SINGAPORE (Reuters) -The CEO of Grab, a popular app to book taxis, order food and make payments in Southeast Asia, has always been determined to win -- from making his firm the best-funded regional start-up to defeating behemoth Uber Technologies. On Tuesday, Anthony Tan set another record when Grab Holdings agreed to list on Nasdaq through a $39.6 billion merger deal with a blank-check company, Altimeter Growth Corp. The transaction will be the world's largest merger involving a so-called special purpose acquisition company (SPAC).
(Bloomberg) -- U.S. stocks retreated after climbing to an all-time high. Treasuries fell with the dollar. Oil rallied.PayPal Holdings Inc. and Nvidia Corp. paced losses among tech companies in the S&P 500, which had fluctuated for much of Wednesday’s session as traders sifted through earnings from some of the world’s biggest banks. Bitcoin slid in the wake of the debut by cryptocurrency company Coinbase Global Inc. on the Nasdaq.Read: Goldman, JPMorgan Traders Show the Reddit Crowd How It’s DoneWith equities lingering near a record, investors are looking to the earnings season for further catalysts. Expectations of a strong profit rebound have helped markets rally, setting the bar high as reporting gets underway. More broadly, investors are monitoring vaccine developments for any threats to the economic recovery. The Federal Reserve said in its Beige Book that activity has picked up pace amid an improvement in consumer spending.“You’re going to see this tug-of-war continue within markets as investors weigh the prospects of a strengthening economy with the risk of rising inflationary pressures,” said Adam Phillips, managing director of portfolio strategy at EP Wealth Advisors.A quarter that began with retail investors declaring the end of the status quo on Wall Street just ended with big banks tallying surprisingly massive hauls. Goldman Sachs Group Inc. and JPMorgan Chase & Co. -- two of the most gilded names in finance -- kicked off bank earnings season with revenue windfalls from trading and dealmaking, defying warnings from within the industry that good times couldn’t last.Goldman Sachs’s stock jumped, while JPMorgan’s slipped -- undermined by concern over weak demand for loans.Some key events to watch this week:U.S. data including initial jobless claims, industrial production and retail sales come Thursday.China economic growth, industrial production and retail sales figures are on Friday.These are some of the main moves in financial markets:StocksThe S&P 500 fell 0.4% at 4 p.m. New York time.The Stoxx Europe 600 Index gained 0.2%.The MSCI Asia Pacific Index advanced 0.7%.CurrenciesThe Bloomberg Dollar Spot Index fell 0.2%.The euro climbed 0.3% to $1.1979.The Japanese yen appreciated 0.2% to 108.89 per dollar.BondsThe yield on two-year Treasuries rose less than one basis point to 0.16%.The yield on 10-year Treasuries rose two basis points to 1.63%.The yield on 30-year Treasuries climbed two basis points to 2.31%.CommoditiesWest Texas Intermediate crude gained 4.5% to $62.89 a barrel.Gold weakened 0.5% to $1,736.65 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
LONDON (Reuters) -Food delivery company Deliveroo said its orders more than doubled in the quarter to end-March in its first trading update since its highly-anticipated listing in London last month flopped. Growth accelerated for the fourth consecutive quarter, the company said, with group orders up 114% year-on-year to 71 million and gross transaction value (GTV) up 130% year-on-year to 1.65 billion pounds ($2.27 billion). Chief Executive Will Shu said demand was strong in both UK and Ireland and its international markets, driven by record new customer growth and sustained demand from existing customers.
The IRS commissioner says the child credit payments will arrive on time after all.
(Bloomberg) -- Qatari stocks advanced the most in the Gulf after the country said it may allow foreign investors to fully own listed companies, a move that could trigger more than $1 billion of overseas inflows.The cabinet approved a draft law that will allow overseas investors to own up to 100% of listed companies, according to the state-run Qatar News Agency. If the law is implemented, companies would have to individually approve the increased limit.While implementation in Qatar is yet to be confirmed, the decision could trigger inflows of about $1.5 billion into listed companies that would earn bigger representation in global benchmarks, according to estimates by investment bank EFG-Hermes.Some of the stocks that could benefit the most include Qatar Islamic Bank SAQ, Masraf Al Rayan QSC and the Commercial Bank of Qatar, the investment bank said.Qatar’s QE Index advanced as much as 2.3% on Thursday, leading gains in the Gulf. It extended gains this year to 4%, lagging most peers in the region.The gas-rich nation is following similar decisions by other Gulf countries as they seek to attract inflows from abroad. In 2019, the United Arab Emirates said it would allow foreigners to own 100% of businesses across industries and Saudi Arabia removed a cap on ownership of publicly traded companies for foreign strategic investors.Read more: Qatar Eases Rules on Foreign Property Ownership Amid Slump(Updates with shares in lead and 5th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Bond traders searching for an opportunity to challenge central banks are starting to look Down Under, where a likely showdown over yield-curve control is set to test the power of policy makers to contain the next wave of reflation bets.The global trading day for bonds begins in earnest in Sydney each morning, giving developments in Australia’s $600 billion sovereign debt market an out-sized impact on sentiment. It was the scene of a dramatic “flash crash” last year when the yield program was announced, illustrating the potential for turmoil.While the Reserve Bank of Australia has largely tamed markets since then, as the economy’s recovery strengthens, wagers against the RBA’s ability to keep yields lower look poised to rise.“If inflation expectations do start to un-anchor, then I think the RBA will be one of the first central banks to be tested by bond traders,” said Shaun Roache, an economist at S&P Global Ratings in Singapore. “The RBA is a canary in the coal mine for central banks as it is ahead in its labor market recovery.”The RBA brought short-sellers quickly to heel when the global bond rout emboldened them to test its grip on yield control in February. After weeks of aggressive positioning by traders, the bank nudged up the cost of speculating on rising rates and the yield on benchmark three-year bonds fell neatly back into line with its 0.1% target.But keeping the market at bay next time may prove more difficult, as vaccination campaigns gather pace in major economies and the U.S. recovery nears an “inflection point,” emboldening traders. Pressure is already apparent in Australia’s three-year swap rate, which is increasing the costs of managing interest-rate risks for corporate borrowers.Read More: BOJ Seeks Only Tweaks to Stay Aligned with Fed, ECBIf yield control fails in Australia, it may fade away as a potential option for other monetary authorities in need of more policy ammunition. Especially because yield control’s record in Japan -- the only other country to officially employ it -- is patchy.Pinning the rate of one key bond maturity has helped the Bank of Japan reduce borrowing costs in general and also allowed it to slow the pace of bond purchases. But it has come at a cost. The nation’s debt market is lambasted as dysfunctional and an economic recovery strong enough to revive inflation looks as far away as ever.Widening GapBeneath the surface, problems are building Down Under too. While the RBA has its thumb on one specific bond line, there is a large gulf between the yield on this security and those maturing slightly later. There’s also a widening gap to rates on the suite of derivatives linked to three-year yields that flow through into borrowing costs for companies and consumers.The three-year swap rate surged through February and March, rising to four times the RBA’s target for three-year bonds amid pressure from higher U.S. yields and a rebounding economy at home.Australia’s bond futures tell a similar story. The yield implied by three-year futures doubled in the two weeks to Feb. 26 and remains elevated, even after retreating from its high point.“Lack of liquidity, a central bank that’s digging its heels in -- all that, for us, means there’s going to be more volatility in Aussie rates,” said Kellie Wood, a fixed-income portfolio manager at Schroders Plc’s Australian unit. “The RBA has succeeded in terms of round one. But we are starting to see cracks,” said Wood, who expects the market to challenge the 0.1% target again.Stephen Miller, an investment consultant at GSFM, an arm of Canada’s CI Financial Corp., agrees that higher yields may arrive in Australia sooner than the RBA thinks. “It will be powerless if the U.S. curve shifts upwards and other rates markets follow,” said Miller.Read More: Debate Over Next Move in Bonds Has Never Been FiercerNot everyone is prepared to bet against the RBA.For Fidelity International’s Anthony Doyle, taking on the RBA may be a recipe for steep losses if past lessons from the European Central Bank and U.S. Federal Reserve are anything to go by.Nine years ago, then ECB President Mario Draghi vowed to do “whatever it takes” to save the euro, leading to quantitative easing and bond purchases that are still in place. The Fed said more than a year ago that it would buy unlimited amounts of Treasuries to keep borrowing costs at rock-bottom levels, and it’s still holding firm.Holding the Cards“I don’t think it’s ever wise to fight anyone that has a printing press,” said Doyle, a cross-asset investment specialist at Fidelity in Sydney. “The RBA as a house holds all the cards. If they want yields lower, they’ll get it.”This caution is shared by JPMorgan Asset Management’s Kerry Craig.For now, the central bank “definitely has enough dry powder,” said Craig, a strategist in Melbourne. But he is concerned that with monetary policy and markets around the world moving in sync, “you can only fight so much if U.S. rates or global rates go higher -- it’s going to drag Australian ones up.”Yet Governor Philip Lowe isn’t doing everything he could to damp doubts over the RBA’s resolve. His reluctance to make an early switch in the yield target to bonds maturing in November 2024, from ones due in April 2024, is fueling debate about how soon the policy could be wound back.Lowe said at the conclusion of the latest board meeting on April 6 that a decision would be made later this year, without being more specific. He also indicated that the RBA expected to maintain “highly supportive monetary conditions” until at least 2024, even though the number of Australians with a job has returned to pre-pandemic levels.“We don’t think they’ll extend yield-curve control” beyond the current April 2024 bond, said Wood, who warned of potential taper tantrums.Lowe’s February win against short sellers, and a slide in yields at home and abroad over recent weeks, has given the RBA space to breathe. But it’s likely only a matter of time before bond traders come back for round two.“Everybody’s watching how this is going to unfold,” said S&P’s Roache. “The RBA may not want this role, but it is taking quite a starring role I think among global central banks.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Investors are pouring money into bonds backed by U.S. offices, shrugging off concerns about whether workers will ever fill them up like they did before the pandemic.About a third of all of this year’s commercial mortgage backed securities tied to single properties -- nearly $4 billion in total -- have helped finance prime office towers in large city centers, according to data compiled by Bloomberg. That’s despite the fact that Covid-19 has eviscerated demand for office space, decimating rents and slashing valuations.There’s no consensus on when a vaccinated workforce might, if ever, flock back, but the industry forecast isn’t great. Office demand may fall 10% to 31%, Deutsche Bank AG analysts said Wednesday.The Durst Organization helped feed hungry investors on Tuesday by pricing $1.1 billion of CMBS to refinance office buildings at 1133 Sixth Avenue and 114 West 47th Street in midtown Manhattan, with strong demand narrowing risk premiums. Bonds backed by loans on marquee properties in Philadelphia, Dallas, Houston, Los Angeles and elsewhere in New York have also been sold this year.Investors’ robust appetite for office-tower debt may be less a vote of confidence for the return of the urban office sector and more a straightforward hunt for yield in a tight credit-market environment, money managers say.“A lot of crossover corporate-bond buyers are looking at these office CMBS transactions for that incremental yield,” said Jen Ripper, a CMBS investment specialist at Penn Mutual Asset Management in Horsham, Pennsylvania. “But in the near term, there’s a lot of uncertainty for the urban office market, and rents, as well as vacancy rates, are under pressure as leases roll off. There are just too many question marks on the safest way to bring people back.”These securitized bonds, known as single-asset single-borrower CMBS, can offer higher yields than other asset-backed debt and corporate paper, and they are often floating-rate securities, an alluring quality at a time when many foresee interest rates rising. SASB securities have built-in safeguards to protect investors in the senior notes in case cash flows suffer, and are underpinned by top-quality assets, making buyers more comfortable, especially for the AAA tranches, Ripper said.The AAA rated slice of Wednesday’s Durst transaction priced at 98 basis points over a swap-spread benchmark for 10-year paper. That compares to a spread of only about 78 basis points over swaps for an average single A rated corporate bond with a seven- to nine-year duration, according to Deutsche Bank.“So you can pick up two full rating categories and incremental basis points,” said Deutsche Bank analyst Edward Reardon.Sales of SASB deals and so-called commercial real estate collateralized loan obligations will likely keep outpacing issuance of what is typically the more popular type of CMBS, known as conduits, in the second quarter, according to analysts at Bank of America Corp. Conduit deals are backed by dozens of different loans from various property sectors, including retail, hotels and industrial real estate.Overall private-label CMBS issuance stands at $29.5 billion this year, 19% higher than at this point in 2020.“It appears that the gradual return of office workers will play out over several years, and no one knows if occupancy will then achieve anywhere near its previous levels,” said Christopher Sullivan, chief investment officer of the United Nations Federal Credit Union.U.S.Big banks started releasing quarterly reports on Wednesday. JPMorgan Chase & Co. released $5.2 billion from its credit reserves, boosting earnings. The company’s fixed-income, currency and commodity trading revenue was stronger than expected, up 15%, while Chief Executive Officer Jamie Dimon said loan demand remains “challenged.”Goldman Sachs Group Inc. reported FICC sales & trading revenue of $3.89 billion, up 31% from a year earlierUnited Airlines Holdings Inc. shifted the majority of its $9 billion junk-debt sale to leveraged loans, the latest company to seek more flexible financing in the floating-rate assetsThe leveraged-loan market saw several other adjustments, including:CoreLogic Inc. slashed its offering to $3.25 billion from $4 billion, though pricing firmed to the tight end of guidanceNutrisystem Inc. inserted several covenant changes, which widened pricing on its dealTencent is holding off marketing a planned dollar bond deal Wednesday, according to people familiar with the matter, as Asia credit markets have been roiled by the plunge in one of China’s biggest distressed-asset managersFor deal updates, click here for the New Issue MonitorFor more, click here for the Credit Daybook AmericasEuropeM&A is driving performance in Europe’s secondary market, with Globalworth Real Estate Investments Ltd.’s bonds jumping in the wake of a takeover bid from CPI Property Group and Aroundtown.The company’s 2025 and 2026 bonds are the best performers in the euro high-grade marketSlovakia is the latest European sovereign to offer new debt, marketing a 15-year euro-denominated issue; Spain, Austria and the U.K. tapped the market with long-dated issues in recent daysThe operator of Amsterdam’s Schiphol airport has hired banks for a potential dual-tranche euro bond offeringAsiaAsian dollar bonds sold off Wednesday as concerns spread about the financial health of China Huarong Asset Management Co., one of the country’s distressed debt managers.Debt offerings slowed amid the turbulence, with just Chinese brokerage Guotai Junan and South Korea’s Shinhan Bank marketing dollar bonds.In Japan, Toshiba Corp.’s debt risk surged after KKR & Co. and Brookfield Asset Management Inc. were said to explore offers for the Japanese conglomerate, increasing the possibility it will be taken private and reduce information disclosure for investors.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Bank of Korea Governor Lee Ju-yeol said the economy will still expand faster than previously expected, even as rising coronavirus infections and a slow pace of vaccinations at home raise concerns over the outlook.Growth will probably reach the mid-3% mark this year, above a 3% central bank forecast in February, Lee said at a press briefing after the board held its key interest rate at 0.5%.Government bonds fell on the upbeat assessment, even as the governor reiterated that the bank will keep policy accommodative and said it’s too early to consider a shift away from its existing position.“The current stance needs to be maintained because we need to confirm whether the momentum for an economic recovery takes root as we watch the Covid situation unfold,” Lee said. The better growth “stems more than anything from improving external conditions,” with exports and facilities investment also increasing faster than earlier expected, he said.The yield on South Korea’s 10-year government bond rose three basis points to 2.02%, while the won weakened 0.2% against the dollar to 1,118.90 as of 12:48 p.m. in Seoul.Lee said his outlook assumes the local virus situation won’t worsen significantly, and that the government’s vaccination campaign proceeds as planned in the second half of the year. He expected inflation to hover around the target of 2% this quarter before falling slightly in the second half of the year.“The governor’s tone has changed and he expressed very strong confidence in growth,” said Kang Seungwon, fixed income strategist at NH Investment & Securities. “But the economy isn’t yet going to be strong enough to accommodate a rate hike, with potential for the momentum in the exports recovery to peak during the second quarter.”Korea has seen some signs of the export-led recovery reaching domestic sectors, with employment rising and consumers turning optimistic for the first time since the start of the pandemic. But with daily virus cases rising close to 700 recently, concerns over a fresh wave of infections has prompted the government to warn of tighter curbs, which could derail a nascent revival of consumer spending and employment.What Bloomberg Economics Says..“Get used to the Bank of Korea’s policy rate at a record-low of 0.5%, where it stayed Thursday -- the central bank is likely to keep it there for an extended period, especially with a fresh virus wave threatening to damp the recovery. Our baseline forecast remains for the central bank to remain on pause through this year and likely next.”--Justin Jimenez, Asia EconomistFor the full report, click hereLee said financial stability continues to feature high in the BOK board’s agenda. Still, high levels of debt are better managed by macro-prudential policies as monetary settings need to remain accommodative for now, he added.Korea’s fast increase in household debt has led to soaring home prices that exacerbate economic disparities and raise the risk of a bubble. After liquidity pumped into markets helped buoy traditional financial assets, volatility is rising in cryptocurrency markets as well.Lee said the central bank is closely monitoring the trends in market yields and banks’ lending costs, and said any further purchase of bonds will depend on market situations. The central bank has bought 2 trillion won ($1.8 billion) of government bonds so far this year, while it said it would stick to its earlier plan to buy around 5 trillion to 7 trillion won of bonds in the first half of 2021.(Updates with remarks from Governor Lee’s press briefing)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Before sitting back and letting the IRS do the work, experts say some people should at least consider filing an amended return.
Wealthy investor Mike Novogratz speculates that bitcoin could be worth $100,000 by the end of 2021 and sees that value increasing by five-fold by 2024, as the nascent crypto market continues to evolve and grow.
MILAN (Reuters) -Andrea Orcel will fulfil his dream of becoming a bank boss on Thursday when UniCredit investors back the veteran dealmaker as chief executive, but disquiet over his pay, among the highest for a banker in Europe, means his tenure begins on the defensive. Orcel only narrowly defeated a shareholder revolt over the terms and size of his up to 7.5 million euro ($9 million)remuneration package, Italian daily la Repubblica reported on its website late on Wednesday. UniCredit declined to comment.