WASHINGTON, July 13 (Reuters) – The U.S. government posted a $228 billion budget deficit for June, up 156% from a year earlier as revenues continued to weaken and July benefit payments were accelerated into June, the U.S. Treasury Department said on Thursday.
The deficit compares to a June 2022 budget gap of $89 billion. June receipts fell $42 billion, or 9% from a year ago, to $418 billion, while June outlays rose $96 billion, or 18%, to $646 billion.
But some $86 billion worth of July benefit payments were made in June because July 1 fell on a weekend, and without these and other calendar adjustments, the June deficit would have been $142 billion — a 66% increase over June 2022.
For the first nine months of the 2023 fiscal year, which ends Sept. 30, receipts fell $423 billion, or 11%, from the year-ago period to $3.413 trillion. The decline was primarily driven by lower non-withheld individual income taxes due to lower capital gains in 2022 and lower year-end salary bonuses, as well as sharply higher individual tax refunds as the Internal Revenue Service cleared a backlog of unprocessed receipts.
The Federal Reserve has earned $93 billion less this year because it is paying higher interest on bank reserves and no longer has positive net income – a situation that a Treasury official said was expected to continue.
Year-to-date outlays rose $455 billion, or 10% from a year earlier to $4.805 trillion. Higher outlays for Social Security this year have been driven by cost-of-living adjustments, while the interest on the public debt so far this year has risen $131 billion, or 25%, to $652 billion due to higher interest rates.
Also driving up outlays were $52 billion in Federal Deposit Insurance Corp costs to resolve failing banks, a Treasury official said.
Reporting by David Lawder; Editing by Andrea Ricci
Erdogan begins new five-year term after runoff win
Unorthodox rate cuts had exacerbated cost-of-living crisis
Economy under deep strain, Simsek seen reversing course
ANKARA, June 3 (Reuters) – President Tayyip Erdogan signalled on Saturday his newly-elected government would return to more orthodox economic policies when he named Mehmet Simsek to his cabinet to tackle Turkey’s cost-of-living crisis and other strains.
Simsek’s appointment as treasury and finance minister could set the stage for interest rate hikes in coming months, analysts said – a marked turnaround from Erdogan’s longstanding policy of slashing rates despite soaring inflation.
After winning a runoff election last weekend, Erdogan, 69, who has ruled for more than two decades, began his new five-year term by calling on Turks to set aside differences and focus on the future.
Turkey’s new cabinet also includes Cevdet Yilmaz, another orthodox economic manager, as vice president, and the former head of the National Intelligence Organisation (MIT) Hakan Fidan as foreign minister, replacing Mevlut Cavusoglu.
Erdogan’s inauguration ceremony at Ankara’s presidential palace was attended by NATO Secretary-General Jens Stoltenberg, Venezuelan President Nicolas Maduro and other dignitaries and high-level officials.
The apparent U-turn on the economy comes as many analysts say the big emerging market is heading for turmoil given depleted foreign reserves, an expanding state-backed protected deposits scheme, and unchecked inflation expectations.
Simsek, 56, was highly regarded by financial markets when he served as finance minister and deputy prime minister between 2009 and 2018.
Reuters reported earlier this week Erdogan was almost certain to put him in charge of the economy, marking a partial return to more free-market policies after years of increasing state control of forex, credit and debt markets.
QUESTION OF INDEPENDENCE
Analysts said that after past episodes in which Erdogan pivoted to orthodoxy only to quickly return to his rate-cutting ways, much would depend on how much independence Simsek is granted.
“This suggests Erdogan has recognised the eroding trust in his ability to manage Turkey’s economic challenges. But while Simsek’s appointment is likely to delay a crisis, it is unlikely to present long-term fixes to the economy,” said Emre Peker, a director at Eurasia Group covering Turkey.
“Simsek will likely have a strong mandate early in his tenure, but face rapidly increasing political headwinds to implement policies as March 2024 local elections draw near.”
Erdogan’s economic programme since 2021 stresses monetary stimulus and targeted credit to boost economic growth, exports and investments, pressing the central bank into action and badly eroding its independence.
[1/12] Turkish President Tayyip Erdogan shakes hands with the new Treasury and Finance Minister Mehmet Simsek as they are flanked by new Energy Minister Alparslan Bayraktar during a press conference where the new cabinet was announced, in Ankara, Turkey June 3, 2023. REUTERS/Umit Bektas
As a result, annual inflation hit a 24-year peak beyond 85% last year before easing.
The lira has lost more than 90% of his value in the last decade after a series of crashes, the worst in late 2021. It hit new all-time lows beyond 20 to the dollar after the May 28 vote.
‘WAYS TO RECONCILE’
Turkey’s longest-serving leader, Erdogan won 52.2% support in the runoff, defying polls that predicted economic strains would lead to his defeat.
His new mandate will allow Erdogan to pursue the increasingly authoritarian policies that have polarised the country, a NATO member, but strengthened its position as a regional military power.
At the inauguration ceremony, attended by Hungarian Prime Minister Viktor Orban and Armenian Prime Minister Nikol Pashinyan, Erdogan struck a conciliatory tone.
“We will embrace all 85 million people regardless of their political views … Let’s put aside the resentment of the election period. Let’s look for ways to reconcile,” he said.
“Together, we must look ahead, focus on the future, and try to say new things. We should try to build the future by learning from the mistakes of the past.”
Earlier, reading out the oath of office, Erdogan vowed to protect Turkey’s independence and integrity, to abide by the constitution, and to follow the principles of Mustafa Kemal Ataturk, founder of the modern secular republic.
Erdogan became prime minister in 2003 after his AK Party won an election in late 2002 following Turkey’s worst economic crisis since the 1970s.
In 2014, he became the country’s first popularly elected president and was elected again in 2018 after securing new executive powers for the presidency in a 2017 referendum.
The May 14 presidential election and May 28 runoff were pivotal given that the opposition had been confident of ousting Erdogan and reversing many of his policies, including proposing sharp interest rate hikes to counter inflation, running at 44% in April.
In his post-election victory speech, Erdogan said inflation was Turkey’s most urgent issue.
Writing and additional reporting by Jonathan Spicer; Editing by Frances Kerry, Giles Elgood and Christina Fincher
TORONTO, May 14 (Reuters) – Signs of recovery in Canada’s housing market after a year-long slump, just as higher borrowing costs are expected to slow much of the rest of the economy, could raise inflation and delay a shift by the central bank to interest rate cuts, analysts said.
The housing market’s upturn comes after the Bank of Canada paused its interest rate hiking campaign last month, leaving the benchmark rate at a 15-year high of 4.50% since January.
In addition, analysts say higher borrowing costs have so far caused less financial stress for homebuyers than they had expected, so the market has not had to accommodate a flood of supply from forced sellers.
The BoC is counting on slower economic growth to return inflation to its 2% target. A rebound in the housing market could boost activity and contribute directly to price pressures.
“The Bank of Canada at the end of the day is probably not going to be too thrilled if the housing market really starts to ramp up,” said Robert Kavcic, a senior economist at BMO Capital Markets. “From a shelter cost perspective, you are going to start to see more upward push on inflation in the second half of this year.”
The cost of shelter has the highest weighting in Canada’s consumer price index, accounting for 30%. And, home prices tend to be highly visible, so an increase could have a pronounced impact on inflation expectations, analysts say.
The average price for a home in the Greater Toronto Area, Canada’s most populous metropolitan region, rose in April on a month-over-month basis for a third straight month, while sales also moved higher. Other major markets have also showed gains.
Despite higher borrowing costs, mortgage delinquency rates have remained low for now in Canada after mortgage borrowers were put through a stress test showing they could manage if interest rates were 2 percentage points higher than the rate on their loan.
In addition, variable-rate borrowers have been sheltered from higher interest rates after lenders temporarily extended the period over which their debt is amortized, keeping their payments the same.
“One of the reasons the market has been able to stabilize so quickly is because there’s just no forced selling,” Kavcic said.
Things could change – Royal Bank of Canada recently warned of the risk that mortgage delinquencies rise by more than a third over the coming year.
The other worry is that stress in the U.S. regional banking sector could spill over to Canada. Clues on that front could come from the BoC’s Financial System Review – an annual checkup of financial system tensions – which is due for release on Thursday.
But there are also tailwinds to support a recovery, including supply shortfalls, record immigration and labor market strength, analysts said.
Wage growth could cool over the coming months, helping to lower inflation, but the Bank of Canada “is unlikely to be in a rush to cut interest rates if house prices are roaring higher again,” Stephen Brown, senior Canada economist at Capital Economics, said in a note.
Reporting by Fergal Smith; Editing by Steve Scherer and Jonathan Oatis
WASHINGTON, May 13 (Reuters) – President Joe Biden said on Saturday that talks with Congress on raising the U.S. government’s debt limit were moving along and more will be known about their progress in the next two days.
“I think they are moving along, hard to tell. We have not reached the crunch point yet,” Biden told reporters at Joint Base Andrews.
“We’ll know more in the next two days,” he said.
Biden is expected to meet with Republican House Speaker Kevin McCarthy and other congressional leaders early next week to resume negotiations.
The leaders had canceled a planned meeting on Friday to let staff continue discussions.
Aides for Biden and McCarthy have started to discuss ways to limit federal spending as talks on raising the government’s $31.4 trillion debt ceiling to avoid a catastrophic default creep forward, Reuters has reported.
The Treasury Department says it could run out of money by June 1 unless lawmakers lift the nation’s debt ceiling.
Reporting by Jeff Mason; Writing by Eric Beech; Editing by David Gregorio
Neither Erdogan or his challenger pass 50% threshold
Erdogan ahead after 20-year rule
Rivals spar over election count
ISTANBUL, May 14 (Reuters) – Turkey headed for a runoff vote after President Tayyip Erdogan led over his opposition rival Kemal Kilicdaroglu in Sunday’s election but fell short of an outright majority to extend his 20-year rule of the NATO-member country.
Neither Erdogan nor Kilicdaroglu cleared the 50% threshold needed to avoid a second round, to be held on May 28, in an election seen as a verdict on Erdogan’s increasingly authoritarian path.
The presidential vote will decide not only who leads Turkey but also whether it reverts to a more secular, democratic path, how it will handle its severe cost of living crisis, and manage key relations with Russia, the Middle East and the West.
Kilicdaroglu, who said he would prevail in the runoff, urged his supporters to be patient and accused Erdogan’s party of interfering with the counting and reporting of results.
But Erdogan performed better than pre-election polls had predicted, and he appeared in a confident and combative mood as he addressed his supporters.
“We are already ahead of our closest rival by 2.6 million votes. We expect this figure to increase with official results,” Erdogan said.
With almost 97% of ballot boxes counted, Erdogan led with 49.39% of votes and Kilicdaroglu had 44.92%, according to state-owned news agency Anadolu. Turkey’s High Election Board gave Erdogan 49.49% with 91.93% of ballot boxes counted.
Thousands of Erdogan voters converged on the party’s headquarters in Ankara, blasting party songs from loudspeakers and waving flags. Some danced in the street.
“We know it is not exactly a celebration yet but we hope we will soon celebrate his victory. Erdogan is the best leader we had for this country and we love him,” said Yalcin Yildrim, 39, who owns a textile factory.
ERDOGAN HAS EDGE
The results reflected deep polarization in a country at a political crossroads. The vote was set to hand Erdogan’s ruling alliance a majority in parliament, giving him a potential edge heading into the runoff.
Opinion polls before the election had pointed to a very tight race but gave Kilicdaroglu, who heads a six-party alliance, a slight lead. Two polls on Friday showed him above the 50% threshold.
The country of 85 million people – already struggling with soaring inflation – now faces two weeks of uncertainty that could rattle markets, with analysts expecting gyrations in the local currency and stock market.
“The next two weeks will probably be the longest two weeks in Turkey’s history and a lot will happen. I would expect a significant crash in the Istanbul stock exchange and lots of fluctuations in the currency,” said Hakan Akbas, managing director of Strategic Advisory Services, a consultancy.
[1/16] Turkish President Tayyip Erdogan, accompanied by his wife Ermine Erdogan, greets supporters at the AK Party headquarters in Ankara, Turkey May 15, 2023. REUTERS/Umit Bektas TPX IMAGES OF THE DAY
“Erdogan will have an advantage in a second vote after his alliance did far better than the opposition’s alliance,” he added.
A third nationalist presidential candidate, Sinan Ogan, stood at 5.3% of the vote. He could be a “kingmaker” in the runoff depending on which candidate he endorses, analysts said.
The opposition said Erdogan’s party was delaying full results from emerging by lodging objections, while authorities were publishing results in an order that artificially boosted Erdogan’s tally.
Kilicdaroglu, in an earlier appearance, said that Erdogan’s party was “destroying the will of Turkey” by objecting to the counts of more than 1,000 ballot boxes. “You cannot prevent what will happen with objections. We will never let this become a fait accompli,” he said.
But the mood at the opposition party’s headquarters, where Kilicdaroglu expected victory, was subdued as the votes were counted. His supporters waved flags of Turkey’s founder Mustafa Kemal Ataturk and beat drums.
KEY PUTIN ALLY
The choice of Turkey’s next president is one of the most consequential political decisions in the country’s 100-year history and will reverberate well beyond Turkey’s borders.
A victory for Erdogan, one of President Vladimir Putin’s most important allies, will likely cheer the Kremlin but unnerve the Biden administration, as well as many European and Middle Eastern leaders who had troubled relations with Erdogan.
Turkey’s longest-serving leader has turned the NATO member and Europe’s second-largest country into a global player, modernised it through megaprojects such as new bridges and airports and built an arms industry sought by foreign states.
But his volatile economic policy of low interest rates, which set off a spiralling cost of living crisis and inflation, left him prey to voters’ anger. His government’s slow response to a devastating earthquake in southeast Turkey that killed 50,000 people earlier this year added to voters’ dismay.
PARLIAMENTARY MAJORITY
Kilicdaroglu has pledged to revive democracy after years of state repression, return to orthodox economic policies, empower institutions that lost autonomy under Erdogan and rebuild frail ties with the West.
Thousands of political prisoners and activists could be released if the opposition prevails.
Critics fear Erdogan will govern ever more autocratically if he wins another term. The 69-year-old president, a veteran of a dozen election victories, says he respects democracy.
In the parliamentary vote, the People’s Alliance of Erdogan’s Islamist-rooted AKP, the nationalist MHP and others fared better than expected and were headed for a majority.
Writing by Alexandra Hudson
Editing by Frances Kerry
LONDON, April 13 (Reuters) – The latest bid by the world’s leading institutions and creditors to speed up debt restructurings and get bankrupt countries back on their feet has been greeted by a mix of cautious optimism and weary scepticism by veteran crisis watchers.
Standoffs between major Western-backed lenders like the International Monetary Fund (IMF) and the world’s top bilateral creditor, China, have been blamed for keeping countries such as Zambia mired in default for nearly three years.
The somewhat loose framework around sovereign restructurings has seen Beijing seek to influence the traditional rules of engagement in these processes.
The renewed push to overcome the logjams came after a “roundtable” at the IMF Spring Meetings and included pledges from the Fund and World Bank to share assessments of countries’ troubles more quickly, provide more low-interest and grant funding and stricter timeframes on restructurings overall.
The idea is that Beijing would then drop its insistence that the multilateral lenders take losses, or “haircuts”, on the loans they have provided or underwritten in crisis-hit countries.
Beijing has not commented directly on the demand for multilateral lender haircuts, but in remarks published on Friday People’s Bank of China Governor Yi Gang reiterated China’s willingness to implement debt talks under the Common Framework, the platform introduced by leading G20 nations in 2020 to streamline talks with all creditors.
“If the multilateral development banks are now making real commitments to provide fresh grants to distressed countries this is a breakthrough,” said Kevin Gallagher, director of the Boston University Global Development Policy Center.
But he added that as the new plans lacked specific mention of China’s intentions it suggested the “lack of a strong and clear consensus” in Washington.
The IMF’s managing director Kristalina Georgieva has stressed that with around 15% of low income countries already in debt distress and dozens more in danger of falling into it, far more urgency is needed.
Besides members of the Paris Club of creditor nations such as the United States, France and Japan, cash-strapped nations now have to rework loans with lenders such as India, Saudi Arabia, South Africa and Kuwait – but first and foremost China.
Beijing is now the largest bilateral creditor to developing nations, extending $138 billion in new loans between 2010 and 2021, according to World Bank data, and some estimates put total lending at almost $850 billion.
Reuters Graphics
HEADWINDS
Global headwinds are about to get stronger too.
Financially weaker countries with “junk”-grade sovereign credit ratings need to repay or refinance $30 billion worth of government bonds next year between them, compared to just $8.4 billion for the remainder of this one.
The rise in global borrowing costs, though, means that many countries under the greatest stress are now unable to borrow in the international capital markets or, if they can, only at unsustainably high interest rates.
The Chinese debt, meanwhile, is often opaque and muddied by arguments about whether the loans have been given by “official” entities – i.e by the government – or by “private” entities.
Authorities in Beijing also prefer to roll over debt payments rather than write them off, and given it is an increasingly dominant creditor, it has little incentive to follow co-operative Paris Club-like principles.
“It would be great to have China on board (with the push to speed up restructurings) but I don’t really have high hopes because there is a lot of geopolitics involved,” said Viktor Szabo, an emerging market debt manager at Abrdn in London.
Select IMF loans to low and middle income countries by date of Board approval
COMMON PROBLEMS
Recent research by Boston University estimated that up to $520 billion in debt needs to be written off to help developing nations at greatest risk of default return to a sounder fiscal footing.
But lengthy delays in Zambia, and more recently in Sri Lanka, have elicited widespread criticism of the Common Framework.
Wednesday’s promises by the IMF to provide its assessments more quickly was an admission that the Common Framework was currently failing, Szabo added.
“You have to make it functional. The fact that it’s been in place for three years and there is nothing to really show for it, that is really appalling.”
Anna Ashton, director of China research at Eurasia Group, said this week’s developments underscored the benefits for China to give some ground on some of its concerns.
“Being willing to compromise and facilitate debt restructuring right now is likely crucial to China’s continued credibility with the developing world writ large,” Ashton said.
Patrick Curran, senior economist with Tellimer, added that China dropping demands for the big multilateral development banks (MDBs) to swallow losses on their loans could also be “a major breakthrough”.
“There is likely to be broad support for the alternative proposal that MDBs mobilize their resources more aggressively, especially at a time when most low-income countries are locked out of the market,” Curran said.
Germany’s finance minister Christian Lindner on Thursday too said all the talk now needed to be converted into action.
The group that took part in Wednesday’s roundtable plans to meet again in coming weeks to address remaining issues, including how various creditors are treated, principles for cut-off dates and suspending debt payments.
Ultimately, whether the new terms help Zambia, and countries like Sri Lanka, Ghana and Ethiopia that are also in the midst of bailout talks, finalise deals will be the only proof of whether the new terms work.
“China is a difficult partner to talk to but we need China at the table for the solution of debt problems, because otherwise we won’t see any progress,” Lindner said.
Reuters Graphics
Additional reporting by Rodrigo Campos in New York and Joe Cash in Beijing
Editing by Mark Potter
LONDON, March 15 (Reuters) – Oil extended losses on Wednesday as unease over Credit Suisse spooked world markets, offsetting hopes of a Chinese oil demand recovery.
Early signs of a return to calm and stability faded after Credit Suisse’s largest investor said it could not provide the Swiss bank with more financial assistance, sending its shares and broader European stocks sliding.
“The financial sector in Europe is under significant turmoil today,” said Naeem Aslam, chief investment officer at Zaye Capital Markets.
Brent crude fell $1.44, or 1.9%, to $76.01 a barrel by 1100 GMT. U.S. West Texas Intermediate crude futures (WTI) were down 33 cents, or 0.5%, at $71.00.
Oil had rallied earlier on figures showing that China’s economic activity picked up in the first two months of 2023 after the end of strict COVID-19 containment measures.
On Tuesday both benchmarks shed more than 4% to three-month lows, pressured by fears that the collapse of Silicon Valley Bank (SVB) last week and other U.S. bank failures could spark a financial crisis that would weigh on fuel demand.
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Wednedsay’s monthly report from the International Energy Agency provided support by flagging an expected boost to oil demand from China a day after OPEC increased its Chinese demand forecast for 2023.
Investors are now awaiting official U.S. oil inventory data later on Wednesday to see if it confirms the 1.2 million barrel rise in crude stocks reported on Tuesday by the American Petroleum Institute.
(This story has been refiled to correct typographical error in headline)
Reporting by Alex Lawler
Additional reporting by Florence Tan in Singapore and Yuka Obayashi in Tokyo
Editing by Jason Neely and David Goodman
RIYADH, March 15 (Reuters) – Saudi Arabia’s Finance Minister Mohammed Al-Jadaan said on Wednesday that Saudi investments into Iran could happen “very quickly” following an agreement to restore diplomatic ties.
“There are a lot of opportunities for Saudi investments in Iran. We don’t see impediments as long as the terms of any agreement would be respected,” Al-Jadaan said during the Financial Sector Conference in Riyadh.
Iran and Saudi Arabia agreed on Friday to re-establish relations and re-open embassies within two months after years of hostility, following talks in China.
“Stability in the region is very important, for the world and for the countries in the region, and we have always said that Iran is our neighbour and we have no interest to have a conflict with our neighbours, if they are willing to cooperate,” Al-Jadaan later told Reuters in an interview.
The hostility between the two Middle Eastern powers had endangered the stability and security of the Middle East and helped fuel regional conflicts including in Yemen, Syria and Lebanon.
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“We have no reason not to invest in Iran, and we have no reason not to allow them to invest in Saudi Arabia. It is in our interest to make sure that both nations benefit from each others resources and competitive advantage,” Al-Jadaan told Reuters.
“If they (Iran) are willing to go through this process, then we are more than willing to go through this process and show them they are welcome and we would be more than happy to participate in their development,” he said.
CHINESE LEVERAGE
The deal, brokered by China, was announced after four days of previously undisclosed talks in Beijing between top security officials from Saudi Arabia and Iran.
China has leverage on Iran and Tehran will find it difficult to explain if it does not honour the agreement signed with Saudi Arabia in Beijing, another Saudi official told reporters, separately, on Wednesday.
The official, who declined to be named, said China is in a unique position as it enjoys exceptional relations with both Iran and Saudi Arabia.
“China is the first trading partner for both countries so the leverage is very important in that regard. And since we are building confidence, that commitment should be made with the presence of Chinese officials,” he said.
Saudi Arabia cut ties with Iran in 2016 after its embassy in Tehran was stormed during a dispute between the two countries over Riyadh’s execution of a prominent Shi’ite Muslim cleric.
The kingdom also has blamed Iran for missile and drone attacks on its oil facilities in 2019 as well as attacks on tankers in Gulf waters. Iran denied the charges.
The most difficult topics in the talks with Iran were related to Yemen, the media, and China’s role, the official said without elaborating.
Both sides have agreed to re-activate a 2001 security agreement, which covers cooperation in fighting drugs, smuggling and organised crime, as well as another earlier pact on trade, economy and investment.
“Resuming diplomatic relations does not mean we are allies… Diplomatic relations are the norm for Saudi Arabia, and we should have them with everybody,” the official said.
Additional reporting by Aziz El Yaakoubi; Writing by Clauda Tanios and Hadeel Al Sayegh; Editing by Christopher Cushing, Jon Boyle and Andrea Ricci
BENGALURU, Feb 22 (Reuters) – India does not want the G20 to discuss additional sanctions on Russia for its invasion of Ukraine during New Delhi’s one-year presidency of the bloc, six senior Indian officials said on Wednesday, amid debate over how even to describe the conflict.
On the sidelines of a G20 gathering in India, financial leaders of the Group of Seven (G7) nations will meet on Feb. 23, the eve of the first anniversary of the invasion, to discuss measures against Russia, Japan’s finance minister said on Tuesday.
The officials, who are directly involved in this week’s G20 meeting of finance ministers and central bank chiefs, said the economic impact of the conflict would be discussed but India did not want to consider additional actions against Russia.
“India is not keen to discuss or back any additional sanctions on Russia during the G20,” said one of the officials. “The existing sanctions on Russia have had a negative impact on the world.”
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Another official said sanctions were not a G20 issue. “G20 is an economic forum for discussing growth issues.”
Spokespeople for the Indian government and the finance and foreign ministries did not immediately respond to requests for comment.
On Wednesday, the first day of meetings to draft the G20 communique, officials struggled to find an acceptable word to describe the Russia-Ukraine conflict, delegates of at least seven countries present in the meetings said.
India tried to form a consensus on the words by calling it a “crisis” or a “challenge” instead of a “war”, the officials said, but the discussions concluded without a decision.
These discussions have been rolled over to Thursday when U.S. Treasury Secretary Janet Yellen will be part of the meetings.
Indian Foreign Minister S. Jaishankar has previously said the war has disproportionately hit poorer countries by raising prices of fuel and food.
India’s neighbours – Sri Lanka, Pakistan and Bangladesh – have all sought loans from the International Monetary Fund in recent months to tide over economic troubles brought about by the pandemic and the war.
U.S. Deputy Treasury Secretary Wally Adeyemo said on Tuesday that Washington and its allies planned in coming days to impose new sanctions and export controls that would target Russia’s purchase of dual-use goods like refrigerators and microwaves to secure semiconductors needed for its military.
The sanctions would also seek to do more to stem the trans-shipment of oil and other restricted goods through bordering countries.
In addition, Adeyemo said officials from a coalition of more than 30 countries would warn companies, financial institutions and individuals still doing business with Russia that they faced sanctions.
Indian Prime Minister Narendra Modi’s government has not openly criticised Moscow for the invasion and instead called for dialogue and diplomacy to end the war. India has also sharply raised purchases of oil from Russia, its biggest supplier of defence hardware.
Jaishankar told Reuters partner ANI this week that India’s relationship with Russia had been “extraordinarily steady and it has been steady through all the turbulence in global politics”.
Additional reporting by Krishn Kaushik; Writing by Krishna N. Das; Editing by Raju Gopalakrishnan and Nick Macfie
BENGALURU, Feb 13 (Reuters) – Indian shares were off to a muted start on Monday, ahead of domestic retail inflation data due later in the day and U.S. inflation data due tomorrow, while the ongoing uncertainty and spillover effects from the Adani Group’s market rout continued to create an overhang.
The Nifty 50 index (.NSEI) was down 0.29% at 17,804.60 as of 9:37 a.m. IST, while the S&P BSE Sensex (.BSESN) fell 0.35% to 60,472.28.
Ten of the 13 major sectoral indexes declined, with information technology stocks (.NIFTYIT) falling nearly 2% amid worries of a growth slowdown in the U.S., from where they get a significant share of their revenue.
On the flip side, metals (.NIFTYMET) gained with a 1% rise.
Twenty-seven of Nifty 50 constituents advanced with Titan Co (TITN.NS) and Eicher Motors Ltd (EICH.NS) among top gainers.
Wall Street equities closed lower on Friday, on fears of a longer-than-expected high-rate regime after hawkish comments from key Federal Reserve officials.
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Asian markets fell, with the MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) sliding 0.63%.
Investors await India’s retail inflation data for January, due today. A Reuters poll of economists showed that India’s annual retail inflation rose from a 12-month low in December, but stayed within the 6% upper limit of RBI’s tolerance band in January.
“The Adani group saga continues to weigh on investors’ minds and hence the sentiment has been negative,” said Prashanth Tapse of Mehta Equities.
The group has lost over $100 billion in market value since Jan. 24, when U.S. short-seller Hindenburg Research accused the conglomerate of stock manipulation and improper use of tax havens.
India’s market regulator is probing the group’s links to some of the investors in its scrapped $2.5 billion share sale of the flagship Adani Enterprises.
($1 = 82.5250 Indian rupees)
Reporting by Bharath Rajeswaran in Bengaluru; Editing by Janane Venkatraman, Nivedita Bhattacharjee
TORONTO, Dec 4 (Reuters) – As the Bank of Canada considers ditching oversized interest rate hikes, it is dealing with an economy likely more overheated than previously thought but also the bond market’s clearest signal yet that recession and lower inflation lie ahead.
Canada’s central bank says that the economy needs to slow from overheated levels in order to ease inflation. If its tightening campaign overshoots to achieve that objective it could trigger a deeper downturn than expected.
The bond market could be flagging that risk. The yield on the Canadian 10-year government bond has fallen nearly 100 basis points below the 2-year yield, marking the biggest inversion of Canada’s yield curve in Refinitiv data going back to 1994 and deeper than the U.S. Treasury yield curve inversion.
Some analysts see curve inversions as predictors of recessions. Canada’s economy is likely to be particularly sensitive to higher rates after Canadians borrowed heavily during the COVID-19 pandemic to participate in a red-hot housing market.
“Markets think the Canadian economy is about to suffer a triple blow as domestic consumption collapses, U.S. demand weakens and global commodity prices drop,” said Karl Schamotta, chief market strategist at Corpay.
The BoC has opened the door to slowing the pace of rate increases to a quarter of a percentage point following multiple oversized hikes in recent months that lifted the benchmark rate to 3.75%, its highest since 2008.
Money markets are betting on a 25-basis-point increase when the bank meets to set policy on Wednesday, but a slim majority of economists in a Reuters poll expect a larger move.
RESILIENT ECONOMY
Canada’s employment report for November showed that the labour market remains tight, while gross domestic product grew at an annualized rate of 2.9% in the third quarter.
That’s much stronger than the 1.5% pace forecast by the BoC and together with upward revisions to historical growth could indicate that demand has moved further ahead of supply, economists say.
But they also say that the details of the third-quarter GDP data, including a contraction in domestic demand, and a preliminary report showing no growth in October are signs that higher borrowing costs have begun to impact activity.
The BoC has forecast that growth would stall from the fourth quarter of this year through the middle of 2023.
The depth of Canada’s curve inversion is signaling a “bad recession” not a mild one, said David Rosenberg, chief economist & strategist at Rosenberg Research.
It reflects greater risk to the outlook in Canada than the United States due to “a more inflated residential real estate market and consumer debt bubble,” Rosenberg said.
Inflation is likely to be more persistent after it spread from goods prices to services and wages, where higher costs can become more entrenched. Still, 3-month measures of underlying inflation that are closely watched by the BoC – CPI-median and CPI-trim – show price pressures easing.
They fell to an average of 2.75% in October, according to estimates by Stephen Brown, senior Canada economist at Capital Economics. That’s well below more commonly used 12-month rates.
“The yield curve would not invert to this extent unless investors also believed that inflation will drop back down toward the Bank’s target,” said Brown.
Like the Federal Reserve, the BoC has a 2% target for inflation.
“The curve is telling us the Bank of Canada will be forced into a reversal by late 2023, with rates remaining depressed for years to come,” Corpay’s Schamotta said.
Reporting by Fergal Smith; Editing by Andrea Ricci
WASHINGTON — U.S. job openings dropped in October but remained high, a sign that businesses became slightly less needy for workers as the Federal Reserve ramps up interest rates in an effort to cool the economy.
Employers posted 10.3 million job vacancies in October, down from 10.7 million in September, the Labor Department said Wednesday. Even with the drop, openings were slightly lower in August, when they dipped below 10.3 million before rebounding the following month.
The number of people quitting their jobs also slipped in October, to 4 million from 4.1 million.
The Federal Reserve is closely monitoring the figures on job openings and quits for signals about the strength of the job market. The Fed is seeking to pull off a delicate task by slowing hiring and the broader economy to cool inflation, but not so much as to cause a recession.
While more job openings are a benefit for those seeking work, Fed officials would like to see the number of openings fall. That’s because fewer openings would indicate less competition between businesses to find and keep workers, reducing pressure on them to raise wages.
The number of open jobs dropped last month in construction, manufacturing, professional services such as architecture and engineering, and health care. They rose in financial services and remained high for restaurants, bars, and hotels.
“The labor market is cooling (what the Fed wants) but it is far from cold,” Jennifer Lee, an economist at BMO Capital Markets, said in an email.
Fed officials would also like to see the number of people quitting decline. When workers quit, they typically do so for a new, higher-paying job. Since the pandemic, people who have left one job for a new one have been getting historically large wage increases.
Many businesses then pass on the higher labor costs to customers through price increases, fueling inflation.
The Fed would like to slow — though not eliminate — wage gains, so it is hoping that its rate hikes will bring down the number of jobs that companies advertise.
Fed Chair Jerome Powell is scheduled to speak about inflation and the labor market in a highly-anticipated speech Wednesday afternoon. Wall Street traders in particular will watch his speech closely for any signs he may give of how much further the Fed will raise interest rates.
Powell’s appearance comes two days before the U.S. releases critical employment data for November.
The Fed has hiked its benchmark interest rate six times this year to a range of 3.75% to 4%, the highest in about 15 years, in a bid to quell rampant inflation. Prices have soared 7.7% in the past year, near the highest in four decades. The Fed typically seeks to slow price increases by weakening the economy and pushing up unemployment, which reduces spending and often brings down inflation.
However, with job openings so high — they hit a two-decade record of 11.9 million in March — many Fed officials hope they can bring down wage increases and inflation by sharply reducing openings, without causing layoffs to rise significantly. Many economists are skeptical that such an approach can succeed, because historically layoffs have also risen when job openings have gone down.
Wednesday’s report — known as the Job Openings and Labor Turnover Survey — provides greater detail about the labor market, while the monthly jobs report on Friday includes the unemployment rate and the number of jobs added or lost each month.
Tokyo CPI stays above BOJ’s 2% target for 6th straight month
Data underscores broadening inflationary pressure
TOKYO, Nov 25 (Reuters) – Core consumer prices in Japan’s capital, a leading indicator of nationwide trends, rose at their fastest annual pace in 40 years in November and exceeded the central bank’s 2% target for a sixth straight month, signalling broadening inflationary pressure.
The increase, driven mostly by food and fuel bills but spreading to a broader range of goods, cast doubt on the view of the Bank of Japan (BOJ) that recent cost-push inflation will prove transitory, some analysts said.
The Tokyo core consumer price index (CPI), which excludes fresh food but includes fuel, was 3.6% higher in November than a year earlier, government data showed on Friday. The rise exceeded a median market forecast of 3.5% and the 3.4% increase seen in October
The last time Tokyo inflation was faster was April 1982, when the core CPI was 4.2% higher than a year before.
While the rise was driven mostly by electricity bills and food prices, companies were also charging more for durable goods as the weak yen pushed up the cost of imports, the data showed.
“Price hikes are broadening and suggests the weak yen could keep inflation elevated well into next year,” said Mari Iwashita, chief market economist at Daiwa Securities.
“Core consumer inflation may stay around the BOJ’s 2% target for much of next year, which would make it hard for the bank to keep arguing that the price rises are temporary.”
The Tokyo core-core CPI index, which excludes fuel as well as fresh food, was 2.5% higher in November than a year earlier, picking up from the 2.2% annual gain seen in October.
BOJ AN OUTLIER
The BOJ has kept interest rates ultra-low on the view that inflation will slow back below its target next year when the boost from fuel price gains dissipate. The central bank has therefore remained an outlier from a wave monetary tightening around the world aimed at combating soaring inflation.
Contrary to the experience of some western economies, where wages have surged with inflation, growth in wages and services prices remain muted in Japan.
Of the components making up the Tokyo CPI data, services prices in November were up just 0.7% on a year earlier, after a 0.8% annual increase seen in October. That compared with a 7.7% spike in durable goods prices for November, which followed October’s 7.0% annual gain.
Separate data released by the BOJ on Friday showed the corporate service price index, which measures prices that firms charge each other for services, had been 1.8% higher in October than a year earlier. That was slower than a 2.1% annual gain seen in September.
BOJ Governor Haruhiko Kuroda has repeatedly said that, for inflation to sustainably hit his 2% inflation target, wages must rise enough to offset the rise in goods prices.
Slow wage growth has been among factors delaying Japan’s recovery from the coronavirus pandemic. The world’s third-largest economy unexpectedly shrank an annualised 1.2% in the third quarter, partly because of soft consumption.
The Tokyo CPI data heightens the chance of further rises in nationwide core consumer prices, which in October were 3.6% higher than a year earlier, also marking a 40-year high. The nationwide data for November is scheduled for release on Dec. 23.
Reporting by Takahiko Wada and Leika Kihara; Editing by Sam Holmes and Bradley Perrett
ACCRA, Nov 24 (Reuters) – Ghana’s government is working on a new policy to buy oil products with gold rather than U.S. dollar reserves, Vice-President Mahamudu Bawumia said on Facebook on Thursday.
The move is meant to tackle dwindling foreign currency reserves coupled with demand for dollars by oil importers, which is weakening the local cedi and increasing living costs.
Ghana’s Gross International Reserves stood at around $6.6 billion at the end of September 2022, equating to less than three months of imports cover. That is down from around $9.7 billion at the end of last year, according to the government.
If implemented as planned for the first quarter of 2023, the new policy “will fundamentally change our balance of payments and significantly reduce the persistent depreciation of our currency,” Bawumia said.
Using gold would prevent the exchange rate from directly impacting fuel or utility prices as domestic sellers would no longer need foreign exchange to import oil products, he explained.
“The barter of gold for oil represents a major structural change,” he added.
The proposed policy is uncommon. While countries sometimes trade oil for other goods or commodities, such deals typically involve an oil-producing nation receiving non-oil goods rather than the opposite.
Ghana produces crude oil but it has relied on imports for refined oil products since its only refinery shut down after an explosion in 2017.
Bawumia’s announcement was posted as Finance Minister Ken Ofori-Atta announced measures to cut spending and boost revenues in a bid to tackle a spiraling debt crisis.
In a 2023 budget presentation to parliament on Thursday, Ofori-Atta warned the West African nation was at high risk of debt distress and that the cedi’s depreciation was seriously affecting Ghana’s ability to manage its public debt.
The government is negotiating a relief package with the International Monetary Fund as the cocoa, gold and oil-producing nation faces its worst economic crisis in a generation.
Reporting by Cooper Inveen and Christian Akorlie
Writing by Sofia Christensen
Editing by Estelle Shirbon and Elaine Hardcastle
TOKYO, Nov 14 (Reuters) – Britain and the euro zone economies are likely to tip into recession next year, Morgan Stanley said, but the United States might make a narrow escape thanks to a resilient job market.
At the same time, China’s expected reopening after almost three years of COVID-19 curbs is set to lead a recovery in its own economy and other emerging Asian markets, the investment bank’s analysts said in a series of reports published on Sunday.
“Risks are to the downside,” the reports said, projecting the global economy to grow by 2.2% next year, lower than the International Monetary Fund’s latest 2.7% growth estimate. read more
Next year, Morgan Stanley predicts a sharp split between developed economies “in or near recession” while emerging economies “recover modestly” but said an overall global pickup would likely remain elusive. China’s economy was predicted to grow 5% in 2023, outpacing the average 3.7% growth expected for emerging markets, while the average growth in the Group of 10 developed countries was forecast at just 0.3%.
Central banks across the globe have raised interest rates this year to curb raging inflation, and in the United States, Morgan Stanley predicted the Federal Reserve to keep rates high in 2023 as inflation remains strong after peaking in the fourth quarter of this year.
“The U.S. economy just skirts recession in 2023, but the landing doesn’t feel so soft as job growth slows meaningfully and the unemployment rate continues to rise,” the report said, predicting a 0.5% expansion next year.
“The cumulative effect of tight policy in 2023 spills over into 2024, resulting in two very weak years,” the report added.
Globally too, the peak in inflation should come in the current quarter, the analysts said, “with disinflation driving the narrative next year”.
U.S. core inflation to fall to 2.9% at end-2023, headline inflation to 1.9%
Asia growth to dip to 3.4% in 1H23 before recovering to 4.6% in 2H23, fuelled by domestic demand
Cross-asset returns – especially in fixed income – will look much better in 2023 than in 2022, driven by cheaper starting valuations
High-grade fixed income to outperform global equities
EM and Japan stocks to outperform, with U.S. shares lagging
Reporting by Kevin Buckland, editing by Miral Fahmy
Big Wall St turnout at flagship Saudi investment summit
RIYADH, Oct 25 (Reuters) – Saudi Arabia decided to be the “maturer guys” in a spat with the United States over oil supplies, the kingdom’s energy minister Prince Abdulaziz bin Salman said on Tuesday.
The decision by the OPEC+ oil producer group led by Saudi Arabia this month to cut oil output targets unleashed a war of words between the White House and Riyadh ahead of the kingdom’s Future Investment Initiative (FII) forum, which drew top U.S. business executives.
The two traditional allies’ relationship had already been strained by the Joe Biden administration’s stance on the 2018 murder of Saudi journalist Jamal Khashoggi and the Yemen war, as well as Riyadh’s growing ties with China and Russia.
When asked at the FII forum how the energy relationship with the United States could be put back on track after the cuts and with the Dec. 5 deadline for the expected price-cap on Russian oil, the Saudi energy minister said: “I think we as Saudi Arabia decided to be the maturer guys and let the dice fall”.
“We keep hearing you ‘are with us or against us’, is there any room for ‘we are with the people of Saudi Arabia’?”
Saudi Investment Minister Khalid al-Falih said earlier that Riyadh and Washington will get over their “unwarranted” spat, highlighting long-standing corporate and institutional ties.
“If you look at the relationship with the people side, the corporate side, the education system, you look at our institutions working together we are very close and we will get over this recent spat that I think was unwarranted,” he said.
While noting that Saudi Arabia and the United States were “solid allies” in the long term, he highlighted the kingdom was “very strong” with Asian partners including China, which is the biggest importer of Saudi hydrocarbons.
The OPEC+ cut has raised concerns in Washington about the possibility of higher gasoline prices ahead of the November U.S. midterm elections, with the Democrats trying to retain their control of the House of Representatives and the Senate.
Biden pledged that “there will be consequences” for U.S. relations with Saudi Arabia after the OPEC+ move.
Princess Reema bint Bandar Al Saud, the kingdom’s ambassador to Washington, said in a CNN interview that Saudi Arabia was not siding with Russia and engages with “everybody across the board”.
[1/3] Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman Al-Saud speaks at the Future Investment Initiative conference, in Riyadh, Saudi Arabia, October 25, 2022. REUTERS/ Ahmed Yosri
“And by the way, it’s okay to disagree. We’ve disagreed in the past, and we’ve agreed in the past, but the important thing is recognizing the value of this relationship,” she said.
She added that “a lot of people talk about reforming or reviewing the relationship” and said that was “a positive thing” as Saudi Arabia “is not the kingdom it was five years ago.”
FULL ATTENDENCE AT FII
Like previous years, the FII three-day forum that opened on Tuesday saw a big turnout from Wall Street, as well as other industries with strategic interests in Saudi Arabia, the world’s top oil exporter.
JPMorgan Chase & Co Chief Executive Jamie Dimon, speaking at the gathering, voiced confidence that Saudi Arabia and the United States would safeguard their 75-year-old alliance.
“I can’t imagine any allies agreeing on everything and not having problems – they’ll work it through,” Dimon said. “I’m comfortable that folks on both sides are working through and that these countries will remain allies going forward, and hopefully help the world develop and grow properly.”
The FII is a showcase for the Saudi crown prince’s Vision 2030 development plan to wean the economy off oil by creating new industries that also generate jobs for millions of Saudis, and to lure foreign capital and talent.
No Biden administration officials were visible at the forum on Tuesday. Jared Kushner, a former senior aide to then-President Donald Trump who enjoyed good ties with Prince Mohammed, was featured as a front-row speaker.
The Saudi government invested $2 billion with a firm incorporated by Kushner after Trump left office.
FII organisers said this year’s edition attracted 7,000 delegates compared with 4,000 last year.
After its inaugural launch in 2017, the forum was marred by a Western boycott over Khashoggi’s killing by Saudi agents. It recovered the next year, attracting leaders and businesses with strategic interests in Saudi Arabia, after which the pandemic hit the world.
Reporting by Aziz El Yaakoubi, Hadeel Al Sayegh and Rachna Uppal in Riyadh and Nadine Awadalla, Maha El Dahan and Yousef Saba in Dubai; Writing by Ghaida Ghantous and Michael Geory; Editing by Louise Heavens, Mark Potter, Vinay Dwivedi, William Maclean
BoE’s Bailey says agrees with Hunt on need to fix finances
Some Conservative lawmakers say Truss will be ousted
LONDON, Oct 15 (Reuters) – Britain’s new finance minister Jeremy Hunt said on Saturday some taxes would go up and tough spending decisions were needed, saying Prime Minister Liz Truss had made mistakes as she battles to keep her job just over a month into her term.
In an attempt to appease financial markets that have been in turmoil for three weeks, Truss fired Kwasi Kwarteng as her chancellor of the exchequer on Friday and scrapped parts of their controversial economic package.
With opinion poll ratings dire for both the ruling Conservative Party and the prime minister personally, and many of her own lawmakers asking, not if, but how Truss should be removed, Truss is relying on Hunt to help salvage her premiership less than 40 days after taking office.
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In an article for the Sun newspaper published late on Saturday, Truss admitted the plans had gone “further and faster than the markets were expecting”.
“I’ve listened, I get it,” she wrote. “We cannot pave the way to a low-tax, high-growth economy without maintaining the confidence of the markets in our commitment to sound money.”
She said Hunt would lay out at the end of the month the plan to get national debt down “over the medium term”.
But, the speculation about her future shows no sign of diminishing, with Sunday’s newspapers rife with stories that allies of Rishi Sunak, another former finance minister who she beat to become leader last month, were plotting to force her out within weeks.
On a tour of TV and radio studios, Hunt gave a blunt assessment of the situation the country faced, saying Truss and Kwarteng had made mistakes and further changes to her plans were possible.
“We will have some very difficult decisions ahead,” he said.”The thing that people want, the markets want, the country needs now, is stability.”
The Sunday Times said Hunt would rip up more of Truss’s original package by delaying a planned cut to the basic rate of income tax as part of a desperate bid to balance the books.
According to the newspaper, Britain’s independent fiscal watchdog had said in a draft forecast there could be a 72 billion pound ($80 billion) black hole in public finances by 2027/28, worse than economists had forecast.
Truss had won the leadership contest to replace Boris Johnson on a platform of big tax cuts to stimulate growth, which Kwarteng duly announced last month. But the absence of any details of how the cuts would be funded sent the markets into meltdown.
She has already ditched plans to cut tax for high earners, and said a levy on business would increase, abandoning her proposal to keep it at current levels. But a slump in bond prices after her news conference on Friday still suggested she had not gone far enough.
‘MEETING OF MINDS’
Kwarteng’s Sept. 23 fiscal statement prompted a backlash in financial markets that was so ferocious the Bank of England (BoE) had to intervene to prevent pension funds being caught up in the chaos as borrowing costs surged.
British Prime Minister Liz Truss attends a news conference in London, Britain, October 14, 2022. Daniel Leal/Pool via REUTERS
BoE Governor Andrew Bailey said he had spoken to Hunt and they had agreed on the need to repair the public finances.
“There was a very clear and immediate meeting of minds between us about the importance of fiscal sustainability and the importance of taking measures to do that,” Bailey said in Washington on Saturday. “Of course, there was an important measure taken yesterday.”
He also warned that inflation pressures might require a bigger interest rate rise than previously thought due to the government’s huge energy subsidies for homes and businesses, and its tax cut plans.
Hunt is due to announce the government’s medium-term budget plans on Oct. 31, in what will be a key test of its ability to show it can restore its economic policy credibility.
He cautioned spending would not rise by as much as people would like and all government departments were going to have to find more efficiencies than they were planning.
“Some taxes will not be cut as quickly as people want, and some taxes will go up. So it’s going to be difficult,” he said. He met Treasury officials on Saturday and will hold talks with Truss on Sunday to go through the plans.
‘MISTAKES MADE’
Hunt, an experienced minister and viewed by many in his party as a safe pair of hands, said he agreed with Truss’s fundamental strategy of kickstarting economic growth, but he added that their approach had not worked.
“There were some mistakes made in the last few weeks. That’s why I’m sitting here. It was a mistake to cut the top rate of tax at a period when we’re asking everyone to make sacrifices,” he said.
It was also a mistake, Hunt said, to “fly blind” and produce the tax plans without allowing the independent fiscal watchdog, the Office for Budget Responsibility, to check the figures.
The fact that Hunt is Britain’s fourth finance minister in four months is testament to a political crisis that has gripped Britain since Johnson was ousted following a series of scandals.
Hunt said Truss should be judged at an election and on her performance over the next 18 months – not the last 18 days.
However, she might not get that chance. During the leadership contest, Truss won support from less than a third of Conservative lawmakers and has appointed her backers since taking office – alienating those who supported her rivals.
The appointment of Hunt, who ran to be leader himself and then backed Sunak, has been seen as a sign of her reaching out, but the move did little to placate some of her party critics.
“It’s over for her,” one Conservative lawmaker told Reuters after Friday’s events.
($1 = 0.8953 pounds)
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Reporting by Michael Holden, Alistair Smout and William Schomberg
Editing by Emelia Sithole-Matarise, Helen Popper, Ros Russell and Diane Craft
ZURICH, Oct 5 (Reuters) – The Swiss National Bank (SNB) is following the situation at Credit Suisse (CSGN.S) closely, SNB Governing Board member Andrea Maechler told Reuters on Wednesday.
Switzerland’s second-biggest bank saw its shares slide by as much as 11.5% and its bonds hit record lows on Monday, before clawing back some of the losses, amid concerns about its ability to restructure its business without asking investors for more money. read more
“We are monitoring the situation,” Maechler said on the sidelines of an event in Zurich. “They are working on a strategy due to come out at the end of October.”
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The SNB has declined to comment in the past about Credit Suisse, which has said it has a strong capital base and liquidity. It is due to announce details of a restructuring plan along with third-quarter results on Oct. 27.
In July, Credit Suisse announced its second strategy review in a year and replaced its chief executive, bringing in restructuring expert Ulrich Koerner to prune its investment banking arm and cut more than $1 billion in costs. read more
The bank is considering measures to scale back its investment bank into a “capital-light, advisory-led” business, and is evaluating strategic options for the securitised products business, Credit Suisse has said.
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Reporting by John Revill
Editing by Michael Shields and Mark Potter
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