<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-820x461.jpeg" alt="" class="wp-image-463622" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16.jpeg 1600w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Federal Reserve Chair Jerome Powell on Wednesday reiterated that he expects interest rates to start coming down this year, but is not ready yet to say when.



In prepared remarks for congressionally mandated appearances on Capitol Hill Wednesday and Thursday, Powell said policymakers remain attentive to the risks that inflation poses and don’t want to ease up too quickly.



“In considering any adjustments to the target range for the policy rate, we will carefully assess the incoming data, the evolving outlook, and the balance of risks,” he said. “The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”



Those remarks were taken verbatim from the Federal Open Market Committee’s statement following its most recent meeting, which concluded Jan. 31.



During the question-and-answer session with House Financial Services Committee members, Powell said he needs “see a little bit more data” before moving on rates.



“We think because of the strength in the economy and the strength in the labor market and the progress we’ve made, we can approach that step carefully and thoughtfully and with greater confidence,” he said. “When we reach that confidence, the expectation is we will do so sometime this year. We can then begin dialing back that restriction on our policy.”



Stocks posted gains as Powell spoke, with the Dow Jones Industrial Average up more than 250 points heading into midday. Treasurys yields mostly moved lower as the benchmark 10-year note was off about 0.3 percentage point to 4.11%.



<h2 class="wp-block-heading" id="h-rates-likely-at-peak"><a></a>Rates likely at peak</h2>



In total, the speech broke no new ground on monetary policy or the Fed’s economic outlook. However, the comments indicated that officials remain concerned about not losing the progress made against inflation and will make decisions based on incoming data rather than a preset course.



“We believe that our policy rate is likely at its peak for this tightening cycle. If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in the comments. “But the economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured.”



He noted again that lowering rates too quickly risks losing the battle against inflation and likely having to raise rates further, while waiting too long poses danger to economic growth.



Markets had been widely expecting the Fed to ease up aggressively following 11 interest rate hikes totaling 5.25 percentage points that spanned March 2022 to July 2023.



In recent weeks, though, those expectations have changed following multiple cautionary statements from Fed officials. The January meeting helped cement the Fed’s cautious approach, with the statement explicitly saying rate cuts aren’t coming yet despite the market’s outlook.



As things stand, futures market pricing points to the first cut coming in June, part of four reductions this year totaling a full percentage point. That’s slightly more aggressive than the Fed’s outlook in December for three cuts.



<h2 class="wp-block-heading" id="h-inflation-easing"><a></a>Inflation easing</h2>



Despite the resistance to move forward on cuts, Powell noted the movement the Fed has made toward its goal of 2% inflation without tipping over the labor market and broader economy.



“The economy has made considerable progress toward these objectives over the past year,” Powell said. He noted that inflation has “eased substantially” as “the risks to achieving our employment and inflation goals have been moving into better balance.”



Inflation as judged by the Fed’s preferred gauge is currently running at a 2.4% annual rate — 2.8% when stripping out food and energy in the core reading that the Fed prefers to focus on. The numbers reflect “a notable slowing from 2022 that was widespread across both goods and services prices.”



“Longer-term inflation expectations appear to have remained well anchored, as reflected by a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets,” he added.



Powell is likely to face a variety of questions during his two-day visit to Capitol Hill, which started with an appearance Wednesday before the House Financial Services Committee and concludes Thursday before the Senate Banking Committee.



Questioning largely centered around Powell’s views on inflation and rates.



Republicans on the committee also grilled Powell on the so-called Basel III Endgame revisions to bank capital requirements. Powell said he is part of a group on the Board of Governors that has “real concerns, very specific concerns” about the proposals and said the withdrawal of the plan “is a live option.” Some of the earlier market gains Wednesday faded following reports that New York Community Bank is looking to raise equity capital, raising fresh concerns about the state of midsize U.S. banks.



Though the Fed tries to stay out of politics, the presidential election year poses particular challenges.



Former President Donald Trump, the likely Republican nominee, was a fierce critic of Powell and his colleagues while in office. Some congressional Democrats, led by Sen. Elizabeth Warren of Massachusetts, have called on the Fed to reduce rates as pressure builds on lower-income families to make ends meet.



Rep. Ayanna Pressley, D-Ohio, joined the Democrats in calling for lower rates. During his term, Democrats frequently criticized Trump for trying to cajole the Fed into cutting.



“Housing inflation and housing affordability [is] the No. 1 issue I’m hearing about from my constituents,” Pressley said. “Families in my district and throughout this country need relief now. I truly hope the Fed will listen to them and cut interest rates.”

107383366-1709744654782-gettyimages-2063429688-_s2_1412_35lefe16

Powell reinforces position that the Fed is not ready to start cutting interest rates

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="482" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-820x482.jpeg" alt="" class="wp-image-462538" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-820x482.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-300x176.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-153x90.jpeg 153w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-768x452.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds-1536x904.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds.jpeg 1700w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A Chinese flag flutters on top of the Great Hall of the People ahead of the opening ceremony of the Belt and Road Forum (BRF), to mark 10th anniversary of the Belt and Road Initiative, in Beijing, China October 18, 2023. Edgar Su | Reuters</figcaption></figure>



BEIJING — China is set this week to kick off its annual parliamentary meetings, which investors are watching closely for signals on economic stimulus.



The country’s gross domestic product grew by 5.2% in 2023, but overall recovery from the Covid-19 pandemic was slower than many had expected. A prolonged slump in the massive real estate market and falling global demand for Chinese exports have contributed to low levels of consumer and business sentiment.



That’s all led to questions over whether Beijing will step in with large-scale support. So far, authorities have been relatively reserved.



Beijing signaled in December that any new policy support would be “appropriate,” said Wang Jun, chief economist at Huatai Asset Management, adding “there’s no way” that stimulus would be as large as it was in 2008. That’s according to a CNBC translation of his Mandarin-language remarks.



China’s economic policy is typically set at an annual meeting in December by leaders within the ruling Communist Party of China.



The meetings this month, known as the “Two Sessions,” are at the government, instead of party, level and typically release more details on policy plans, such as the GDP target for the year.



Wang said he is watching for comments on authorities’ plans for the real estate sector, capital markets and local government finances.



Back in 2008, when the world was reeling from the financial crisis, China unleashed a massive stimulus package to sustain growth with greater demand. While the economy rebounded, the measures drew criticism for a resulting surge in local government debt.



Beijing in recent years has emphasized the need to stem financial risks and clamped down on real estate developers’ high reliance on debt for growth, an issue tied to local government finances. This time around, China’s monetary policy also faces constraints on how far it can deviate from the U.S. Federal Reserve’s interest rate path.



<h2 class="wp-block-heading" id="h-gdp-and-other-economic-targets"><a></a>GDP and other economic targets</h2>



The Chinese People’s Political Consultative Conference, an advisory body, is set to kick off its annual meeting on Monday.



The following day the National People’s Congress legislature is due to begin its meeting. Tuesday is also when the country’s premier is expected to share the year’s targets for GDP, employment and other economic indicators in what’s called the “Government Work Report.”



“The target will likely remain relatively high,” said Bank of China’s chief researcher Zong Liang, noting GDP grew by 5.2% last year. That’s according to a CNBC translation of his Mandarin-language remarks.



He expects the target for the fiscal deficit will be around 3.5% and that monetary policy will also be relatively loose.



China in October made a rare announcement that it was raising the fiscal deficit to 3.8%, from 3%.



“We expect the on-budget deficit – which excludes special bonds, policy bank bonds, and local government financing vehicle (LGFV) debt – to be set at 3.0%-3.5% of GDP, narrowing from last year’s 3.8% of GDP,” Louise Loo, lead economist at Oxford Economics, said in a report Thursday.



“We expect a modest step-up in the local government special bonds (LGSB) quota, to RMB4.0tn from RMB3.8tn last year,” Loo said. “Authorities may also finally put pen to paper on the reported RMB1tn in planned central government special bonds (CGSBs), reflecting the increasing role of central coffers amid a continued debt cleanup process among local government entities this year.”



“On balance, the additional fiscal impulse this year, assuming a bazooka-like fiscal package is not forthcoming, is unlikely to be particularly large.”



<h2 class="wp-block-heading"><a></a>Watching for comments on real estate and tech</h2>



The Two Sessions is also a period for releasing the budget and for delegates to discuss needed policy changes and plans.



“Speeches by top policymakers will be key to watch, including interviews of key ministers, such as Minister of Industry and Information Technology, Minister of Science and Technology, and Minister of Housing and Urban-Rural Development. These key ministers will discuss various policies in more detail,” Goldman Sachs analysts said in a report.



During the parliamentary meetings, Chinese officials will likely also discuss plans to bolster tech and innovation, in line with a recent high-level call to bolster “new productive forces.”



Authorities announced Monday that China’s premier would not hold the usual press conference at this year’s parliamentary meeting, and that such press meetings are canceled for the rest of the current congressional term, which would typically run for another three years. The announcement noted there would be more ministry-level press conferences on the economy and foreign affairs, but did not say whether the foreign minister would hold a press conference as has been the case in past years.



The advisory body is set to conclude its annual meeting on Sunday, March 10, according to an official announcement. The National People’s Congress is set to end the afternoon of the following day, Monday, March 11.



Bank of China’s Zong expects that policymakers will send signals on opening up borders or other business opportunities to foreigners, as well as improving the environment for non-state-owned enterprises.



However, specific implementation details are typically left to individual ministries to announce, following high-level directives from Beijing.



Any direct support for consumption is unlikely, but broader moves to improve the social safety net would be of note.



“On the demand side, the delayed Third Plenum [of the Chinese Communist Party’s Central Committee] (originally set for December) suggests that longer term demand policies – including on fiscal, tax, and pensions reforms – may still be in initial stages of discussion, but could still warrant a mention here,” Loo said.



<h2 class="wp-block-heading"><a></a>The macro context</h2>



This year’s Two Sessions follow regular leadership reshuffles that have strengthened the ruling Communist Party of China’s control of the government.



At the parliamentary meeting last year, Beijing announced an overhaul of finance and tech regulation by establishing party-led commissions to oversee the two sectors. Chinese President Xi Jinping, who is also the party’s general secretary, gained an unprecedented third term as president.



No major Chinese government or party leadership positions are scheduled to change this year, while the U.S. is set to hold its presidential election in November.



Since last summer, Chinese authorities have already announced a slew of policies to bolster growth and acknowledged the need to increase confidence. Critics say the measures are relatively piecemeal.



Recent economic data releases point to a mixed picture for growth, with some improvement in manufacturing but real estate at best only stabilizing.



Huatai’s Wang expects the economy will recover gradually this year, and that in contrast to last year, nominal GDP will be better than real GDP. That means the perceived improvement this year will be more tangible for consumers and businesses.

107322262-16981550392023-10-24t134236z_46329598_rc2nu3aqwna3_rtrmadp_0_china-economy-bonds

Chinese leaders to hold annual ‘Two Sessions’ meeting as debate about bazooka-like stimulus swirls

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="518" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-820x518.jpg" alt="" class="wp-image-461443" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-820x518.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-300x190.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-142x90.jpg 142w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-768x485.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-1536x970.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/03/7VFJAVAAS5MPLCGIMEWXWDNEG4-scaled.jpg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A logo is seen at the World Trade Organization (WTO) headquarters before a news conference in Geneva, Switzerland, October 5, 2022. REUTERS/Denis Balibouse/File Photo</figcaption></figure>



ABU DHABI, March 1 (Reuters)&nbsp;&#8211;&nbsp;World Trade Organization (WTO) negotiators extended talks again in Abu Dhabi on Friday as they struggled to break a political deadlock after five days of high-level negotiations.



It was far from clear whether a consensus could be reached among the WTO&#8217;s 164 members before a new deadline of 10 p.m. local time (1800 GMT). Several delegates warned that countries remained far apart as organisers announced a fifth extension.



&#8220;I think we&#8217;re leaving here empty-handed,&#8221; one delegate said.



On the fifth day of the ministerial meeting, most ministers had already gone home, although India&#8217;s Piyush Goyal and European Trade Commissioner Valdis Dombrovskis remained.



Goyal was smiling and shaking hands outside a meeting room barely 30 minutes from an informal ministerial meeting, as delegates gathered in small groups next to a coffee stand.



Delegates were seen earlier on Friday huddled outside meeting rooms, drinking coffee while others were poring over documents or typing urgently on mobile phones. One participant mimed pulling the pin out of a hand grenade.



Negotiators released new draft deals on Friday, which showed that all-night talks failed to reach a breakthrough.



The biennial high-level meeting of trade ministers from around the world is seeking to revise global commerce rules on a broad range of issues from fishing and farming to e-commerce.



A document circulated by the WTO said that &#8220;time is running out&#8221;. &#8220;It is everyone&#8217;s hope that this postponement allows reaching agreement,&#8221; it said.



WTO spokesperson Ismaila Dieng said the discussions were &#8220;intensive and difficult&#8221;.



India, along with South Africa, has opposed extending a moratorium on digital trade tariffs &#8211; a move that has overwhelming support of most governments and from business.



WTO talks have failed before and this year&#8217;s negotiations, held in the oil-rich Gulf state the United Arab Emirates, has highlighted fissures between some of the world&#8217;s top economies.



<h2 class="wp-block-heading" id="h-brics-disagreement">BRICS DISAGREEMENT</h2>



U.S. President Joe Biden&#8217;s trade chief Katherine Tai said in an interview with Reuters late on Thursday that if talks failed, fragmentation among the BRICS group would have contributed.



India and China, core members of the BRICS group of nations, have disagreed on key issues including on investment. India&#8217;s commerce minister joined the negotiations two days after they started and after his Chinese counterpart had left Abu Dhabi.



Pacific islands nations have also complained at the talks about feeling marginalized and overlooked by most major powers.



U.S. support for global trade and multilateral groups like the WTO has been renewed under Biden. But negotiators are mindful that former President Donald Trump, who disrupted the multilateral system, could win a second term in the U.S. presidential election in November.



So far, no deals have been agreed after nearly five days of talks in Abu Dhabi and even the formal acceptance of completed negotiations on improving investment was blocked at an organisation where all 164 members must agree by consensus.



However, many of the disputes are seen as political theatre and so one breakthrough could lead nations to drop opposition to other deals, as happened at the Geneva conference in 2022.



A consensus is also seen as important to the United Arab Emirates, which in recent years has appeared to place an increased emphasis on multilateralism and dialogue and a turnaround from the assertive foreign policy it was pursuing a decade ago.



It has served as a non-permanent member of the U.N. Security Council, hosted the U.N. COP28 Climate Conference, joined China and India as members of the BRICS grouping of nations, established ties with Israel and repaired fractured relations.



Ahead of the talks, UAE foreign minister Sheikh Abdullah bin Zayed Al Nahyan, a member of Abu Dhabi&#8217;s ruling family, announced a $10 million grant to support WTO initiatives.



(Reporting by Emma Farge and Rachna Uppal, writing by Alexander Cornwell and Emma Farge; Editing by Jacqueline Wong, Kim Coghill, Angus MacSwan and Emelia Sithole-Matarise)

FILE PHOTO: A logo is seen at the WTO in Geneva

Deadlocked WTO talks drag into fifth day with no breakthrough

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="615" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-820x615.jpg" alt="" class="wp-image-461198" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-820x615.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-300x225.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-120x90.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-768x576.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-1536x1152.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2036339260-scaled.jpg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo taken on Feb. 27, 2024, shows the venue of a four-day World Trade Organization ministerial conference through Feb. 29 in Abu Dhabi, the United Arab Emirates. (Photo by Kyodo News via Getty Images)</figcaption></figure>



ABU DHABI, Feb 29 (Reuters)&nbsp;&#8211;&nbsp;Negotiations at the World Trade Organisation (WTO) ministerial meeting in Abu Dhabi were set to go into overtime on Thursday, with the trade body announcing the closing session had been delayed, and no sign of a breakthrough in negotiations.



The biennial conference is seeking deals on ending fishing subsidies and extending a moratorium on digital trade tariffs &#8211; a move that India and South Africa oppose.



The scheduled announcement of a final agreement after four days of intergovernmental talks was pushed back four hours until midnight in the Gulf State (2000 GMT).



Some delegates expressed scepticism that a deal would be reached by then, telling Reuters that serious differences remained on a range of issues meant to address global trade.



&#8220;Tense! Difficult,&#8221; said one delegate on condition of anonymity.



India&#8217;s trade minister said he was &#8220;sad&#8221; some countries were still obstructing significant outcomes. He gave little sign New Delhi would drop its opposition to extending a waiver on digital tariffs.



&#8220;Of course we feel sad that some countries are still obstructing significant outcomes that could have helped less developed countries and developing countries gain confidence in the working of&nbsp;WTO,&#8221; Piyush Goyal told reporters on the final day of the talks.



Still, he voiced optimism that &#8220;significant outcomes&#8221; could be achieved in the negotiations.



<h2 class="wp-block-heading" id="h-fisheries-draft-deal-faces-opposition">FISHERIES DRAFT DEAL FACES OPPOSITION</h2>



A grouping of Pacific islands, including Papua New Guinea and the Solomon Islands, were also opposing a draft deal on changes to fisheries subsidies, with Fiji&#8217;s deputy prime minister telling Reuters it did not go far enough.



&#8220;We would like the large subsidising countries to put a cap on the current level of subsidies,&#8221; Manoa Seru Kamikamica said.



India&#8217;s Goyal did not name the countries that he said were blocking results at the talks. But he said his top priority was fixing the&nbsp;WTO&#8217;s dispute system, adding he had raised the lack of progress with U.S. Trade Representative Katherine Tai in a Wednesday meeting.



&#8220;The first and highest priority is to get the Appellate Body of the dispute resolution mechanism in place because without that all the decisions we are taking cannot be adjudicated upon,&#8221; he said.



The WTO&#8217;s top appeals court has been hamstrung for four years due to U.S. opposition to judge appointments and remains out of service. Tai already ruled out an agreement on WTO dispute settlement appeals reform this week, but said negotiations were showing progress.



Asked whether India would drop its opposition to a waiver on tariffs on digital goods like film downloads, he said: &#8220;Let us see what everybody else is budging on&#8221;.



(Reporting by Emma Farge, Alexander Cornwell and Rachna Uppal; Editing by Alex Richardson and Emelia Sithole-Matarise)

WTO ministerial conference in Abu Dhabi

WTO talks head into overtime with no sign of breakthrough

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-820x547.jpg" alt="" class="wp-image-460817" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-1536x1025.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/GettyImages-2020618884-scaled.jpg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Group of 20 signage at City Hall in Rio de Janeiro, Brazil, on Wednesday, Feb. 21, 2024. The Group of 20 nations is so split on the conflicts in Gaza and Ukraine that they may be forced to reduce the forum&#8217;s scope and avoid geopolitical issues altogether this year, according to people familiar with the matter. Photographer: Lucas Landau/Bloomberg via Getty Images</figcaption></figure>



SAO PAULO, Feb 28 (Reuters)&nbsp;&#8211;&nbsp;Brazil&#8217;s Finance Minister Fernando Haddad on Wednesday warned of global economic challenges, as G20 finance leaders gathered in Sao Paulo for a meeting overshadowed by deep divisions in the group over the wars in Ukraine and in Gaza.



As finance leaders kicked off their two-day discussions on Wednesday, their host Hadded said the global economic conjuncture was &#8220;challenging&#8221; and required the G20 to address issues ranging from climate change and poverty.



Brazil&#8217;s coordinator of the finance track at the G20, Tatiana Rosito, said negotiations for the economic portion of the group&#8217;s communique were successfully completed by finance ministry and central bank deputies in a &#8220;very positive&#8221; atmosphere.



But German Finance Minister Christian Lindner said his country will only agree on the G20 communique if geopolitical issues such as the war in Ukraine are mentioned.



He also said the G20 finance leaders are discussing financing for Ukraine to raise pressure on Russia, adding that funds could be mobilized for Kyiv by using proceeds from frozen Russian assets.



His remarks highlight challenges the group may face in agreeing on a G20 communique. A draft version, seen by Reuters on Tuesday, had made only a passing reference in their closing statement to regional conflicts due to deep divisions over wars in Gaza and Ukraine.



It was far shorter than previous years, reflecting Brazil&#8217;s hope to sidestep controversial geopolitical issues with language mentioning &#8220;wars&#8221; left in brackets, underscoring a lack of consensus on the matter.



The smaller G7 group of advanced nations also met on Wednesday, where they likely discussed measures to apply pressure on Russia.



U.S. Treasury Secretary Janet Yellen on Tuesday called on allies to move urgently to unlock the value of frozen Russian sovereign assets to help Ukraine, prompting an angry response from Russian officials.



Canada threw its support behind the U.S. idea with Finance Minister Chrystia Freeland saying on Tuesday the two countries agreed on the urgent need to move forward with confiscating frozen Russian sovereign assets to help Ukraine.



Finance officials and central bankers from the G20 are meeting at a time of lingering global economic uncertainties, increasing strains of record debt burdens, and worries that inflation may not yet be tamed.



Another source of tension is Brazil&#8217;s push to give developing nations of the Global South more voice in G20 meetings as well as global lenders like the International Monetary Fund and World Bank, where leadership is currently dominated by advanced economies.



(Reporting by Marcela Ayrer and Christian Kraemer; Writing by Leika Kihara; editing by Gabriel Araujo and Chizu Nomiyama)

G-20 Foreign Ministers Meeting in Rio de Janeiro

Brazil warns of global economic challenges as G20 finance chiefs meet

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="511" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-820x511.jpg" alt="" class="wp-image-460080" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-820x511.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-300x187.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-144x90.jpg 144w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-768x478.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-1536x957.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/VUWEHZ7LJVPHXABMJEQQZHIP5M-scaled.jpg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration</figcaption></figure>



LONDON, Feb 26 (Reuters)&nbsp;&#8211;&nbsp;The dollar inched lower on Monday ahead of a macro-packed week that could shed more light on the global rate outlook, with a U.S. inflation reading taking centre stage.



The core personal consumption expenditures (PCE) price index, the Federal Reserve&#8217;s preferred measure of inflation, is due on Thursday, with a 0.4% rise on a monthly basis forecast.



Inflation figures in the euro zone, Japan and Australia also land this week, alongside a rate decision from the Reserve Bank of New Zealand (RBNZ) and China PMI surveys.



The euro&nbsp;EUR=EBS&nbsp;was up 0.3% at $1.0854, after gains against the dollar in eight of the last nine trading sessions.



ECB officials have reiterated their focus on inflation in the euro zone, particularly the service sector and wage growth.



European Central Bank President Christine Lagarde on Friday said wage growth had moderated, but it was too early to assume inflation had been conquered.



&#8220;Euro zone inflation is expected to cool to 2.5% and yet the ECB minutes still show the reluctance from the ECB to even talk about cutting rates,&#8221; City Index market strategist Fiona Cincotta said.



&#8220;We also saw inflation expectations in the euro zone ticked up very slightly, but also that upbeat mood on the back of earnings has been pulling some safe-haven flows out of the dollar and has pushed the euro higher,&#8221; she said.



A major driver behind the euro&#8217;s strength has been the narrowing gap between where traders believe U.S. and euro zone interest rates will finish the year.



Only two weeks ago, investors were assuming the Fed would cut rates by around 80 basis points this year, compared with around 100 bps from the ECB. By Monday, that gap had all but disappeared.



<h2 class="wp-block-heading" id="h-spotlight-on-inflation">SPOTLIGHT ON INFLATION</h2>



The main event for investors this week will be Thursday&#8217;s U.S. core PCE. Hotter readings of producer and consumer inflation have increased the likelihood that this measure might top expectations as well, which could further push back expectations for when the Fed might deliver its first cut.



Markets are currently pricing in just about a 20% chance that the Fed will begin easing rates in May, versus a nearly 90% chance a month ago, according to the CME FedWatch tool.



&#8220;If anything, the (data) may be stronger than markets currently expect, and that will likely give a modest boost to the dollar,&#8221; said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA).



The dollar index&nbsp;=USD&nbsp;was down 0.2% at 103.74.



Japan&#8217;s nationwide consumer prices are due on Tuesday and are forecast to show core inflation slowed to an annual rate of 1.8% in January, the lowest since March 2022.



That would complicate the Bank of Japan&#8217;s (BOJ) plans to end negative interest rates in coming months, keeping the yen under pressure in the near term.



The yen&nbsp;JPY=EBS&nbsp;was last steady at 150.57 per dollar, having already fallen more than 6% against it this year.



&#8220;News that Japan fell into technical recession in H2 2023 will have dampened some of the market&#8217;s enthusiasm regarding the pace of monetary tightening from the BOJ,&#8221; said Jane Foley, head of FX strategy at Rabobank.



Sterling&nbsp;GBP=D3, meanwhile, rose 0.2% to $1.2696, but eased by 0.1% against the euro&nbsp;EURGBP=D3&nbsp;to 85.50 pence.



In cryptocurrencies, ether ETH= rose by as much as 6.5% above $3,130 to another two-year high. It was last up 3.9% at $3,055, while bitcoin BTC= rose 0.3% to $51,140.



(Additional reporting by Rae Wee in Singapore; Editing by Jamie Freed, Jacqueline Wong, Ed Osmond and Alexander Smith)

FILE PHOTO: Illustration shows U.S. dollar banknotes

Dollar lower before inflation-heavy data deluge

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="800" height="559" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/download-66.jpg" alt="" class="wp-image-425261" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/download-66.jpg 800w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/download-66-300x210.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/download-66-129x90.jpg 129w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/download-66-768x537.jpg 768w" sizes="(max-width: 800px) 100vw, 800px" /><figcaption class="wp-element-caption">Workers from Mondi paper mill stand behind a fence in the town of Stamboliyski, Bulgaria. File photo. REUTERS/Stoyan Nenov</figcaption></figure>



Feb 22 (Reuters)&nbsp;&#8211;&nbsp;British packaging company Mondi&nbsp;MNDI.L&nbsp;said on Thursday that its customers, which include consumer goods companies and e-commerce retailers, have been reluctant to change to sustainable packaging due to cost considerations.



In recent years there has been a push to shift away from plastic packaging due to its negative impact on the environment, with companies seeking more sustainable ways to deliver goods.



&#8220;In the short term, we have seen the world naturally distracted by heightened geopolitical and macroeconomic risks, at times slowing down progress on key sustainability issues,&#8221; Mondi CEO Andrew King told analysts in a post-earnings call.



&#8220;We see this in the rate of adoption of some of the sustainable packaging solutions we have developed, where our customers and ultimately the end consumer have been reluctant to make the change due to cost considerations,&#8221; King added.



However, he added that he believed it to be more of a &#8220;cyclical phenomenon&#8221;.



For Mondi, which counts Unilever&nbsp;ULVR.L, Reckitt&nbsp;RKT.L&nbsp;and Tesco&nbsp;TSCO.L&nbsp;among its customers, 82% of its 2022 revenue came from packaging and paper products that are reusable, recyclable or compostable.



Mondi makes &#8216;EcoWicketBags&#8217; which are used to package diapers and toilet paper, as well as paper-based packaging for Reckitt&#8217;s Finish dishwasher tablets.



(Reporting by Aby Jose Koilparambil and Yadarisa Shabong in Bengaluru; Editing by Kirsten Donovan)

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Mondi says customers reluctant to switch to sustainable packaging on cost concerns

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107350975-1703235128856-gettyimages-1245866118-70395549-820x547.jpeg" alt="" class="wp-image-456371" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107350975-1703235128856-gettyimages-1245866118-70395549-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107350975-1703235128856-gettyimages-1245866118-70395549-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107350975-1703235128856-gettyimages-1245866118-70395549-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107350975-1703235128856-gettyimages-1245866118-70395549-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107350975-1703235128856-gettyimages-1245866118-70395549-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107350975-1703235128856-gettyimages-1245866118-70395549-scaled.jpeg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">People shopping on Oxford Street in London. Picture date: Thursday December 29, 2022. (Photo by James Manning/PA Images via Getty Images) James Manning &#8211; Pa Images | Pa Images | Getty Images</figcaption></figure>



LONDON — The U.K. economy slipped into a technical recession in the final quarter of last year, initial figures showed Thursday.



The Office for National Statistics said U.K. gross domestic product shrank by 0.3% in the final three months of the year, notching the second consecutive quarterly decline.



Though there is no official definition of a recession, two straight quarters of negative growth is widely considered a technical recession.



Economists polled by Reuters had produced a consensus forecast of -0.1% for the October to December period.



All three main sectors of the economy contracted in the fourth quarter, with the ONS noting declines of 0.2% in services, 1% in production and 1.3% in construction output.



Across the whole of 2023, the British GDP is estimated to have increased by just 0.1%, compared to 2022. For the month of December, output shrank by 0.1%.



U.K. Finance Minister Jeremy Hunt said that high inflation remains “the single biggest barrier to growth,” since it is forcing the Bank of England to keep interest rates firm and stymie economic growth.



“But there are signs the British economy is turning a corner; forecasters agree that growth will strengthen over the next few years, wages are rising faster than prices, mortgage rates are down and unemployment remains low,” he added.



Inflation has come down markedly in the U.K., but remains well above that of the country’s economic peers and the Bank of England’s 2% target, squeezing household finances. The headline consumer price index reading came in at 4% year-on-year in January.



<h3 class="wp-block-heading" id="h-shallow-and-short-lived-recession">‘Shallow and short-lived’ recession</h3>



Marcus Brookes, chief investment officer at Quilter Investors, said that the figures most likely indicate that the recession will be a “potentially shallow and short-lived one that may not reflect the true state of the economy,” which is set to experience a “muted recovery” throughout 2024.



“U.K. GDP contracting in both December and the fourth quarter of 2023 is mainly due to persistently high inflation, structural weaknesses in the labour market and low productivity growth, but also adverse weather conditions,” Brookes said via email.



“These factors affected the performance of the services and construction sectors, which are the main drivers of the U.K. economy.”



He noted that some of these hindrances are temporary and have already started to ease, with the inflation print of January undershooting forecasts for a reacceleration.



“Over the coming months, we expect inflation to fall, potentially easing the pressure on U.K. households, and supporting the recovery of the consumer-driven economy,” Brookes added.



“The key indicator to watch is inflation in the services sector, which accounts for the bulk of the UK’s economic activity and employment and reflects the strength of wage growth and consumer demand, which are crucial for the U.K.’s recovery.”



Neil Birrell, chief investment officer at Premier Miton Investors, said Thursday’s figure and the softer-than-expected inflation data “may give rise to some concern over economic strength in the coming year.”



“Most sectors of the economy were weak, but the optimists will point to the fact that there is plenty of scope to cut interest rates should the current trend in inflation and growth accelerate.”

107350975-1703235128856-gettyimages-1245866118-70395549

UK economy slipped into technical recession at the end of 2023

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107372713-1707821086281-gettyimages-1968040821-20240131-dsc_3484-820x547.jpeg" alt="" class="wp-image-456040" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107372713-1707821086281-gettyimages-1968040821-20240131-dsc_3484-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107372713-1707821086281-gettyimages-1968040821-20240131-dsc_3484-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107372713-1707821086281-gettyimages-1968040821-20240131-dsc_3484-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107372713-1707821086281-gettyimages-1968040821-20240131-dsc_3484-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107372713-1707821086281-gettyimages-1968040821-20240131-dsc_3484-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107372713-1707821086281-gettyimages-1968040821-20240131-dsc_3484-scaled.jpeg 2048w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Pro-EU demonstrators protest outside Parliament against Brexit on the fourth anniversary of Britain’s official departure from the European Union in London, United Kingdom on January 31, 2024. Future Publishing | Getty Images</figcaption></figure>



LONDON — Post-Brexit Britain has “significantly underperformed” other advanced economies since the 2016 EU referendum, according to new analysis from Goldman Sachs, which aims to quantify the economic cost of the Leave vote.



In a note last week entitled “The Structural and Cyclical Costs of Brexit,” the Wall Street bank estimates that the U.K. economy grew 5% less over the past eight years than other comparable countries.



The true hit to the British economy could be anywhere from 4% to 8% of real gross domestic product (GDP), however, the bank said, acknowledging the difficulties of extracting the impact of Brexit from other simultaneous economic events including the Covid-19 pandemic and the 2022 energy crisis. Real GDP is a growth metric that has been adjusted for inflation.



Goldman Sachs attributed the economic shortfall to three key factors: reduced trade; weaker business investment; and labor shortages as a result of lower immigration from the EU.



The U.K. voted 52% to 48% to leave the EU on June 23, 2016, but officially exited the union on Jan. 31, 2020.



Over that period until today, U.K. goods trade has underperformed other advanced economies by around 15% since the Leave vote, according to the bank’s estimates, while business investment has fallen “notably short” of pre-referendum levels.



Meantime, immigration from the EU has fallen — a key pledge of the Vote Leave campaign — only to be replaced by a less economically active cohort of non-EU migrants, primarily students, the research said.



“Taken together, the evidence points to a significant long-run output cost of Brexit,” the report’s authors said.



The bank noted the reduction in trade was in line with expectations and the underperformance in investment was “more pronounced” that anticipated. However, it said the shifts in immigration patterns posed the most important cyclical repercussions for the U.K. economy — and inflation in particular.



“The post-Brexit change in immigration flows has reduced the elasticity of labor supply in the U.K., contributing to the post-pandemic surge in inflation and pointing to more cyclical labor market and inflation pressures going forward,” the report said.



U.K. real GDP per capita has barely risen above pre-Covid levels and currently stands 4% above the mid-2016 level, it said. That compares to 8% for the euro zone area and 15% for the U.S.



Meantime, the U.K. has recorded higher inflation over the period, with U.K. consumer prices rising 31% since mid-2016 compared with 27% in the U.S. and 24% in the euro zone, it added.



While the report noted that new non-EU trade agreements could potentially mitigate the costs of Brexit, estimates suggest that the benefit is likely to be small.



The British government estimates that its free trade agreement with Australia will boost U.K. GDP by 0.08% per year, while the economic impact of a new trade deal with Switzerland is unclear.



Meantime, the timelines for prospective new trade deals with major partners such as the U.S. and India have not yet been announced.

107372713-1707821086281-gettyimages-1968040821-20240131-dsc_3484

Brexit Britain has ‘significantly underperformed’ other advanced economies, Goldman Sachs says

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107365401-1706390936186-gettyimages-1958536825-AFP_34H26WJ-820x461.jpeg" alt="" class="wp-image-455790" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107365401-1706390936186-gettyimages-1958536825-AFP_34H26WJ-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107365401-1706390936186-gettyimages-1958536825-AFP_34H26WJ-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107365401-1706390936186-gettyimages-1958536825-AFP_34H26WJ-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107365401-1706390936186-gettyimages-1958536825-AFP_34H26WJ-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107365401-1706390936186-gettyimages-1958536825-AFP_34H26WJ-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107365401-1706390936186-gettyimages-1958536825-AFP_34H26WJ.jpeg 1920w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



Inflation rose more than expected in January as stubbornly high shelter prices weighed on consumers, the Labor Department reported Tuesday.



The consumer price index, a broad-based measure of the prices shoppers face for goods and services across the economy, increased 0.3% for the month, the Bureau of Labor Statistics reported. On a 12-month basis, that came out to 3.1%, down from 3.4% in December.



Economists surveyed by Dow Jones had been looking for a monthly increase of 0.2% and an annual gain of 2.9%.



Excluding volatile food and energy prices, so-called core CPI accelerated 0.4% in January and was up 3.9% from a year ago, unchanged from December. The forecast had been for 0.3% and 3.7% respectively.



Shelter prices, which comprise about one-third of the CPI weighting, accounted for much of the increase. The index for that category rose 0.6% on the month, contributing more than two-thirds of the headline increase, the BLS said. On a 12-month basis, shelter increased 6%.



Food prices moved higher as well, up 0.4% on the month. Energy helped offset some of the increase, down 0.9% due largely to a 3.3% slide in gasoline prices.



Stock market futures slid sharply following the release. Futures tied to the Dow Jones Industrial Average were off more than 250 points and Treasury yields surged higher.



Even with the rise in prices, inflation-adjusted earnings increased 0.3% for the month. However, adjusted for the decline in the average workweek, real weekly earnings fell 0.3%. Real average hourly earnings rose 1.4% from a year ago.



“Inflation is generally moving in the right direction,” said Bright MLS Chief Economist Lisa Sturtevant. “But it’s important to remember that a lower inflation rate does not mean that prices of most things are falling — rather, it simply means that prices are rising more slowly. Consumers are still feeling the pinch of higher prices for the things they buy most often.”



The release comes as Federal Reserve officials look to set the proper balance for monetary policy in 2024. Though financial markets have been looking for aggressive interest rate cuts, policymakers have been more cautious in their public statements, focusing on the need to let the data be their guide rather than preset expectations.



Fed officials expect inflation to recede back to their 2% annual target in large part because they think shelter prices will decelerate through the year. January’s increase could be problematic for a central bank looking to take its foot off the brake for monetary policy at its tightest in more than two decades.



“The much-anticipated CPI report is a disappointment for those who expected inflation to edge lower allowing the Fed to begin easing rates sooner rather than later,” said Quincy Krosby, chief global strategist at LPL Financial. “Across the board numbers were hotter than expected making certain that the Fed will need more data before initiating a rate cutting cycle.”



Generally, the inflation data had been encouraging, even if annual rates remain well above the Fed’s 2% target. Moreover, core inflation, which officials believe is a better guide of long-run trends, has been even more stubborn as housing costs have held higher than anticipated.



In recent days, policymakers including Chair Jerome Powell have said the broader strength of the U.S. economy gives the Fed more time to process data is it doesn’t have to worry about high rates crushing growth.



Market pricing prior to the CPI release indicated a tilt towards the first rate cut coming in May, with a likely total of five quarter-percentage point moves lower before the end of 2024, according to CME Group data. However, several Fed officials have said they think two or three cuts are more likely.



Outside of the jump in shelter costs, the rest of the inflation picture was a mixed bag.



Used vehicle prices declined 3.4%, apparel costs fell 0.7% and medical commodities declined 0.6%. Electricity costs rose 1.2% and airline fares increased 1.4%. At the grocery store, ham prices fell 3.1% and eggs jumped 3.4%.



This is breaking news. Please check back here for updates.

107365401-1706390936186-gettyimages-1958536825-AFP_34H26WJ

Prices rose more than expected in January as US inflation won’t go away

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="800" height="533" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/09/download-71.jpg" alt="" class="wp-image-427693" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/09/download-71.jpg 800w, https://cms.cnbcafrica.com/wp-content/uploads/2023/09/download-71-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/09/download-71-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/09/download-71-768x512.jpg 768w" sizes="(max-width: 800px) 100vw, 800px" /><figcaption class="wp-element-caption">Gold bars are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019. REUTERS/Michael Dalder</figcaption></figure>



Feb 9 (Reuters)&nbsp;&#8211;&nbsp;Gold&nbsp;prices were subdued on Friday, hurt by a stronger dollar and higher Treasury yields, while investors looked ahead to next week&#8217;s U.S. inflation reading for clues on when the Federal Reserve could begin cutting interest rates.



Spot&nbsp;gold&nbsp;XAU=&nbsp;was down 0.2% to $2,029.80 per ounce at 1236 GMT, with prices down 0.5% over the week. U.S.&nbsp;gold&nbsp;futures&nbsp;GCcv1&nbsp;also lost 0.2% to $2,044.50 per ounce.



The dollar index&nbsp;.DXY&nbsp;remained on track for a weekly rise, making&nbsp;gold&nbsp;more expensive for holders of other currencies, while the U.S. 10-year Treasury yield&nbsp;US10YT=RR&nbsp;also edged higher.&nbsp;USD/US/



Jigar Trivedi, a senior analyst at Reliance Securities, said that Fed Chair Jerome Powell&#8217;s recent comments had reduced the probability of an interest rate cut in March, putting a cap on&nbsp;gold&nbsp;prices.



After several Fed policymakers this week said they would&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3ARR:333&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">wait to cut</a>&nbsp;rates until they were more confident that inflation would fall to 2%, all eyes will be on Tuesday&#8217;s U.S. consumer price index report.



Traders now see about a 61% chance of an interest rate cut in May, according to the&nbsp;<a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html" target="_blank" rel="noreferrer noopener">CME Fedwatch tool</a>. Lower interest rates decrease the opportunity cost of holding non-yielding bullion.



On the physical front, physical&nbsp;gold&nbsp;dealers in India charged premiums this week for the first time in four months, encouraged by a pick-up in purchases as local prices eased, while the approaching Lunar New Year festival boosted activity in China and elsewhere.



Elsewhere, palladium&nbsp;XPD=&nbsp;rose 0.3% to $889.62 per ounce and platinum&nbsp;XPT=&nbsp;was down 0.5% to $880.56. Prices of both metals were heading for a second weekly dip.



Prices of auto-catalyst metal palladium&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL1N3ET0R9&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">fell</a>&nbsp;below those of platinum for the first time since April 2018 on Thursday.



&#8220;Challenging supply backdrop, heavy platinum loadings and substitution away from palladium are boding well for platinum,&#8221; analysts at ANZ Research wrote in a note.



Spot silver&nbsp;XAG=&nbsp;rose 0.2% to $22.62.



Platinum-to-palladium ratio&nbsp;<a href="https://reut.rs/3weVJli" target="_blank" rel="noreferrer noopener">https://reut.rs/3weVJli</a>



Spot&nbsp;gold&nbsp;price in USD per oz&nbsp;<a href="https://reut.rs/3wdw8Jq" target="_blank" rel="noreferrer noopener">https://reut.rs/3wdw8Jq</a>



(Reporting by Sherin Elizabeth Varghese and Brijesh Patel in Bengaluru; Editing by Kirsten Donovan and Mark Potter)

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Gold pressured by firm dollar, higher yields as traders seek Fed clues

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="728" height="485" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/VWGGGHRVGFNNBKICEKKB2G2CXI.jpg" alt="" class="wp-image-419501" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/VWGGGHRVGFNNBKICEKKB2G2CXI.jpg 728w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/VWGGGHRVGFNNBKICEKKB2G2CXI-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/VWGGGHRVGFNNBKICEKKB2G2CXI-135x90.jpg 135w" sizes="(max-width: 728px) 100vw, 728px" /><figcaption class="wp-element-caption">A bitcoin representation is seen in a file photo, in Paris, France, June 23, 2017. REUTERS/Benoit Tessier/File Photo</figcaption></figure>



<a href="https://www.cnbc.com/quotes/BTC.CM=/">Bitcoin</a>&nbsp;marched higher to end the week, with its price breaching the $47,000 level for the first time in almost two years.&nbsp;



On Friday the flagship cryptocurrency rose more than 4% to $47,307.00, according to Coin Metrics, a level not seen since March 2022.&nbsp;<a href="https://www.cnbc.com/quotes/ETH.CM=/">Ether</a>&nbsp;advanced 3% to $2,511.75.&nbsp;



Bitcoin trading volume and sentiment have been suppressed over the past two weeks as investors worried about big outflows from the&nbsp;<a href="https://www.cnbc.com/quotes/">Grayscale Bitcoin ETF</a>&nbsp;and a deeper pullback in its price ahead of an expected rip higher this year. Nevertheless, bitcoin’s now up 10% for the week, while ether is on track for a 9% gain.



Positive sentiment appears to be returning now as the GBTC outflows have slowed. Additionally, momentum from the S&amp;P 500 briefly touching 5,000 Thursday for the first time ever may be spilling over to crypto.



“The recent price appreciation of bitcoin could be attributed to recent inflows into the spot ETFs, the prospect of the halving around the corner, which tends to generate optimism from investors as prices often shoot&nbsp; up after, and general market momentum,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs. “In the past, there have been parallels between bitcoin and tech stocks. Lower rates, falling inflation, earnings growth and indices like the S&amp;P 500 hitting groundbreaking levels certainly improve risk sentiment for the asset class.”



The move pulled crypto equities higher in premarket trading. Crypto exchange&nbsp;<a href="https://www.cnbc.com/quotes/COIN/">Coinbase</a>&nbsp;and bitcoin proxy&nbsp;<a href="https://www.cnbc.com/quotes/MSTR/">Microstrategy</a>&nbsp;each gained more than 6%, while the biggest miners,&nbsp;<a href="https://www.cnbc.com/quotes/RIOT/">Riot Platforms</a>&nbsp;and&nbsp;<a href="https://www.cnbc.com/quotes/MARA/">Marathon Digital</a>, rose 10% and 11%, respectively.



Bitcoin is nearing a key resistance level, which Fairlead Strategies earlier this week identified at $48,600. Hitting that level would open the door to a new all-time high, the firm said.



On Thursday, bitcoin&nbsp;<a href="https://www.cnbc.com/2024/02/08/bitcoin-rises-above-45000-its-highest-level-in-almost-a-month.html">passed $45,000 for the first time since Jan. 12</a>, the day after U.S. bitcoin ETFs began trading. The cryptocurrency has struggled to maintain its pre-ETF highs but has avoided falling to as low as $36,000, as expected. It has not fallen below $39,000 in the past month.

FILE PHOTO: Bitcoin representation is seen in an illustration picture taken at La Maison du Bitcoin in Paris

Bitcoin breaks above $47,000 for the first time since March 2022

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107367289-17067309052024-01-31t193846z_1251250014_rc26t5afcbas_rtrmadp_0_usa-economy-fed-820x462.jpeg" alt="" class="wp-image-453156" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107367289-17067309052024-01-31t193846z_1251250014_rc26t5afcbas_rtrmadp_0_usa-economy-fed-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107367289-17067309052024-01-31t193846z_1251250014_rc26t5afcbas_rtrmadp_0_usa-economy-fed-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107367289-17067309052024-01-31t193846z_1251250014_rc26t5afcbas_rtrmadp_0_usa-economy-fed-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107367289-17067309052024-01-31t193846z_1251250014_rc26t5afcbas_rtrmadp_0_usa-economy-fed-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/02/107367289-17067309052024-01-31t193846z_1251250014_rc26t5afcbas_rtrmadp_0_usa-economy-fed.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Federal Reserve Chair Jerome Powell holds a press conference following the release of the Fed’s interest rate policy decision at the Federal Reserve in Washington, U.S., January 31, 2024.  Evelyn Hockstein | Reuters</figcaption></figure>



Federal Reserve Chair Jerome Powell vowed in an interview aired Sunday that the central bank will proceed carefully with interest rate cuts this year and likely will move at a considerably slower pace than the market expects.



In a wide-ranging interview with “60 Minutes” after last week’s Federal Open Market Committee meeting, Powell expressed confidence in the economy, promised he wouldn’t be swayed by this year’s presidential election, and said the pain he feared from rate hikes never really materialized.



“With the economy strong like that, we feel like we can approach the question of when to begin to reduce interest rates carefully,” he told the news magazine’s Scott Pelley, according to a transcript CBS released.



“We want to see more evidence that inflation is moving sustainably down to 2%,” Powell added. “Our confidence is rising. We just want some more confidence before we take that very important step of beginning to cut interest rates.”



As he did during a Wednesday news conference, he said it’s unlikely the FOMC will make that first move in March, which futures markets had been anticipating.



The meeting concluded with the committee holding its benchmark borrowing rate in a range between 5.25%-5.5%. In its post-meeting statement, the committee said it would not be cutting “until it has gained greater confidence that inflation is moving” to the 2% target.



Markets have been making aggressive bets on how many cuts the Fed would make this year. Current pricing is pointing to five quarter-percentage points reductions, though Powell backed the FOMC’s December “dot plot” grid of individual members’ estimates that pointed to just three moves.



“We’ll update [the outlook] at the March meeting. I will say, though, nothing has happened in the meantime that would lead me to think that people would dramatically change their forecasts,” he said, noting that “the time is coming” for cuts but perhaps not yet.



Powell was broadly optimistic about the economy, noting that inflation, while still above the Fed’s target, has moderated while the jobs market is strong. Nonfarm payrolls accelerated by 353,000 in January, the Labor Department reported Friday. The biggest risk, he said, is likely from geopolitical events.



During the Fed’s annual retreat in Jackson Hole, Wyoming, in August 2022, in the early days of the rate-hike cycle, Powell warned that the policy tightening would cause “some pain.” However, that hasn’t been the case, he said in the “60 Minutes” interview.



“It really hasn’t happened. The economy has continued to grow strongly. Job creation has been high,” he said. “So really the kind of pain that I was worried about and so many others were, we haven’t had that. And that’s a really good thing. And, you know, we want that to continue.”



In another matter, Powell reiterated that neither he nor his colleagues would be swayed by political pressure during this presidential election year.



“We do not consider politics in our decisions. We never do. And we never will,” he said.

107367289-17067309052024-01-31t193846z_1251250014_rc26t5afcbas_rtrmadp_0_usa-economy-fed

Powell insists the Fed will move carefully on rate cuts, with probably fewer than the market expects

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107223161-1681220740794-gettyimages-1243887539-IMF_WORLD_ECO-820x461.jpeg" alt="" class="wp-image-451521" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107223161-1681220740794-gettyimages-1243887539-IMF_WORLD_ECO-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107223161-1681220740794-gettyimages-1243887539-IMF_WORLD_ECO-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107223161-1681220740794-gettyimages-1243887539-IMF_WORLD_ECO-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107223161-1681220740794-gettyimages-1243887539-IMF_WORLD_ECO-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107223161-1681220740794-gettyimages-1243887539-IMF_WORLD_ECO-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107223161-1681220740794-gettyimages-1243887539-IMF_WORLD_ECO.jpeg 1600w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



JOHANNESBURG/WASHINGTON, Jan 30 (Reuters) &#8211; The International Monetary Fund on Tuesday edged its forecast for global economic growth higher, upgrading the outlook for both the United States and China &#8211; the world&#8217;s two largest economies &#8211; and citing faster-than-expected easing of inflation.



The IMF&#8217;s chief economist, Pierre-Olivier Gourinchas, said the global lender&#8217;s updated World Economic Outlook showed that a &#8220;soft landing&#8221; was in sight, but overall growth and global trade still remained lower than the historical average. However the fund downgraded its Sub-Saharan Africa forecast on subpar growth in Nigeria and South Africa, the region&#8217;s largest economies.



&#8220;The global economy continues to display&nbsp;remarkable&nbsp;resilience, with inflation declining steadily and growth holding up. The chance of a &#8216;soft landing&#8217; has increased,&#8221;&nbsp;Gourinchas&nbsp;told reporters in Johannesburg, adding, &#8220;We are very far from a global recession scenario.&#8221;



But he cautioned that the base of&nbsp;expansion&nbsp;was slow and risks remained, including geopolitical tensions in the Middle East and attacks in the Red Sea that could disrupt commodity prices and supply chains.



Delays in announced fiscal consolidation in what Gourinchas called &#8220;the biggest global election year in history&#8221; could boost economic activity but might also spur inflation, he added.



The IMF said the improved outlook was supported by stronger private and public spending despite tight monetary conditions, as well as increased labor force participation, mended supply chains and cheaper energy and commodity prices.



The IMF forecast global growth of 3.1% in 2024, up two-tenths of a percentage point from its October forecast, and said it expected unchanged growth of 3.2% in 2025. The historical average for the 2000-2019 period was 3.8%.



Global trade was expected to expand by&nbsp;3.3% in 2024 and 3.6% in 2025, well below the historical average of 4.9%, with gains weighed down by&nbsp;thousands of fresh trade restrictions.



The IMF stuck with its October forecast for headline inflation of 5.8% for 2024, but lowered the 2025 forecast to 4.4% from 4.6% in October. Excluding Argentina, which has seen inflation spike, global headline inflation would be lower, Gourinchas said.



Advanced economies should see average inflation of 2.6%, down four-tenths of a percentage point from the October forecast, with inflation set to reach central bank targets of 2% in 2025. By contrast, inflation would average 8.1% in emerging market and developing economies in 2024, before easing to 6% in 2025.



The IMF said average oil prices would drop 2.3% in 2024, versus the 0.7% decline it had predicted in October, and said prices were expected to drop 4.8% in 2025.



<h2 class="wp-block-heading" id="h-red-sea-attacks">RED SEA ATTACKS</h2>



&#8220;Staying on the path to a soft landing will not be easy,&#8221; Gourinchas said, noting that&nbsp;new commodity price spikes from geopolitical shocks, including&nbsp;continued attacks on shipping in the Red Sea, could prolong tight monetary conditions.



Gourinchas told reporters the IMF was watching developments in the Middle East closely, but the broader economic impact&nbsp;appeared&nbsp;&#8220;relatively limited&#8221;&nbsp;as of now.



&#8220;It doesn&#8217;t seem to represent, as of now, a major source of potentially reigniting supply-side inflation,&#8221; he&nbsp;said.



The United States got one of the biggest upgrades in the January update of the IMF outlook, with its GDP now forecast to expand by 2.1% in 2024 versus the 1.5% forecast in October. Growth was expected to ease to 1.7% in 2025.



Gourinchas credited fiscal support and consumer spending for the upgrade, but said the IMF had&nbsp;warned&nbsp;Washington that some of its subsidies from domestic producers and other industrial policies could violate global trade rules.



The euro area got a downgrade, and was now expected to grow just 0.9% in 2024 and 1.7% in 2025, with the biggest European economy &#8211; Germany &#8211; expected to see minimal GDP growth of 0.5% in 2024 instead of the 0.9% forecast in October.



China&#8217;s GDP was expected to grow by 4.6% in 2024, an upward revision of four-tenths of a percentage point from October, and 4.1% in 2025. Gourinchas said the boost reflected significant fiscal support from the authorities, and a less-severe-than-expected slowdown stemming from the property sector.



The U.S. Federal Reserve, European Central Bank and Bank of England were expected to&nbsp;start lowering interest rates gradually in the second half of 2024, Gourinchas said, adding, &#8220;We are not quite there yet.&#8221;



The Bank of Japan was expected to maintain low interest rates, and that was &#8220;appropriate,&#8221; but the IMF had told it to be ready to raise rates if inflation spiked, he said.



Gourinchas added that markets had been &#8220;excessively optimistic&#8221; on the prospects for early interest rate cuts by major central banks, and a repricing could increase long-term interest rates and trigger more rapid fiscal consolidation that would weigh on growth prospects.



Emerging market and developing economies&nbsp;were expected to grow by&nbsp;4.1% in 2024, with&nbsp;emerging&nbsp;and developing Europe getting an upgrade due to&nbsp;stronger-than-expected growth in Russia on the back of&nbsp;military spending for the war in Ukraine.



Russia&#8217;s GDP was expected to grow 2.6% in 2024, 1.5 percentage points more than expected in October, with growth seen easing to 1.1% in 2025. The IMF said there could be further revisions since the numbers were preliminary and there were questions about the extent of Russia&#8217;s fiscal stimulus.



Negative growth in Argentina depressed the forecast for the Latin America and Caribbean region, with growth seen dropping to 1.9% in 2024, four-tenths of a percentage point lower than in October. Growth should edge higher to 2.5% in 2025, the IMF said.



Gourinchas said the global outlook reflected more balanced upside and downside risks, with the risk of a wider conflict in the Middle East offset by the prospect that lower fuel prices could help inflation fall faster than expected.



&#8220;We see them as broadly balanced at this point,&#8221; he said, noting that a lot of the downside risks &#8211; especially with respect to disinflation &#8211; seen a year ago had not materialized.



(Reporting by Andrea Shalal; Editing by Paul Simao)

107223161-1681220740794-gettyimages-1243887539-IMF_WORLD_ECO

IMF lifts 2024 global growth outlook, lowers Sub-Saharan Africa

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231-820x462.jpeg" alt="" class="wp-image-450070" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355390-1704724879173-gettyimages-1896093454-vcg111472304231.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">SUIXI, CHINA &#8211; DECEMBER 30: An employee works on the production line of aluminum foil at a workshop of Anhui Limu New Material Technology Co., Ltd on December 30, 2023 in Suixi County, Huaibei City, Anhui Province of China. (Photo by Li Xin/VCG via Getty Images) Vcg | Visual China Group | Getty Images</figcaption></figure>



Global commodity markets are in a “super squeeze” amid supply disruptions and lack of investment — and it’s only going to get worse as geopolitical and climate risks exacerbate the situation, HSBC said.



“For some time now we have described global commodity markets as being in a ‘super-squeeze,’” its chief economist Paul Bloxham told CNBC.



A commodity “super squeeze” is denoted by higher prices driven by supply constraints more than a robust growth in demand, he explained.



“If it’s a supply constraint that’s driving high commodity prices, it’s a very different story for global growth,” said via Zoom. Higher prices as a result of a super squeeze are “not as positive.”



“We see the deeper ‘super-squeeze’ factors on the supply-side as still set to play a key role in keeping commodity prices elevated,” he said, outlining factors like political uncertainties, climate change and the lack of investments into the green energy transition.



Geopolitical risks include the ongoing Israel-Hamas conflict in Gaza and the Ukraine war, which have hampered global trade, as seen in shipping disruptions from the recent Houthi attacks in the Red Sea.



Another reason is climate change, which disrupts supply chains as well as commodities supply, especially in the agricultural space.



“The super squeeze could be deeper, or more prolonged if geopolitical, climate change or energy transition related supply disruptions are larger than expected,” he added.



<h2 class="wp-block-heading" id="h-lack-of-investments"><a></a>Lack of investments</h2>



The world’s pursuit of a net-zero carbon future is fueling demand for energy transition metals such as copper and nickel, Bloxham pointed out.



However, there are insufficient investments allocated to procuring these critical minerals, leading to a sharper supply squeeze on energy transition metals — in particular copper, aluminum and nickel, he said.



As energy transition ramps up, markets could be looking at a shortage of a slew of metals like graphite, cobalt, copper, nickel and lithium in the next decade, the Energy Transitions Commission said in a report in July.



At the recent COP28 climate change conference, more than 60 countries backed a plan to triple global renewable energy capacity by 2030, in what is largely deemed as a step forward for energy transition and a further boost in demand for metals required for that transition. 



“Large-scale mining projects can take 15-20 years, and the last decade has seen a lack of investment in exploration and production for key energy transition materials,” the report said.



Annual capital investments in these metals averaged $45 billion in the last two decades, and must rise to around $70 billion each year through to 2030 to ensure an ample stream of supply, according to the ETC report.



Without more investment in new capacities, supply will be constrained, HSBC’s Bloxham said, adding that “for any given amount of demand,” it should be expected that commodity prices will stay more elevated than in the past.



“That seems to be playing out across many of the commodities at the moment.”



Technology could also be a gamechanger if a development came along and made it much easier to extract the metals used in the battery space, Bloxham added.



He did not say how long it will take global commodity markets to move out of the squeeze, but one way out of it — which would also push commodity prices lower — is a “bigger and deeper [economic] downturn globally,” he said.



“Commodities are notoriously volatile asset classes, with a long history that is prone to a short squeeze and the current landscape points to more of the same,” said Brian Luke, senior director and head of commodities at S&amp;P Dow Jones Indices. He highlighted that extreme weather events and geopolitics have also impacted the agricultural and energy commodity baskets.



<h2 class="wp-block-heading"><a></a>Metals most impacted</h2>



Analysts say metals will likely see the most upside.



Bloxham noted that aside from clean energy metals, iron ore was also on his list due to falling inventory and a lack of investments into expanding capacity.&nbsp;



Iron ore has seen a price jump of over 24% in the last year, according to data from FactSet. The benchmark 62%-grade iron ore last traded at $135.48 per ton.



“The reason why [iron ore] has a sudden squeeze-up is because inventory has been very low,”&nbsp;said Bank of America Securities’ head of Asia -Pacific basic materials, Matty Zhao.



She noted that in spite of China’s property crisis, steel production has continued, fueling demand for iron ore and coking coal, which are integral to steelmaking.



China, which makes around 55% of the world’s steel, produced 874.7 million tons of steel in the first 10 months of 2023 — up 1.4% across the same period in 2022.



<h2 class="wp-block-heading"><a></a>What squeeze?</h2>



While risks remain, one analyst is of the view that commodity markets are still “adequately supplied” for the most part.



“The commodity markets are currently focused on slumping demand due to the sluggish global economy. As such, there’s not too much concern about supplies,” said Arlan Suderman, chief commodities economist at financial services firm StoneX.



Oil, for one, saw an increase in global oil inventories in 2023.



Some are still hoping that a rebound in Chinese demand will help.



“A resurgence from Asia will go a long way in determining if commodities will have a breakout year,” said S&amp;P’s Luke, adding that 2023 saw a year of unfulfilled demand from China which weighed heavily on commodity markets.&nbsp;

107355390-1704724879173-gettyimages-1896093454-vcg111472304231

Commodity markets are in a ‘super squeeze’ — and higher prices could be here to stay

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz-820x462.jpeg" alt="" class="wp-image-449191" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">A securities business hall in Fuyang, China, in December 2023. Costfoto | Nurphoto | Getty Images</figcaption></figure>



China is considering a rescue package backed by offshore money to stave off a slump in its struggling stock markets, according to Bloomberg News.



The report, citing people familiar with the matter, said Chinese authorities are aiming to get about 2 trillion yuan ($278 billion), primarily through offshore accounts of Chinese state-owned companies to help stabilize the market by purchasing stocks onshore through Hong Kong markets.



According to Bloomberg, Chinese policymakers have also put aside 300 billion yuan of local funds that would be used to invest into onshore shares through state-owned financial firms China Securities Finance Corp. or Central Huijin Investment Ltd.



Mainland China’s CSI 300 index slid 11.4% last year, clocking its third straight year of falls. Hong Kong’s Hang Seng index fell nearly 14% in 2023, making it the worst performing major Asian stock market.



The Bloomberg report comes a day after Chinese Premier Li Qiang said during a state council meeting the country will be rolling out measures to stabilize its stock markets.



“We must take more powerful and effective measures to stabilize the market and confidence,” Li said, according to state media.

107353683-1704290729465-gettyimages-1825446250-cfoto-chinasto231205_npegz

China is weighing measures to prop up its stock markets, could reportedly mobilize $278 billion

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355902-1704799006982-gettyimages-1862396365-li1_5971-820x462.jpeg" alt="" class="wp-image-444613" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355902-1704799006982-gettyimages-1862396365-li1_5971-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355902-1704799006982-gettyimages-1862396365-li1_5971-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355902-1704799006982-gettyimages-1862396365-li1_5971-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355902-1704799006982-gettyimages-1862396365-li1_5971-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2024/01/107355902-1704799006982-gettyimages-1862396365-li1_5971.jpeg 929w" sizes="(max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">PARIS, FRANCE &#8211; DECEMBER 20: French Education Minister Gabriel Attal during the weekly cabinet meeting at the presidential Elysee Palace on December 20 2023 in Paris, France. (Photo by Christian Liewig &#8211; Corbis/Getty Images) Christian Liewig &#8211; Corbis | Corbis News | Getty Images</figcaption></figure>



French President Emmanuel Macron on Tuesday named Gabriel Attal as the country’s new prime minister, as he seeks to set a fresh course ahead of the summer’s European Union elections.



Attal, the current education minister, will become the youngest person to occupy France’s second-highest office at 34 years old.



It follows the apparently reluctant resignation of Elisabeth Borne on Monday afternoon, who said in a letter that she had been informed it was Macron’s wish. Borne said it was “more necessary than ever to continue the reforms” being carried out by the government.



In France, the prime minister leads the government and is appointed by, but cannot be directly dismissed by, the president.



Macron and Borne struggled through a turbulent 2023, with the government narrowly avoiding being toppled amid lawmaker and public opposition to its move to raise the retirement age.



The government suffered another blow in December, when an initial draft of an immigration bill seen as a signature Macron policy was voted down. It eventually passed after it was redrafted to become more hardline.



Macron’s personal disapproval rating is currently 68%, according to a Politico aggregate of polls.



Ensemble, a liberal coalition comprising Macron’s Renaissance party, is trailing both the far-right National Rally and left-wing New Ecological and Social People’s Union.



Attal, a close ally of Macron, is the most popular government minister, polls suggest. He will be the first openly gay prime minister of France.



“I know I can count on your energy and your commitment to implement the rearmament and regeneration project that I announced,” Macron said on X, formerly Twitter, addressing Attal.



The political move comes ahead of elections for the European Parliament in June, in which Renaissance is seeking to avoid an embarrassing blow given its series of political controversies.



The choice of the relatively junior Attal, rather than one of several more senior ministers who were reportedly vying for the role, was likely an effort to avoid infighting within the party ahead of the elections, political consultant Julien Hoez told CNBC.



“There have been many rumors of friction between Macron and Borne, with Borne resistant to be seen as the sacrificial lamb fronting the government’s less popular positions,” Hoez said by phone.



“With all the drama of last year, the riots that were never properly responded to, the immigration law fiasco, the pension reform, Macron likely thought the time had come to move on and provide a palate cleanser.”



“Attal is reasonably well known, with a reputation for working hard. But overall policy is not going to change much from Macron’s existing agenda,” he added.

International

Powell reinforces position that the Fed is not ready to start cutting interest rates

Chinese leaders to hold annual ‘Two Sessions’ meeting as debate about bazooka-like stimulus swirls

Deadlocked WTO talks drag into fifth day with no breakthrough

WTO talks head into overtime with no sign of breakthrough

Brazil warns of global economic challenges as G20 finance chiefs meet

Dollar lower before inflation-heavy data deluge

Mondi says customers reluctant to switch to sustainable packaging on cost concerns

UK economy slipped into technical recession at the end of 2023

Brexit Britain has ‘significantly underperformed’ other advanced economies, Goldman Sachs says

Prices rose more than expected in January as US inflation won’t go away

Gold pressured by firm dollar, higher yields as traders seek Fed clues

Bitcoin breaks above $47,000 for the first time since March 2022

Powell insists the Fed will move carefully on rate cuts, with probably fewer than the market expects

IMF lifts 2024 global growth outlook, lowers Sub-Saharan Africa

Commodity markets are in a ‘super squeeze’ — and higher prices could be here to stay

China is weighing measures to prop up its stock markets, could reportedly mobilize $278 billion

Gabriel Attal becomes France’s youngest prime minister in modern history

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International

Powell reinforces position that the Fed is not ready to start cutting interest rates

Chinese leaders to hold annual ‘Two Sessions’ meeting as debate about bazooka-like stimulus swirls

Deadlocked WTO talks drag into fifth day with no breakthrough

WTO talks head into overtime with no sign of breakthrough

Brazil warns of global economic challenges as G20 finance chiefs meet

Dollar lower before inflation-heavy data deluge

Mondi says customers reluctant to switch to sustainable packaging on cost concerns

UK economy slipped into technical recession at the end of 2023

Brexit Britain has ‘significantly underperformed’ other advanced economies, Goldman Sachs says

Prices rose more than expected in January as US inflation won’t go away

Gold pressured by firm dollar, higher yields as traders seek Fed clues

Bitcoin breaks above $47,000 for the first time since March 2022

Powell insists the Fed will move carefully on rate cuts, with probably fewer than the market expects

IMF lifts 2024 global growth outlook, lowers Sub-Saharan Africa

Commodity markets are in a ‘super squeeze’ — and higher prices could be here to stay

China is weighing measures to prop up its stock markets, could reportedly mobilize $278 billion

Gabriel Attal becomes France’s youngest prime minister in modern history

News Tips

Advertise With Us

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