Latest news with #U.S.Dollar
Wall Street Journal
a day ago
- Business
- Wall Street Journal
Taiwan Dollar Strength Spells Trouble for Tech Exporters, Insurers
Another flare-up in the Taiwan dollar's strength is unwelcome news for the island's exporters and life insurers. The New Taiwan dollar hit a three-year high against the greenback on Friday, bringing year-to-date gains to around 12%. It was last changing hands at 29.01 to the U.S. dollar, hovering at a key psychological level.
Yomiuri Shimbun
17-06-2025
- Business
- Yomiuri Shimbun
US Treasury 20-Year Auction Shows Solid Demand; 5-Year TIPS Next
Reuters U.S. Dollar banknotes are seen in this photo illustration taken February 12, 2018. REUTERS/Jose Luis Gonzalez/Illustration NEW YORK, June 16 (Reuters) – The U.S. Treasury's sale of $13 billion in 20-year bonds showed solid demand on Monday, in line with last week's 10-year and 30-year debt auctions that were also well-received. The auction priced at a high yield of 4.942%, roughly tracking the market's rate forecast in when-issued trading at the bid deadline. This outcome suggested no premium was needed to take down the note. The auction was a big turnaround from the sale of new 20-year bonds last month, which underperformed and saw their yields soar to the highest levels since November 2023. Last month's 20-year sale also triggered a sharp selloff in other long-dated Treasuries. In afternoon, the 20-year yield US20YT=RR rose 4.2 basis points to 4.974%, despite a well-received sale, up from 4.933% just before the auction. 'The bond market has not been behaving as usual. I think the market has been taking back some of the safe-haven bids last Friday following the Israel-Iran conflict,' said Kim Rupert, managing director of global fixed income analysis at Action Economics in San Francisco. 'And now we have this news that Iran is probably back at the negotiating table, and so that's curbing a likely rally a little bit. In general, 20-year bonds often have trouble attracting bids, but this auction went okay.' The bid-to-cover ratio, another gauge of demand, was at 2.68, higher than last month's 2.46 and the auction average of 2.63 for reopened bonds. Indirect bids, which include foreign central banks, were awarded 66% of the total issue, down from 68% during last month's auction of new 20-year bonds. The 66% reading was in line with the average for a reopening. Primary dealers took in just 13% of the bonds, compared with nearly 17% last month. Lower dealer participation in Treasury auctions suggests increased interest from other investors, meaning dealers had no need to step in to absorb the note. Traders are bracing for Tuesday's $23 billion auction of U.S. five-year Treasury Inflation-Protected Securities (TIPS) which could garner attention given the recent spike in oil prices that has stoked concerns about inflation. U.S. crude futures, however, fell on Monday after reports that Iran is seeking an end to hostilities with Israel. That raised the possibility of a truce and has eased fears of a disruption to crude supplies from the region. Demand for front-end TIPS has been solid so far given worries about near-term inflation with the effect of tariffs impacting core goods prices, analysts said. But the outcome for five-year TIPS in the last three auctions was soft, pricing above the rate forecast in when-issued trading at the bid deadline, according to Barclays data, which suggested that investors demanded a premium to buy the note. In bond market parlance, the five-year TIPS auctions 'tailed.' The last bid-to-cover ratios were also down at 2.28 in the April auction and 2.10 in December 2024, the lowest in a decade, according to Barclays rates and inflation strategist Jon Hill. 'We see preliminary evidence of a pullback in investor class allocations to 'foreign & international' accounts across TIPS benchmarks year-to-date, as both the April five-year new issue and May 10-year reopening had allocations below 5%,' Hill wrote in a research note.
Yahoo
31-05-2025
- Business
- Yahoo
AAVE Rebounds From 15% Drop as DeFi Yield Markets Gain Momentum
AAVE has demonstrated remarkable resilience in the face of global market turbulence, rebounding from a 15% price drop over four days as buyers stepped in to capitalize on DeFi's growing momentum. The protocol's price climbed from $240 to above $250, buoyed by expanding tokenized yield markets that are drawing increased institutional and retail interest. The price action comes as global trade tensions and new tariff uncertainties — including reports of China violating its trade agreement with the U.S. — injected volatility across risk assets. Despite these headwinds, the DeFi sector is showing renewed strength, with total value locked (TVL) surging to $178.52 billion. AAVE remains a key leader in the space, commanding a TVL of $25.41 billion. News Background A key driver of AAVE's recent rebound has been its integration with Pendle's tokenized yield markets, which saw new markets reach their supply caps within hours of launch, underscoring the strong demand for yield-generating products in the DeFi ecosystem. The Ethereum Foundation (EF) borrowed $2 million in GHO, Aave's decentralized stablecoin pegged to the U.S. Dollar, earlier this week. This move, facilitated by supplying ETH as collateral, highlighted EF's strategy of leveraging its crypto holdings to fund operations while supporting Aave's protocol. Aave's GHO stablecoin is fully overcollateralized within the Aave ecosystem, with EF's loan backed by 1,403,519.94 Gwei of ETH (valued at $0.01 in the transaction). Interest payments on this loan support Aave's DAO treasury, reinforcing a community-driven financial model that incentivizes participation and governance. Aave's lending dominance is underscored by its 45% market share from January 2023 to May 2025, according to IntoTheBlock data. This figure highlights Aave's steady recovery from the 2023 DeFi dip and cements its status as the largest decentralized lending protocol by volume and activity. Technical Analysis Recap AAVE established a high-volume support zone around $242.70 during the 16:00-17:00 and 01:00-02:00 hours, attracting strong buying with volumes exceeding 90,000 units. A bullish ascending triangle pattern formed, with higher lows indicating accumulation despite recent resistance. After peaking at $255.96 at 20:00, AAVE set resistance at $253.75 before stabilizing at $248-$250. A notable volume spike between 07:51-07:52 coincided with a sharp rise from $248.98 to $249.82, creating a new resistance level. A cup-and-handle pattern formed, with the handle developing between 07:56-08:00, suggesting accumulation after the recent pullback. Short-term consolidation near $249, coupled with increasing volume on upward moves, hints at potential bullish momentum building for a test of $250 resistance. As DeFi yield markets continue to expand, AAVE's ability to integrate new products and sustain high-volume support levels positions it as a key player in the sector's growth — despite the broader market's macroeconomic challenges. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
20-05-2025
- Business
- CNBC
U.S. Treasury yields slip as Fed signals just one rate cut in 2025
U.S. Treasury yields slipped early Tuesday after the U.S. Federal Reserve signaled just one rate cut in 2025. The 30-year Treasury yield slipped almost 3 basis points after briefly surging past 5% on Monday. The 10-year yield dipped 2 basis points to 4.455% at 1:50 a.m. ET, and the 2-year Treasury yield shed slightly over 1 basis point to 3.97%. One basis point is equivalent to 0.01%, and yields and prices move in opposite directions. Last Friday, Moody's Ratings lowered the U.S. credit rating to the second-highest tier, following in the footsteps of S&P Global Ratings and Fitch, which did so in 2011 and 2023, respectively. The downgrade from Aaa to Aa1 by Moody's is "admittedly significantly dire," said Vishnu Varathan, head of macro research at Mizuho Securities. But the move is "inconsequential" for markets, he wrote in a note. Though the resultant jolt in yields may clip already tentative market optimism, the downgrade is unlikely to crush the broader recovery, he added. The downgrade has no adverse impact on the liquidity and collateral value of U.S. Treasurys, and hence no "imminent shock" from forced liquidation, Varathan said. "Above all, there are no triple-A alternatives for markets that are sufficiently deep and liquid to threaten the reserve asset status of USTs that is tagged to the U.S. Dollar's global reserve currency status," he added. In April, U.S. Treasury yields surged after U.S. President Donald Trump introduced broad "reciprocal tariffs" targeting foreign trade partners. Concerns over a potential financial panic and higher consumer borrowing costs led the administration to scale back the most aggressive tariffs. On top of that, Atlanta Federal Reserve President Raphael Bostic told CNBC on Monday he's leaning toward just one interest rate cut this year, as the central bank seeks to strike a balance between containing inflation risks and avoiding an economic downturn. Although the Fed's March projections indicated two 25-basis-point cuts in 2025, Bostic noted that the impact of tariffs has been more significant than anticipated.
Reuters
12-05-2025
- Business
- Reuters
Breakingviews - Taiwan insurers get a stern currency warning
HONG KONG, May 12 (Reuters Breakingviews) - The Taiwanese currency's recent stunning rally against the U.S. dollar has highlighted a big risk in an unlikely area: the island's insurers. The large swing against the greenback, if sustained, will hit earnings at Cathay Life and its peers, which between them hold some $760 billion of overseas investments, mostly of U.S. stock and bonds. Hedges and reserves will soften the blow. But the underlying mismatch of domestic policies funding overseas assets is an enduring problem. It is hard to pinpoint what prompted the Taiwan dollar's overall 6% appreciation, per LSEG, against its U.S. counterpart on May 2 and May 5. A combination of capital inflows and expectations that authorities will allow a stronger currency to smooth trade talks with Washington were probably factors, although the central bank has denied the latter. In any event, local exporters rushing to convert U.S. dollars and investors scrambling to hedge their currency exposure exacerbated the situation. As of Friday's close, the Taiwan dollar was trading at 30.29 to the dollar - a near-9% appreciation since the start of April. The island's insurers have put an estimated 70% of their $1 trillion, opens new tab or so of investable assets as of January overseas, but 80% of their liabilities – the life insurance policies they have written – are in the local currency. When they prepare their earnings results each quarter, they have to convert their foreign holdings into Taiwanese dollars. On paper, the recent ructions mean – absent a reversal – that their bottom lines are in for a pummelling. Cathay Life disclosed, opens new tab last year that a 1% of currency appreciation against the U.S. dollar would translate to a T$7.6 billion ($251 million) hit to its bottom line, after hedging. Theoretically, a 10% appreciation would have wiped out its full-year profit. The island's central bank supports local life insurers by funding a "decent chunk" of their hedging costs via FX swaps managed by local banks, according to Brad Setser, a Senior Fellow at the Council on Foreign Relations. That still leaves a significant portion of private market hedges exposed to global interest rates and price swings. All else being equal, a strengthening Taiwan dollar can quickly turn into a solvency nightmare: the local industry has a combined $86 billion in shareholders' equity, representing 11.3% of its overseas holding. Taiwanese lifers, though, have spent years managing currency fluctuations while remaining well capitalised. They have specific reserve funds that can offset up to 100% of foreign exchange losses; those reserves swelled on the back of a strong U.S dollar in 2024. They have also ramped up sales of foreign-denominated policies in recent years. All in, that means just 12% of total assets have none of those protections, per S&P Global analyst Serene Hsieh. That works out to $147 billion, using the latest government figures as of January - less than 18% of GDP. That's comforting from a systemic perspective. But it's no excuse for complacency. Income statements will still bleed red ink. And U.S. President Donald Trump's trade wars may yet cause further ructions that lead to long-term appreciation of the Taiwan dollar. Ultimately, so long as the export-dependent economy keeps running a massive account surplus - nearly 15% of GDP last year - life insurers will keep investing abroad. But now their balance sheet mismatch has been exposed, they will need to find new ways to mitigate it. Follow @mak_robyn, opens new tab on X CONTEXT NEWS Taiwan's Financial Supervisory Commission held meetings with three of the island's biggest insurers, Cathay Life, Fubon Life and Nanshan Life, local media reported on May 5. The three companies told the regulator that their risk-based capital ratios would remain within legal limits even if the Taiwan dollar strengthened below 30 per U.S. dollar, according to the report. The Taiwan dollar's 6% rise against the U.S. dollar over May 2 and May 5 marked a record two-day appreciation. On May 9, the currency closed at 30.29 to the U.S. dollar, per LSEG.
