Latest news with #UStreasuries
Reuters
03-07-2025
- Business
- Reuters
Gold and its miners may enjoy a 'critical mineral' upgrade
LAUNCESTON, Australia, July 3 (Reuters) - Is gold the next metal to be added to the list of "critical minerals"? Gold is not a vital component of advanced manufacturing like other critical minerals such as rare earths, lithium and copper. But the precious metal appears to be undergoing a subtle shift in how it is viewed by governments and investors. Since countries moved away from the gold standard by the early 1970s, gold has largely been viewed as a relatively niche part of investment portfolios and government reserves. Gold was something that was added to portfolios as an inflation hedge or during times of heightened geopolitical tensions. In some ways, the role of gold in both central bank and investment portfolios was overtaken by bonds, with U.S. Treasuries becoming the most important of these assets. But the return of Donald Trump to the U.S. presidency is leading to a global reassessment of the relative safety of U.S. assets, the independence of the Federal Reserve and the likely worsening of the U.S. fiscal position. Add in Trump's attacks on the rule of law in the United States and the likely hit to both the U.S. and global economies from his trade policies, and the stage is set for a reevaluation of the role of gold. The precious metal has gained 32.3% from a low of $2,536.71 an ounce hit on November 14 in the days after Trump's victory over his Democratic Party rival, former Vice President Kamala Harris. It reached a record high of $3,500.05 an ounce on April 22, and has since retreated slightly to close at $3,357.08 on Wednesday. While gold's day-to-day moves are still largely driven by the news cycle, the overall backdrop looks supportive. The World Gold Council released a report last month in which it surveyed 73 central banks, and 95% of them expected the official sector to increase holdings in the coming 12 months. "This is a record high since it was first tracked in the 2019 survey and represents a 17% increase from the 2024 findings," the council said. Central banks are also moving to repatriate more of their holdings back to their home countries and away from the United States, a further sign that there is a loss of confidence in U.S. assets and the policies of the Trump administration. Gold is also well-placed as one of the few viable alternatives if more governments, fund managers and private investors outside the United States form the view that the era of U.S. exceptionalism is over and that U.S. Treasuries are now a riskier asset as the country's fiscal position deteriorates. Another factor that is showing the positive story for gold is the performance of gold mining equities. Major gold producers have seen their share prices rise at a far faster pace than the actual metal. There are several reasons why this could be the case, including the expectation that shareholders will receive higher dividend payouts in the future and that companies are being rewarded for showing capital discipline in prior years. But it also may be that investors are starting to re-rate gold mining companies in the expectation that gold becomes a more vital and larger part of portfolios, both public and private. For example, shares in Newmont (NEM.N), opens new tab, the world's largest listed gold miner, have risen 63% from their most recent low on December 30 to close at $60.06 on Wednesday. Canada's Barrick Mining ( opens new tab has seen its shares gain 40.6% in U.S. dollar terms from its recent low on December 19 to the close on Wednesday. Anglogold Ashanti (AU.N), opens new tab shares in New York have surged 108% from the low on December 30 to the close of $46.66 on Wednesday, while Gold Fields (GFIJ.J), opens new tab has seen a gain of 88% in U.S. dollar terms from its November 14 low to the close on Wednesday. If gold does become a more central part of investment strategies, the listed miners are likely to become more attractive, given the difficulty of finding and developing new projects and the long time between exploration and production. Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, opens new tab and X, opens new tab. The views expressed here are those of the author, a columnist for Reuters.
Zawya
03-07-2025
- Business
- Zawya
Gold and its miners may enjoy a 'critical mineral' upgrade: Russell
(The views expressed here are those of the author, a columnist for Reuters.) LAUNCESTON, Australia - Is gold the next metal to be added to the list of "critical minerals"? Gold is not a vital component of advanced manufacturing like other critical minerals such as rare earths, lithium and copper. But the precious metal appears to be undergoing a subtle shift in how it is viewed by governments and investors. Since countries moved away from the gold standard by the early 1970s, gold has largely been viewed as a relatively niche part of investment portfolios and government reserves. Gold was something that was added to portfolios as an inflation hedge or during times of heightened geopolitical tensions. In some ways, the role of gold in both central bank and investment portfolios was overtaken by bonds, with U.S. Treasuries becoming the most important of these assets. But the return of Donald Trump to the U.S. presidency is leading to a global reassessment of the relative safety of U.S. assets, the independence of the Federal Reserve and the likely worsening of the U.S. fiscal position. Add in Trump's attacks on the rule of law in the United States and the likely hit to both the U.S. and global economies from his trade policies, and the stage is set for a reevaluation of the role of gold. The precious metal has gained 32.3% from a low of $2,536.71 an ounce hit on November 14 in the days after Trump's victory over his Democratic Party rival, former Vice President Kamala Harris. It reached a record high of $3,500.05 an ounce on April 22, and has since retreated slightly to close at $3,357.08 on Wednesday. While gold's day-to-day moves are still largely driven by the news cycle, the overall backdrop looks supportive. The World Gold Council released a report last month in which it surveyed 73 central banks, and 95% of them expected the official sector to increase holdings in the coming 12 months. "This is a record high since it was first tracked in the 2019 survey and represents a 17% increase from the 2024 findings," the council said. Central banks are also moving to repatriate more of their holdings back to their home countries and away from the United States, a further sign that there is a loss of confidence in U.S. assets and the policies of the Trump administration. Gold is also well-placed as one of the few viable alternatives if more governments, fund managers and private investors outside the United States form the view that the era of U.S. exceptionalism is over and that U.S. Treasuries are now a riskier asset as the country's fiscal position deteriorates. MINING COMPANIES Another factor that is showing the positive story for gold is the performance of gold mining equities. Major gold producers have seen their share prices rise at a far faster pace than the actual metal. There are several reasons why this could be the case, including the expectation that shareholders will receive higher dividend payouts in the future and that companies are being rewarded for showing capital discipline in prior years. But it also may be that investors are starting to re-rate gold mining companies in the expectation that gold becomes a more vital and larger part of portfolios, both public and private. For example, shares in Newmont, the world's largest listed gold miner, have risen 63% from their most recent low on December 30 to close at $60.06 on Wednesday. Canada's Barrick Mining has seen its shares gain 40.6% in U.S. dollar terms from its recent low on December 19 to the close on Wednesday. Anglogold Ashanti shares in New York have surged 108% from the low on December 30 to the close of $46.66 on Wednesday, while Gold Fields has seen a gain of 88% in U.S. dollar terms from its November 14 low to the close on Wednesday. If gold does become a more central part of investment strategies, the listed miners are likely to become more attractive, given the difficulty of finding and developing new projects and the long time between exploration and production. Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn and X. The views expressed here are those of the author, a columnist for Reuters. (Editing by Jamie Freed)
Yahoo
02-07-2025
- Business
- Yahoo
Schroders upgrades global corporate bonds on easing U.S. recession risks
(Reuters) -Schroders upgraded its outlook for global corporate bonds to 'neutral' from 'negative' on Wednesday and maintained its positive view on global equities as it expects reduced risks of a U.S. recession. The British asset manager upgraded its stance on both U.S. investment grade and high yield bonds to 'neutral' from 'negative' backed by stabilising growth, rising demand and positive consumer sentiment data. In May, Moody's downgraded the U.S. sovereign credit, while President Trump's tariff policies has caused some volatility in benchmark Treasury bonds, which in turn have lifted corporate bond yields. U.S. junk bond issuance totaled $28.9 billion in May, the most for a month since September 2024, according to brokerage J.P. Morgan. Schroders said the "biggest risks seem to have passed" for U.S. investment grade credit but pointed out that valuations remain high for domestic corporate bonds overall. "Now, the market can pay more attention to deregulation and government spending," it added. Earlier this month, data from the Treasury Department showed foreign investors' holdings of U.S. Treasuries showed a modest decline in April from record levels of U.S. debt. The asset manager reiterated its positive stance on global equities, including U.S. equities. It maintained a negative outlook on the dollar. "While economic uncertainty persists, we think downside risks are contained and the risk of recession this year is lower," they added. 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
Reuters
30-06-2025
- Business
- Reuters
Trump's 'big, beautiful' bill set to further tarnish Treasuries' lustre overseas
TOKYO/SINGAPORE, June 30 (Reuters) - As the Trump administration's "big, beautiful bill" grinds its way through the U.S. Senate, incentives are growing for foreign investors to diversify out of U.S. Treasuries losing sheen from prospects of deficit spending and inflation-boosting tariffs. President Donald Trump's sweeping tax cut and spending measure will boost U.S. debt by $3.3 trillion, the nonpartisan Congressional Budget Office estimates, while runaway deficits and swelling debt led Moody's to cut its credit rating in May. "Definitely I'm concerned about the fiscal deficit expansion," said Toshinobu Chiba, a Tokyo-based rates and credit fund manager for Simplex Asset Management. Chiba said he has been using futures to shift away from Treasuries and into European debt, but aims to move that trade to the cash bond market when Trump's "big, beautiful bill" passes and inflation expectations tick upwards. "I think the first options should be Europe, especially the bunds and French bonds, and also Australia and Singapore are options for global investors." Traditionally a refuge for markets, Treasuries have been volatile since April, becoming less attractive for overseas investors as Trump's erratic policies on tariffs and taxes drove them to pare exposure to the dollar and U.S. markets. U.S. Treasury International Capital (TIC) data shows foreign money leaving U.S. short and long-term debt and banking flows stood at a net $14.2 billion in April, the same month that Trump rattled global markets with his "Liberation Day" tariffs. The U.S. national debt has increased fourfold in less than 10 years to some $36 trillion, with about $29 trillion held publicly. Japan is the biggest external holder of Treasuries with $1.13 trillion, followed by Britain with $807.7 billion and China with $757.2 billion, TIC data shows. Treasuries fell in the aftermath of the tariff news, with benchmark 10-year yields reaching as high as 4.629% on May 22 before settling down to about 4.277%. Treasury 10-year yields have swung between 3.9% and 4.629% since April. Passage of Trump's long-simmering bill would give investors another reason to fret about the state of U.S. finances. Senators debating the measure in a marathon weekend session were expected to pass it late on Monday and in the Asian trading day on Tuesday. Senate Republicans are set on using an alternative calculation method for the bill's cost that does not factor in extending the 2017 tax cuts and seems to save $500 billion, according to an analysis by the Bipartisan Policy Center. Prospects for even wider deficits in the U.S. may compel European investors to dump Treasuries and bring their money home, said Gustavo Medeiros, London-based global head of research at emerging markets investment manager Ashmore Group. When Treasuries and other major bond markets sold off in April, the Bund market held firm. Though the amount of German debt is also growing after the new government's trillion euro defence and infrastructure spending push, Europe's biggest economy is the only G7 member with a debt-to-GDP ratio below 100%, bolstering its safe-haven credentials. "That not only creates an upward, better opportunity for the equity markets, but it also is going to increase the issuance of risk-free German bunds and pan-European debt," Medeiros said. "So you're going to have a lot of incentive for capital to come back." Yet a widespread sell-off is unlikely, despite fiscal concerns over Trump's spending bill that are expected to steepen the Treasury yield curve as investors demand higher returns to hold U.S. debt for longer, said analyst Masahiko Loo. "The reduction in foreign US Treasury holdings has been a long-term structural trend rather than a sudden exodus," said Loo, a senior fixed income strategist at State Street. "It is a 'diversification, not divestment' story with foreign investors, particularly in Asia." Hemant Mishr, group CIO of SCUBE Capital, is also betting on a steeper Treasury curve. "The markets are worried and U.S. risk premiums will further widen," he said. "We expect U.S. credit default swaps to continue quoting at a substantial premium to similarly rated sovereigns."
Yahoo
30-06-2025
- Business
- Yahoo
Trump's 'big, beautiful' bill set to further tarnish Treasuries' lustre overseas
By Rocky Swift and Vidya Ranganathan TOKYO/SINGAPORE (Reuters) -As the Trump administration's "big, beautiful bill" grinds its way through the U.S. Senate, incentives are growing for foreign investors to diversify out of U.S. Treasuries losing sheen from prospects of deficit spending and inflation-boosting tariffs. President Donald Trump's sweeping tax cut and spending measure will boost U.S. debt by $3.3 trillion, the nonpartisan Congressional Budget Office estimates, while runaway deficits and swelling debt led Moody's to cut its credit rating in May. "Definitely I'm concerned about the fiscal deficit expansion," said Toshinobu Chiba, a Tokyo-based rates and credit fund manager for Simplex Asset Management. Chiba said he has been using futures to shift away from Treasuries and into European debt, but aims to move that trade to the cash bond market when Trump's "big, beautiful bill" passes and inflation expectations tick upwards. "I think the first options should be Europe, especially the bunds and French bonds, and also Australia and Singapore are options for global investors." Traditionally a refuge for markets, Treasuries have been volatile since April, becoming less attractive for overseas investors as Trump's erratic policies on tariffs and taxes drove them to pare exposure to the dollar and U.S. markets. U.S. Treasury International Capital (TIC) data shows foreign money leaving U.S. short and long-term debt and banking flows stood at a net $14.2 billion in April, the same month that Trump rattled global markets with his "Liberation Day" tariffs. The U.S. national debt has increased fourfold in less than 10 years to some $36 trillion, with about $29 trillion held publicly. Japan is the biggest external holder of Treasuries with $1.13 trillion, followed by Britain with $807.7 billion and China with $757.2 billion, TIC data shows. Treasuries fell in the aftermath of the tariff news, with benchmark 10-year yields reaching as high as 4.629% on May 22 before settling down to about 4.277%. Treasury 10-year yields have swung between 3.9% and 4.629% since April. Passage of Trump's long-simmering bill would give investors another reason to fret about the state of U.S. finances. Senators debating the measure in a marathon weekend session were expected to pass it late on Monday and in the Asian trading day on Tuesday. Senate Republicans are set on using an alternative calculation method for the bill's cost that does not factor in extending the 2017 tax cuts and seems to save $500 billion, according to an analysis by the Bipartisan Policy Center. Prospects for even wider deficits in the U.S. may compel European investors to dump Treasuries and bring their money home, said Gustavo Medeiros, London-based global head of research at emerging markets investment manager Ashmore Group. When Treasuries and other major bond markets sold off in April, the Bund market held firm. Though the amount of German debt is also growing after the new government's trillion euro defence and infrastructure spending push, Europe's biggest economy is the only G7 member with a debt-to-GDP ratio below 100%, bolstering its safe-haven credentials. "That not only creates an upward, better opportunity for the equity markets, but it also is going to increase the issuance of risk-free German bunds and pan-European debt," Medeiros said. "So you're going to have a lot of incentive for capital to come back." Yet a widespread sell-off is unlikely, despite fiscal concerns over Trump's spending bill that are expected to steepen the Treasury yield curve as investors demand higher returns to hold U.S. debt for longer, said analyst Masahiko Loo. "The reduction in foreign US Treasury holdings has been a long-term structural trend rather than a sudden exodus," said Loo, a senior fixed income strategist at State Street. "It is a 'diversification, not divestment' story with foreign investors, particularly in Asia." Hemant Mishr, group CIO of SCUBE Capital, is also betting on a steeper Treasury curve. "The markets are worried and U.S. risk premiums will further widen," he said. "We expect U.S. credit default swaps to continue quoting at a substantial premium to similarly rated sovereigns."
