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Thursday, December 12, 2019

NewsBreak: UK Exit Poll Shows Big Tory Majority; Sterling Surges

© Reuters.  © Reuters. - The British pound jumped as the U.K. general election exit poll showed Thursday the ruling Conservative party running away with a big majority in parliament.

  • GBP/USD surged 2.2% shortly after the polls came out.
  • The Conservatives are predicted to win 368 seats, with opposition Labour taking 191 seats, the Scottish National Party with 55 seats and the Liberal Democrats winning 13 seats.
  • That would be the highest number of Tory seats since 1987 and the lowest number of Labour seats since 1935.
  • Original Article

    U.S. reaches deal in principle on trade with China: source

    By Andrea Shalal

    WASHINGTON (Reuters) - The United States has reached a "phase-one" trade deal in principle with China, a source briefed on talks between the two nations said on Thursday, saying a statement from the White House was expected soon.

    Trump was scheduled to huddle with his top trade advisers at 2:30 p.m. (1930 GMT) on Thursday. Ahead of the meeting, U.S. Trade Representative Robert Lighthizer told senators that announcements were possibly "imminent" on U.S. tariffs, senior Republican Senator John Cornyn told reporters.

    Bloomberg News was first to report a deal in principle had been reached.

    U.S. negotiators have offered to reduce tariffs on about $375 billion in Chinese goods by 50% across the board, two people familiar with the negotiations said, and suspend tariffs on $160 billion in goods scheduled to go into effect on Sunday.

    Original Article

    Palladium Erases Gold’s All-Time High; Gold Cautious on China

    © Reuters.  © Reuters. - It took eight years, but palladium has finally done it, erasing gold’s all-time highs on Thursday on persistent worries about the auto-catalyst metal’s tight supplies.

    Gold, meanwhile, dipped slightly in otherwise steady trade as a rash of tweets left the market befuddled on whether the Trump administration would indeed halt new punitive tariffs on Chinese imports due this weekend. Bloomberg, however, reported after the regular trading session for gold in New York that an "agreement in principle" had been reached on a phase one trade deal between the U.S. and China.

    The spot price of palladium surged to its highest peak ever of $1,946 before retreating to $1,937.72 by 2:05 PM ET (19:05 GMT) — still up $27.72, or 1.5%, on the day.

    The spot price of gold reached an all-time high of $1,920.80 in September 2011.

    Spot palladium has hit record highs for 15 days in a row after surpassing $1,900 on Tuesday. The rally came as flooding triggered power blackouts that shut down mines in South Africa, the major palladium producing country.

    Palladium futures for March delivery on Comex settled up $29.10, or 1.5%, at $1,914.20, after setting a record intraday high at $1,919.75.

    Palladium futures are up 60% on the year while spot palladium has gained 52%, easily making the metal, which serves as a purifying agent for gasoline emissions, the best-performing commodity of 2019.

    “Palladium has been one of the stars of not just the metals, but the commodities arena overall for the year,” David Meger, director of metals trading at High Ridge Futures, told Reuters.

    “Just the power outages bring about more supply constraints to what is already a tightly supplied market with strong demand.”

    Gold gave up some of its gains from two previous days after the Wall Street Journal reported the White House was planning a tariffs ceasefire with China. Bloomberg reported late afternoon in New York, after gold futures settled their trade, that the United States and China have reached a phase one trade deal in principle that was awaiting a sign-off from President Donald Trump.

    Trump tweeted earlier on Thursday that the two sides were “very close” to a deal, sending stocks on Wall Street to record highs, weighing on gold, which is an alternative to equities. But many traders across markets also appeared skeptical about the tweet, given the president's proclivity for using hyperbolic language without results.

    Since the week began, attention across markets has been riveted on the trade war and how the Trump administration would proceed come Sunday, the deadline for the imposition of tariffs on another $156 billion worth of Chinese goods.

    Gold futures for February delivery on New York’s COMEX settled settled down $2.70, or 0.2%, at $1,472.30.

    Spot gold, which tracks live trades in bullion, settled down $2.70, or 0.2%, at $1,472.30 by 2:37 PM ET (19:37 GMT).

    Spot gold is up 15% on the year, while gold futures are showing a 14% gain.

    Analysts said gold was likely to spend the remaining two weeks of the year, moving within a range of $1,465-$1,485 an ounce, after weathering Wednesday’s expected decision by the Federal Reserve to end rate cuts for 2019 following three back-to-back quarter-percentage point reductions.

    “This lends strength to the view that gold will continue to bounce higher into 2020,” TD Securities said in a note about gold.

    Original Article

    NewsBreak - ECB Holds Steady, Focus Turns to Lagarde

    © Reuters.  © Reuters. - The European Central Bank left key rates on hold on Thursday, at its first meeting chaired by new president Christine Lagarde.

  • Attention will now turn to Lagarde’s first press conference at 08:30 AM ET (01:30 GMT) as investors look for clues about the future of stimulus plans
    • Deposit rate facility remains at -0.50%
    • Main refinancing rate remains at 0.00%
    • Marginal lending facility remains at 0.25%
  • Rates to remain at present or lower levels until inflation outlook robustly converges to a level sufficiently close to, but below 2%, ECB statement says
  • Bond buying to continue until "shortly before" rates are raised
  • Expects QE to run "for as long as necessary"
  • EUR/USD at 1.1130 from around 1.1132 ahead of the announcement
  • EUR/GBP at 0.8456 from 0.8451 earlier
  • Original Article

    Oil up on Trump Tweet, Report Suggesting No Higher China Tariffs

    © Reuters.  © Reuters. – Canceled China tariffs or weak oil demand, which is bigger? Oil traders obviously think the former, pushing crude prices up Thursday on signs the Trump administration was pulling back higher duties due this weekend on Chinese imports.

    Both U.S. West Texas Intermediate and U.K. Brent crude futures were up about 1% each as traders looked beyond the weak oil-demand forecast for next year by the International Energy Agency (IEA) to focus instead on a Wall Street Journal report that the White House was planning a tariffs ceasefire with China. Trump’s tweet that the two sides were “very close” to a deal also fueled positive speculation, though the president habitually resorts to such language without results.

    NYMEX-traded WTI, the U.S. crude benchmark, was up 67 cents, or 1.1%, at $59.43 per barrel by 12:15 PM ET (17:15 GMT), recouping Wednesday’s 48-cent, or 1%, drop.

    ICE-traded Brent, the global oil benchmark, also rose 1.1%, or 72 cents, to trade at $64.44. It fell 62 cents, or 1%, in the previous session.

    Crude prices overcame a weak start after the Journal reported that U.S. trade negotiators have offered to cancel a new round of tariffs on imported Chinese goods set to take effect on Sunday as part of an effort to cement a phase one deal to de-escalate the trade conflict between the two powers.

    U.S. negotiators reportedly offered to cut existing tariffs by as much as half on roughly $360 billion of Chinese-made goods to keep talks going, according to people briefed on the matter.

    Trump, in his usual hyperbole style, tweeted: “Getting VERY close to a BIG DEAL with China. They want it, and so do we!”

    Oil was down earlier after the Paris-based IEA said global oil inventories could rise sharply through March despite an agreement by OPEC and its allies to deepen output cuts, as well as lower expected production by the United States and other non-OPEC nations.

    "Despite the additional curbs ... and a reduction in our forecast of 2020 non-OPEC supply growth to 2.1 million barrels per day (bpd), global oil inventories could build by 700,000 bpd in Q1 2020," the IEA said in its monthly report distributed Thursday.

    OPEC, in its own monthly report on Wednesday, said it expected a small oil market deficit in the next year, suggesting the market is tighter than previously thought.

    Original Article

    Canada's Conservative leader Andrew Scheer resigns

    © Reuters. Leader of the Official Opposition Scheer  speaks to reporters after meeting with Canada's Prime Minister Trudeau in Ottawa© Reuters. Leader of the Official Opposition Scheer speaks to reporters after meeting with Canada's Prime Minister Trudeau in Ottawa

    OTTAWA (Reuters) - Canada's Conservative Party leader Andrew Scheer, who lost the October election to Liberal Prime Minister Justin Trudeau, announced on Thursday in the House of Commons that he has decided to resign.

    "I just informed my colleagues in the Conservative caucus that I will be resigning," Scheer said on the floor of the House. "I felt it was time to put my family first."

    He will stay on as party chief and head of the largest opposition bloc until the party chooses a new leader, he said.

    Scheer has come under fire from within his own party since the election because he failed to defeat Trudeau, who was beset by scandals heading into the vote.

    Former Conservative cabinet minister Peter Mackay, whom some consider a possible replacement for Scheer, compared the performance to a hockey player who failed to score "on an open net".

    Original Article

    Lagarde Wants an `Economic Ballet.’ It Could Be a Mosh Pit.

    © Reuters.  Lagarde Wants an `Economic Ballet.’ It Could Be a Mosh Pit.© Reuters. Lagarde Wants an `Economic Ballet.’ It Could Be a Mosh Pit.

    (Bloomberg Opinion) -- Christine Lagarde started her first press conference as president of the European Central Bank by warning that she was different from her predecessor, Mario Draghi. It took reporters just a few minutes to realize that she was indeed.

    Lagarde is ushering in an era of democratic central banking at the ECB, or so she wants you to believe. But questions remain about whether she’ll stray too far into politics or if she’ll be able to effectively steward a divided and riotous governing council.

    For years, the ECB has been led in a deeply technocratic manner, as Draghi maintained a rigid focus on the narrow message he wanted to send. Lagarde on Thursday was much more colorful in her metaphors: She called herself “neither a dove, nor a hawk, but an owl”; referred to an upcoming strategy review as “a house we will build stone by stone”; and justified the need for a better policy mix in the euro area by saying “it takes many to dance the economic ballet that delivers on price stability and growth.” For better or worse, it was hard to imagine Draghi using that kind of language.

    Lagarde is also keen to show that the ECB will be more open to the voices of all the national central banks and to the general public than in the past. She pledged to “include members of the governing council and seek their view” before making a decision, something Draghi was accused of not doing enough of. And she made clear that the strategic review — which will start in January, and is expected to “turn each and every stone” — will be open not just to the “usual suspects” but to civil society. In the ivory tower of central banking, this is a small revolution.

    As Lagarde has acknowledged, there will be a tension between communicating rigorously and talking to a broader public. She asked reporters not to over-interpret her messages when she talks to people who lack technical expertise. But will this really be possible? She’s the president of the ECB, after all, and investors will be listening for hints of the central bank’s next moves every time she speaks. There’s a risk that she could create confusion, or even that market players could stop paying so much attention to her.

    There’s also the question of what kind of relationship she’ll build with politicians and the public. It’s all well and good to say that she doesn’t want the ECB to “preach the Gospel but listen.” Yet politicians could interpret this message as an open invitation to meddle with central bank independence — something Lagarde considers “critically important.” The new president is adamant that the ECB should “take up the fight” against climate change, for instance; that position would put the bank squarely into the political arena, and expose it to the attacks of those who fear it has exceeded its mandate.

    Finally, will the new age of democratic central banking produce effective policies? Lagarde did an impressive job on Thursday in sticking to the path the ECB had set in September. She said clearly that she wouldn’t reopen those decisions, including the controversial step of restarting asset purchases. She also made clear that she doesn’t see negative interest rates as a problem at their current level, emphasizing how lending is increasing. And she stressed that the ECB’s monetary-policy stance should be seen as a package, with different instruments acting on slightly different objectives.

    Disagreements are still inevitable, however, and the question is whether this consensus-seeking president will be able to make her own voice heard, as her predecessor famously did. Lagarde is aware of the challenge: She said she knows that the strategic review will lead to controversies, but added that once a decision has been made, it should stand. As the divisions at the end of Draghi’s era show, though, keeping everyone on board can be a painful and occasionally hopeless pursuit.

    With Lagarde, the era of omniscient central bankers appears to be over. “When I will not know, I will tell you that I don’t know,” she told reporters. The new president wants to be seen as a woman of the people. The euro area will soon find out exactly what that means.

    Original Article