Oil prices dip as investors fret over demand outlook

HOUSTON, June 26 – Crude oil prices fell 1% on Tuesday as weak U.S. consumer confidence data fed worries about the economic outlook and fuel demand after a slow start to the U.S. summer driving season.

Brent futures for August settled down $1, or 1.2%, at USD 85.01 a barrel. U.S. crude futures settled at $80.83, down 80 cents or 1%.

Last week, both benchmarks gained about 3%, marking two straight weeks of gains, and taking them to their highest since April.

U.S. consumer confidence decreased in June. While households remained upbeat about the labor market and expected inflation to moderate, concerns about the economy could dent gasoline demand.

High inventory levels have made oil traders nervous about summer driving demand.

U.S. crude stocks were up by 914,000 barrels in the week ended June 21, according to market sources citing American Petroleum Institute figures that also showed gasoline inventories rose by 3.843 million barrels and distillates fell by 1.178 million barrels. Official government data is due Wednesday.

U.S. crude and gasoline stockpiles were expected to have fallen while distillate inventories likely rose last week, a preliminary Reuters poll showed on Monday.

Investors are also trying to discern the timing of Federal Reserve interest rate cuts. Fed Governor Lisa Cook said on Tuesday a rate cut is likely if the economy performs as expected, but declined to say when the U.S. central bank will act.

A Fed “decision on interest rates is still mixed, and most of the crude market has priced in a quarter percent cut by September,” said Dennis Kissler, senior vice president of trading at BOK Financial.

Oil drew support from supply disruption linked to Ukrainian attacks on Russian oil infrastructure. On June 21, Ukrainian drones hit four refineries, including the Ilsky refinery, one of the main fuel producers in southern Russia.

Worries of escalating tensions between Israel and the Iran-backed group Hezbollah have also underpinned oil prices, analysts said.

Israeli forces killed at least 24 Palestinians in three separate airstrikes on Gaza City early on Tuesday, Gaza health officials and medics said.

More than eight months into the war, international mediation backed by the U.S. has failed to yield a ceasefire agreement.

“Geopolitical pressures continue to roil the oil market from multiple fronts. … (The) tensions are expected to persist amid failed efforts to broker ceasefires,” said Claudio Galimberti, a director at consultancy Rystad Energy.

Reporting by Arathy Somasekhar in Houston, Deep Vakil and Arunima Kumar in Bengaluru; Additional reporting by Emily Chow in Singapore; Editing by David Goodman, Jan Harvey, Will Dunham, Barbara Lewis and David Gregorio

Resilience vs quarter-end caution

June 26 – The first definition that appears in an online search for the meaning of “resilience” is “the capacity to withstand or to recover quickly from difficulties; toughness.”

In global markets right now, one word probably suffices: “Nasdaq” or “Nvidia.”

Shares in the world’s AI and chip darling roared back 6.8% on Tuesday for their best day in a month, enough to recover the previous day’s slump, narrow the recent correction, and set the tone for a tech-led rise in U.S. and global equities.

There was no fresh news or impetus behind the move, which probably has as much to do with investors’ book-squaring and position adjustments as the end of the quarter and half-year point draws into view as any thing else.

In that light, the direction Asian markets are liable to take on Wednesday is hard to call. Will Tuesday’s tech and mega cap rebound spark a flurry of buying, or will investors still be minded to limit risk exposure ahead of quarter-end on Friday?

There doesn’t appear much from Tuesday’s U.S. session, other than tech’s bounce, to give a signal either way – the dollar rose a bit, Treasury yields were flat, and the tone from remarks by two Fed governors probably leaned on the hawkish side.

Broader concerns about the weakness of the yen and potential intervention from Japanese authorities, and the Chinese yuan’s steady depreciation, still hang heavily over Asian markets. The lack of fresh news or developments on either front is unlikely to change that going into Wednesday.

The regional economic data calendar is extremely light on Wednesday, with only Australian inflation and manufacturing data from Singapore set for release.

Reserve Bank of Australia assistant governor Christopher Kent is scheduled to speak, while Thailand’s central bank releases the minutes of its June 12 policy meeting, and later hosts an analyst meeting on the economy and monetary policy.

Inflation in Australia is proving to be much stickier than previously envisaged. This explains why rates traders reckon the RBA will be the most hawkish G10 central banks this year apart from the Bank of Japan, and are only pricing in a one-in-four chance of any rate cut this year.

The Aussie dollar is reacting accordingly – it is the second best performing G10 currency against the U.S. dollar this year behind sterling.

Economists polled by Reuters expect the annual rate of weighted consumer inflation in May accelerated to 3.8% from 3.6% in April. That would be the highest this year and the second consecutive rise – not the RBA’s preferred direction of travel.

Here are key developments that could provide more direction to markets on Wednesday:

– Australia inflation (May)

– RBA assistant governor Kent speaks

– Singapore manufacturing production (May)

Reporting by Jamie McGeever

Nvidia shares surge nearly 7%, bouncing after USD430B market slump

NEW YORK, June 26 – Shares of Nvidia surged nearly 7% on Tuesday, snapping out of a three-session tailspin that had erased about USD 430 billion from the artificial intelligence chipmaker’s market value.

Nvidia’s shares finished at $126.09, after a tumble that saw them lose around 13% from their June 18 close of $135.58. The drop followed a rally that accelerated after a 10-for-1 stock split that took effect on June 10.

“The bounce today is a normal technical bounce after a 15% drop in three days; you’re not going to go straight down every single day,” said Tom Hayes, chairman at Great Hill Capital in New York. “It’s a great company, it’s a great CEO, and you have insiders selling three-quarters of a billion worth of stock just as retail investors were getting involved with the split,” Hayes added.

Nvidia’s breathtaking rise and its position as the dominant provider of chips to support artificial intelligence applications have made it emblematic of this year’s tech-driven boom in U.S. stocks.

Shares of Nvidia, which last week briefly became the world’s most valuable company, are up 154% this year and have accounted for nearly 30% of the S&P 500’s .SPX year-to-date return as of Monday’s close, according to S&P Dow Jones Indices. The index is up 14.6% this year.

The recent selloff helped ease some worries about Nvidia’s valuation, which now stands at about $3.1 trillion from a high of about $3.3 trillion earlier this month.

“It’s a normal correction for a company that has made a run and gotten a lot of publicity,” said Tom Plumb, chief executive and portfolio manager at Plumb Funds, which has Nvidia as one of its largest holdings. “Until there’s a confirmation that the actual business would justify the slowing of the momentum, I don’t think you’ve reached the all-time peak.”

Bullishness on Nvidia was evident in the options market, though the stock’s recent share price slide appears to have made traders more cautious.

Nvidia call options, typically used to bet on a rising stock price, outnumbered puts by 1.4-to-1 over the last three sessions, Trade Alert data showed. That compared to a call-to-put ratio of 1.6-to-1 for the prior 10 sessions.

At the same time, Nvidia short sellers, who bet on declines in the stock, have gained $4.97 billion in the past three sessions combined, according to data analytics firm Ortex Technologies.

Meanwhile, retail investors have likely been buyers of the stock on the recent dip, said Mario Iachini, senior vice president of Vanda Research, which tracks the behavior of individual investors.

Reporting by Chibuike Oguh in New York; Additional reporting by Saqib Iqbal Ahmed, Suzanne McGee, Medha Singh, and Lewis Krauskopf; Editing by Ira Iosebashvili, Chris Reese, Aurora Ellis and David Gregorio

Gold gains on dollar retreat, focus now on US inflation data

June 24 – Gold prices rose on Monday, helped by a pullback in the dollar, while investors looked forward to US inflation data due later this week that could influence the Federal Reserve’s monetary policy path.

Spot gold was up 0.5%, to USD 2,332.62 per ounce, as of 02:02 a.m. ET (1802 GMT). US. gold futures settled 0.6% higher, to USD 2,344.40.

The dollar fell 0.3% against its rivals, making gold attractive for holders of other currencies.

Gold is in consolidation mode and there is active buying on dips, said David Meger, director of alternative investments and trading at High Ridge Futures, adding that investors are looking for the trajectory of interest rates moving forward and the timing of those potential rate cuts.

The focus this week will be on the US Personal Consumption Expenditures (PCE) data, the Fed’s preferred measure of inflation, due on Friday.

Also on the radar are at least five Fed officials, including San Francisco Fed President Mary Daly and Fed Governors Lisa Cook and Michelle Bowman, who are scheduled to speak this week.

Traders are currently pricing in a 66% chance of a Fed rate cut in September, according to the CME FedWatch Tool.

“We believe gold can hit USD 3,000/oz over the next 12-18 months, although flows do not justify that price level right now,” BofA said in a research note.

“Achieving this would require non-commercial demand to pick up from current levels, which in turn needs a Fed rate cut to happen. An inflow into physically backed ETFs and a pick-up in LBMA clearing volumes would be an encouraging first signal.”

Lower rates reduce the opportunity cost of holding bullion.

Elsewhere, spot silver was steady, at USD 29.49 per ounce, and platinum gained 0.5%, to USD 997.80.

Palladium climbed 3.2%, to USD 979.17. Prices hit a one-month high in the previous session, breaking above the key level of $1,000 per troy ounce in volatile trading as some investors covered their short positions and the market was tight for nearby physical supply.

Reporting by Brijesh Patel and Anmol Choubey in Bengaluru; Editing by Vijay Kishore and Pooja Desai

US yields roughly unchanged as market awaits inflation data

NEW YORK, June 24 – US Treasury yields were largely unchanged on Monday as investors awaited economic and inflation data later this week to assess whether a recent weakening in economic activity will continue, which would strengthen the case for a first interest rate cut by the Federal Reserve in the coming months.

Yields, which move inversely to prices, have declined this month as price pressures have eased and data across different sectors of the economy, including the labor market, started to show moderation.

Benchmark 10-year yields are down by over 25 basis points so far this month and were at about 4.251% on Monday, just slightly lower than Friday. Two-year yields, which tend to more closely reflect monetary policy expectations, were last at 4.738%, marginally higher than their close last week.

Barring a rebound in inflation or a sharper-than-anticipated slowdown in the economy – both seen as unlikely scenarios at this stage – many in the market expect yields to move sideways until there is more clarity over the extent of any rate cuts.

“Markets are thinking the Fed is going to cut at some point … but it is going to take a lot of damage to the economy to get rates to move much lower,” said John Luke Tyner, head of fixed income and portfolio manager at Aptus Capital Advisors.

Investors will be looking at first quarter gross domestic product estimates released on Thursday and, more importantly, May inflation data on Friday, to get more clues about the US central bank’s next steps as it tries to battle inflation without causing a recession.

“I think there will be some wait and see in the market. PCE (personal consumption expenditures) inflation on Friday will be the biggest data release of the week,” said Mona Mahajan, senior investment strategist at Edward Jones. “Otherwise a relatively quieter week and looks like that’s been reflected in markets.”

Federal Reserve Bank of Chicago President Austan Goolsbee said in a CNBC interview on Monday he was still looking for inflation to cool further as part of the process that would open the door to a rate cut.

Cleveland Fed President Loretta Mester, who is set to retire at the end of the month, told Reuters she expects inflation will cool over time and eventually allow the Fed to cut rates. She said she’d like to see “a few more months of data” before gaining confidence that easier policy is warranted.

Traders in futures tied to the Fed’s policy rate were assigning a 61.2% chance to a first 25 basis point rate cut in September, LSEG data showed on Monday, with a total of nearly two rate cuts priced for this year.

Meanwhile, the gap between two- and ten-year yields remained deeply negative at about minus 48.6 basis points. An inversion in that part of the yield curve, which occurs when shorter-dated Treasuries yield more than longer-dated ones, has historically indicated that a recession is on the horizon.

Reporting by Davide Barbuscia, Editing by William Maclean and Nick Zieminski

European shares start the week higher on autos, banks

June 25 – European equities advanced on Monday, led by gains in automobile and financial stocks, while investor attention focused on the first round of French parliamentary elections later this week.

The Europe-wide STOXX 600 closed up 0.7%, slightly below a nearly two-week high hit earlier in the session.

Banks rose 1.7% to lead sectoral gains, with Italian lenders such as BPER, UniCredit, and Monte dei Paschi di Siena gaining between 3.8% and 4.9%.

Automobile shares added 1.5% as the European Union and China agreed to hold talks on the planned imposition of tariffs on Chinese-made electric vehicles (EVs).

Ahead of the first round of France’s parliamentary elections this week, polls show a lead for the far-right National Rally (RN) party and its allies. Previously analysts have feared a far-right government could spend recklessly, but analysts on Monday said the view had shifted.

The French benchmark closed 1% higher on Monday.

“The weekend has brought new signals that the National Rally may not be as fiscally irresponsible as we and others have feared,” noted global strategists at Macquarie.

The party’s likely candidate for France’s finance ministry, Jean-Philippe Tanguy said an RN-led government would end the decades-long practice of running high budget deficits and stick to the European Union’s fiscal rules.

On the data front, German business morale unexpectedly fell in June following a survey that showed pessimistic expectations for Europe’s largest economy.

“The optimism at the start of the year has given way to realism. The (latest) readings have illustrated that the German economy is still struggling to gain more momentum,” Carsten Brzeski, global head of macro at ING, said.

The data follows last week’s weak readings on German and broader euro zone business activity.

European shares recouped some losses last week, following the French election shock-induced drop earlier this month. However, gains were checked as a rally in technology stocks faded.

Among other stocks, Hochtief climbed by nearly 10% as Jefferies upgraded the German construction firm to “buy” from “hold”, citing the company’s growing exposure to high-tech infrastructure projects.

Belgian pharmaceutical company argenx jumped 9% after it said the U.S. FDA approved Vyvgart Hytrulo, a treatment for chronic inflammatory demyelinating polyneuropathy.

UK’s Prudential added 7.3% after the insurance group launched a $2 billion share buyback programme.

Eurofins Scientific, however, plunged 16.1% to the bottom of the benchmark index after short seller Muddy Waters said it has a short position on the French testing company.

Reporting by Shashwat Chauhan and Shristi Achar A in Bengaluru and Jesus Calero in Gdansk; Editing by Sohini Goswami and Barbara Lewis

Oil prices rise on fuel demand expectations, easing US dollar

NEW YORK, June 24 – Oil prices rose about 1% on Monday, spurred by the prospect of strong summer driving demand and as tensions in the Middle East and drone attacks on Russian refineries led to concerns about supply.

An easing US dollar added to the crude price strength.

Brent futures for August delivery settled at USD 86.01 a barrel, gaining 77 cents, or 0.9%. US crude settled at USD 81.63 a barrel, gaining 90 cents, or 1.1%

Both benchmarks advanced about 3% last week for their second consecutive weekly upswing.

“The chief underlying reason behind the price strength … is the growing confidence that global oil inventories will inevitably plunge during the summer in the northern hemisphere,” said Tamas Varga of oil broker PVM, referring to seasonal demand for oil products.

After last week’s big decline in U.S. crude and gasoline inventories, EIA/S, traders are waiting to see whether the report due on Wednesday will provide further evidence of sustained strong gasoline demand, said Bob Yawger, director of energy futures at Mizuho in New York.

“It has to sustain for this positive narrative to continue in the market,” said Yawger, adding that the growing electric vehicle market is eroding gasoline’s share of the transportation market.

The gasoline-led rally could taper off in the coming weeks as inflation eats into summer travel spending, said Jim Ritterbusch of Ritterbusch and Associates. “We still expect a significant falloff in demand next month especially with the recent uplift in retail pricing further curtailing vacation plans,” Ritterbusch said.

Geopolitical risks in the Middle East and an increase in Ukrainian drone attacks on Russian refineries also underpinned oil prices.

EU countries on Monday agreed on a new package of sanctions against Russia over its war in Ukraine, including a ban on reloading Russian liquefied natural gas (LNG) in the EU for further shipment to third countries.

An easing US currency made dollar-denominated commodities such as oil more attractive to buyers using other currencies.

The dollar weakened from a near eight-week high as traders went back on alert for intervention to support the yen after the Japanese currency danced with the 160 per dollar level.

The dollar index, measuring performance against six major currencies, had climbed on Friday and was up slightly on Monday after data showed U.S. business activity at a 26-month high in June.

In Ecuador, state oil company Petroecuador has declared force majeure on deliveries of Napo heavy crude for export after the shutdown of a pipeline and oil wells owing to heavy rain, sources said on Friday.

Additional reporting by Paul Carsten in London, Florence Tan in Singapore and Mohi Narayan in New Delhi
Editing by David Goodman, Sharon Singleton, David Gregorio and Barbara Lewis

Asia shares subdued as inflation, politics loom large

SYDNEY – Asia shares were subdued on Monday in a countdown for US price data that investors hope will show a renewed moderation in inflation, while markets were on alert for possible Japanese intervention as the dollar tested the 160 yen barrier.

Geopolitics also loomed large, with the first US presidential debate on Thursday and the first round of voting in the French election at the weekend.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.1%, after touching a two-year top last week. South Korean stocks fell 0.5%.

S&P 500 futures and Nasdaq futures were both up around 0.1%. Shares in Boeing could face pressure after Reuters reported US prosecutors are recommending criminal charges be brought against the aircraft maker.

Japan’s Nikkei eased 0.1%, with the continued decline in the yen putting pressure on the Bank of Japan to tighten policy despite patchy domestic data.

Minutes of the central bank’s last policy meeting out on Monday showed there was much discussion about tapering its bond-buying and raising rates.

Japan’s top currency official was out early to voice disapproval with the yen’s latest drop which saw the dollar reach 159.87 on Friday.

The dollar was trading just a shade softer at 159.73, eyeing the 160.17 level where Japan was thought to have spent around USD 60 billion buying the yen back in late April and early May.

Demand for carry trades, borrowing yen at low rates to buy higher-yielding currencies, has also seen both the Australian and New Zealand dollars reach 17-year peaks on the yen.

Even the euro was testing recent highs at 170.87 yen, despite being saddled with a round of soft manufacturing surveys (PMI) which left it stuck at USD 1.0688.

“The decline in the Euro area flash June PMI raises some concern that the nascent rebound is being cut short,” wrote analysts at JPMorgan in a note.

“The abruptness of the drop is notable against the backdrop of the French election, which was mentioned explicitly by firms as a reason for the drag.”

France’s far-right National Rally (RN) party and its allies were leading the first round of the country’s elections with 35.5% of the vote, according to a poll published on Sunday.

Manufacturing surveys from the United States, in contrast, showed activity at a 26-month high in June, though price pressures still subsided considerably.

The latter shift whetted appetites for the personal consumption expenditures (PCE) price index due on Friday. Annual growth in the Federal Reserve’s favored core index is expected to slow to 2.6% in May, the lowest in more than three years.

Such a result would likely reinforce market bets on a Fed rate cut as early as September, which futures currently price as a 65% prospect.

There are at least five Fed speakers on the docket this week, including San Francisco Fed President Mary Daly and Fed Governors Lisa Cook and Michelle Bowman.

In commodity markets, gold felt the burden of a firm dollar and dipped to USD 2,317 an ounce.

Oil prices also eased a touch after rising around 3% last week.

Brent slipped 40 cents to USD 84.84 a barrel, while US crude lost 39 cents to USD 80.34 per barrel.

(Reporting by Wayne Cole; Editing by Muralikumar Anantharaman)

S&P, Nasdaq end lower as Nvidia drags the tech sector for second day

June 21 – The S&P 500 and Nasdaq closed marginally lower on Friday, weighed down by a decline in Nvidia shares for a second straight day, which dragged down the technology sector.

Technology was the biggest loser among the 11 major S&P 500 sectors, down 0.84%, weighed by Nvidia, while communication services led the gain.

“It’s Nvidia’s game, and the rest of us are just pretending to be here,” said Michael Green, chief strategist at Simplify Asset Management in Philadelphia.

“Basically all the activity is now concentrated in Nvidia call options,” he added. “Seven million option contracts Nvidia have traded. That’s something in the neighborhood of three or four times the quantity of contract volume that would have traded for the market in total five years ago.”

The Dow Jones Industrial Average rose 15.57 points, or 0.04%, to 39,150.33, the S&P 500 lost 8.55 points, or 0.16%, to 5,464.62 and the Nasdaq Composite lost 32.23 points, or 0.18%, to 17,689.36.

Shares of megacaps Microsoft, Alphabet, Amazon.com rose between 0.92% to 1.89%. Apple slipped 1.04%.

“We’ve had a very strong run, especially in the S&P over the last couple weeks. So not surprised to see things kind of take a pause and settle down,” Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.

Friday’s trading could be more volatile than usual due to triple witching, the simultaneous expiration of stock options, stock index options, and stock index futures.

U.S. business activity reached a 26-month high in June amid a rebound in employment, while easing price pressures suggested the recent inflation slowdown may continue.

Flash services PMI increased to 55.1 this month, above expectations of 53.7, while manufacturing PMI edged up to 51.7, compared with expectations of a dip to 51.

May home sales fell to a seasonally adjusted annual rate of 4.11 million units versus expectations of 4.10 million units.

Money markets are still pricing in a 58% chance of a 25-basis point rate cut in September, and still expect about two rate cuts this year, according to LSEG’s FedWatch data.

AI chip firm Nvidia dropped 3.22%, while semiconductor stocks Qualcomm QCOM.O, Broadcom AVGO.O and Micron Technology were down between 1.36% and 4.38%.

Wall Street’s bumper gains since the final leg of 2023 have been primarily driven by the likes of Nvidia and a handful of other heavily weighted stocks linked to artificial intelligence. Analysts, however, have raised concerns whether the strong increase in their valuations is sustainable.

Shares of Spirit AeroSystems rose 6.00% following a Reuters report that Boeing is nearing a deal to buy back the airplane parts supplier after months of talks.

Sarepta Therapeutics soared 30.14% after the U.S. FDA allowed expanded use of the company’s gene therapy for patients with Duchenne muscular dystrophy aged four and older.

Declining issues outnumbered advancers by a 1.03-to-1 ratio on the NYSE. There were 98 new highs and 73 new lows on the NYSE.

The S&P 500 posted 23 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 34 new highs and 186 new lows.

Volume on U.S. exchanges was 17.68 billion shares, compared with the 12.05 billion average for the full session over the last 20 trading days.

Reporting by Echo Wang in New York; Additional reporting by Lisa Mattackal and Ankika Biswas in Bengaluru; Editing by Shounak Dasgupta and Aurora Ellis

US closer to curbing investments in China’s AI, tech sector

WASHINGTON/NEW YORK, June 24 – The United States on Friday issued draft rules for banning or requiring notification of certain investments in artificial intelligence and other technology sectors in China that could threaten U.S. national security.

The U.S. Treasury Department published the proposed rules and a raft of exceptions after an initial comment period following an executive order signed by President Joe Biden last August. The rules put the onus on U.S. individuals and companies to determine which transactions will be restricted or banned.

Biden’s executive order, which directed regulation of certain U.S. investments in semiconductors and microelectronics, quantum computing and artificial intelligence, is part of a broader push to prevent U.S. know-how from helping the Chinese to develop sophisticated technology and dominate global markets.

The U.S. is on track to implement regulations by the end of the year as anticipated. Public comments on the proposed rules will be accepted until Aug. 4.

“This proposed rule advances our national security by preventing the many benefits certain U.S. investments provide – beyond just capital – from supporting the development of sensitive technologies in countries that may use them to threaten our national security,” said Treasury Assistant Secretary for Investment Security Paul Rosen.

Treasury said the new rules were intended to implement “a narrow and targeted national security program” focused on certain outbound investments in countries of concern.

Treasury had mapped out the contours of the proposed rules in August. The Treasury Department on Friday included additional exceptions, such as for transactions deemed to be in the U.S. national interest.

The proposed rules would ban transactions in AI for certain end uses, and involving systems trained in using a specified quantity of computing power, but would also require notification of transactions related to the development of AI systems or semiconductors not otherwise prohibited.

FOCUS ON CHINA, MACAU AND HONG KONG

Other exceptions would apply to publicly traded securities, such as index funds or mutual funds; certain limited partnership investments; buyouts of country-of-concern ownership; transactions between a U.S. parent company and a majority-controlled subsidiary; binding commitments that pre-date the order; and certain syndicated debt financings.

Certain third-country transactions determined to be addressing national security concerns, or in which the third country adequately addressed the national security concerns, could also be exempted, Treasury said.

The order focuses initially on China, Macau and Hong Kong, but U.S. officials have said it could be widened later.

Former Treasury official Laura Black, a lawyer at Akin Gump in Washington, said Treasury was attempting to define the scope of the rule as narrowly as possible, but it would require increased vigilance by companies seeking to invest in China.

“U.S. investors will need to engage in more extensive due diligence when making investments in China or investments involving Chinese companies that operate in the covered sectors,” she said.

Black said Treasury’s proposed rules were keeping U.S.-managed private equity and venture capital funds in the cross-hairs, as well as some U.S. limited partners’ investments in foreign managed funds and convertible debt.

Certain Chinese subsidiaries and parents will be covered under the rule, which would also prohibit some investments by U.S. companies in third countries, she added.

Besides equity investments, joint ventures and greenfield projects, default debt also could be captured when it becomes equity.

The regulations track restrictions on exporting certain technology to China, such as those barring shipment of certain advanced semiconductors.

The goal is to prevent U.S. funds from helping China develop its own capabilities in those areas to modernize its military.

Those who violate the rules could be subject to both criminal and civil penalties, and investments could be unwound.

Treasury said it had engaged with U.S. allies and partners about the goals of the investment restrictions, and noted that the European Commission and United Kingdom had begun to consider whether and how to address outbound investment risks.

Reporting by Andrea Shalal and David Lawder in Washington and Karen Freifeld in New York; Editing by Chris Sanders, Chizu Nomiyama and Matthew Lewis

2024 Mid-Year Economic Briefing: Navigating the Easing Cycle

Investing with Love: A Mother’s Guide to Putting Money to Work

Investor Series: An Introduction to Estate Planning

Consensus Pricing – June 2025

Policy Rate Update: Dovish BSP Narrows IRD