Limited support for central bank digital currencies in global investment industry survey

LONDON – The most comprehensive survey of the global investment industry on central bank digital currencies to date has shown both limited support and a lack of understanding of how a digital dollar, euro, yen or pound would work.

The survey carried out by the CFA Institute, a worldwide association for bankers, investors and finance chiefs, found that only 42% of the more than 4,150 respondents who took part believed that central bank digital currencies, or CBDCs, should be launched.

A number of countries including the Bahamas and Nigeria have already launched CBDCs, and around 130 more representing 98% of the global economy are exploring whether to do the same.

“Even for a sophisticated and financially literate cohort like our members there is very little understanding of what CBDCs are,” the CFA Institute’s Olivier Fines told Reuters.

There was also “a general feeling of scepticism” about their possible benefits, especially in developed economies where people can already pay for things instantly online or using mobile phones, he said.

Only 37% of respondents from developed markets said they favoured a CBDC versus 61% from emerging markets.

Just 31% of those in the United States supported the creation of a digital dollar, followed by 38% in Canada, 45% in the European Union and 46% in the United Kingdom.

In China, in contrast, where the People’s Bank of China is currently running the world’s biggest CBDC pilot project, the support rate was 70% while in India, which hopes to launch an e-rupee next year, it was 66%.

“There is a clear and very significant divide,” Fines said, putting it down to a likely “perception in developing economies that a CBDC could fill a gap that may not exist in the developed world”.

Central banks themselves, including the head of the Bank of England, Andrew Bailey, have raised questions about CBDCs, saying they may be “a solution looking for a problem”.

Among UK respondents who opposed launching a CBDC, the top reason cited by almost half was a belief that their introduction would not address a compelling need.

By far the biggest outright concern about CBDCs globally was the risk of cyberhacking, at 69%. Data privacy was also a major concern for 64% of respondents in developed markets and 57% in developing economies.

Age is also correlated with the level of support for or opposition to CBDCs. Less than a quarter of respondents under 30 opposed them, the survey found, compared with 37% among those over 55.

“Clearly the younger you are the more receptive you are to a CBDC, like with crypto assets more generally,” Fines said. “The question is will this stabilise over time or as people get older will their mindset shift?”

Overall, though, the main questions were what benefits CBDCs will bring compared with existing payment systems. “I don’t think the argument has been settled on whether this is absolutely necessary,” Fines said.

China hopes, US big tech fire up markets

July 26 (Reuters) – Asian stock markets will open strongly on Wednesday if the previous day’s China- and US-fueled momentum doesn’t wilt, as investors brace for a triple whammy of major central bank policy decisions over the coming 72 hours.

On the regional data front, Australian consumer inflation grabs the spotlight. Economists expect inflation to have slowed in June and over the second quarter, which could lean investors toward thinking interest rates have peaked at 4.10%.

It’s not often China is the source of much optimism for investors these days, but that it exactly where markets find themselves after the country’s top leaders on Monday pledged to ramp up support for the struggling economy.

China’s blue chip equity index rose nearly 3% for its best day this year, and Chinese property stocks surged 8% for their biggest rise this year too. Hong Kong’s main property stocks index jumped 14%, the biggest rise since March last year.

Beijing’s top policy-making Politburo said it will implement macro adjustments “in a precise and forceful manner” to support an economy undergoing a “tortuous” post-COVID recovery.

Fine words and sentiment, but as analysts at Investec note, no details on actual policies were forthcoming. This is what will determine China’s recovery, so until more clarity emerges, investors’ optimism may fade as quickly as it appeared.

The mainland property index is still down 13% this year and the Hong Kong-based index is down 25%. Maybe they are cheap enough to draw in buyers, but the problems run deep.

That said, MSCI’s Asia ex-Japan equity index on Tuesday ended a six-day losing streak and rallied 2%. The MSCI World index rose for the 10th session of the last 12, reaching its highest level since April last year, and the S&P 500 also climbed to a new 15-month high.

Surprisingly strong US consumer confidence, growing faith in an economic ‘soft landing’, and the Artificial Intelligence buzz around juicy earnings reports from Big Tech firms all contributed to the latest Wall Street rally.

Strong results from Microsoft and Alphabet after the bell will only strengthen the upbeat tone in Asia on Wednesday too.

All this comes ahead of the first of three major central bank policy decisions this week – the Federal Reserve is expected to raise rates 25 basis points on Wednesday, followed by a similar move from the European Central Bank on Thursday and the Bank of Japan holding the line on Friday.

(By Jamie McGeever)

Global equities, US yields gain ahead of Fed, corporate results

July 25– Global equity markets and US Treasury yields rose on Tuesday ahead of the Federal Reserve’s expected interest rate hike and as markets awaited a stream of quarterly results from corporate heavyweights.

Fed officials are gathering for their July monetary policy meeting, starting on Tuesday, where the central bank’s rate-tightening cycle will be top of the agenda. Most market participants expect the Fed to deliver a 25 basis-point rate hike when the meeting concludes on Wednesday.

US Treasury yields advanced, with benchmark 10-year notes rising to 3.890% while rate-sensitive two-year notes were up at 4.8806%.

Google owner Alphabet and Microsoft are among US technology giants whose quarterly earnings on Tuesday give investors a glimpse of the health of the US economy. The performance of these megacap tech companies underlies the nearly 19% year-to-date rally in the benchmark S&P 500.

After the bell on Tuesday, Alphabet said second-quarter profit exceeded Wall Street expectations. Microsoft on Tuesday surpassed Wall Street estimates for fourth-quarter revenue and profit as its cloud business benefited from product upgrades featuring new artificial intelligence (AI) technology.

“There’s a bit of catch-your-breath mentality before what could really be a big market moving event with the big Fed meeting tomorrow,” said Ryan Detrick, chief market strategist at Carson Group.

“At the same time, the Fed is important but corporate earnings matter. Overall, it’s been fairly positive and people expect earnings to come in better than expected,” Detrick said.

The MSCI All-World index, which tracks equities in more than 50 countries, rose 0.47%.

Europe’s STOXX 600 gained 0.48%, led in part by shares in mining companies, which rallied after China’s leaders pledged to bolster their sputtering economy.

On Wall Street, the three main indexes closed higher, led by gains in shares of technology, materials, and communication services companies.

The Dow Jones Industrial Average rose 0.08% to 35,438.07, the S&P 500 gained 0.28% to 4,567.46 and the Nasdaq Composite added 0.61% to 14,144.56.

“A 25 basis-point hike is pretty much baked in but clearly what matters more is whether (in Fed Chair Jerome Powell’s press conference) it’s going to be a dovish or hawkish hike,” Detrick added.

Oil prices rose to three-month highs as signs of tighter supplies and pledges by Chinese authorities lifted sentiment.

Brent futures settled up 1% at USD 83.64 a barrel after hitting USD 83.87 earlier, the highest level since April 19. US West Texas Intermediate (WTI) crude rose 1% to settle at USD 79.63.

The US dollar weakened, losing earlier session gains, ahead of the Fed meeting as well as rate decisions from other key central banks, including the European Central Bank and the Bank of Japan. The dollar index fell 0.128%, with the euro down 0.1% to USD 1.1051.

Gold prices strengthened as the dollar fell. Spot gold added 0.5% to USD 1,964.34 an ounce, while US gold futures GCc1 gained 0.07% to USD 1,961.70 an ounce.

(Reporting by Chibuike Oguh in New York. Editing by Sharon Singleton and Matthew Lewis)

Japan’s Nikkei ends lower on caution ahead of key rate decisions

TOKYO – Japan’s Nikkei share average ended lower on Tuesday, with heavyweight technology stocks leading the losses, as risk appetite was sapped by caution ahead of interest rate decisions from key global central banks, including Japan’s.

The Nikkei index slipped 0.06% to end at 32,682.51, having pulled back from a drop of 0.6% earlier in the session. The broader Topix ended up 0.18% to 2,285.38.

“We should not take this level of decline seriously but market players were not actively making bets ahead of the central banks’ decision in Japan, the US and Europe,” said Takehiko Masuzawa, trading head at Phillip Securities Japan.

“The market consensus is that the Bank of Japan (BOJ) will keep its monetary policy unchanged but the outcome may be the opposite. It is hard to make a move also during the earnings season.”

The BOJ, whose two-day policy meeting starts on Thursday, is widely expected to keep its ultra-low rate policy intact.

But investors remember a surprising tweak in the yield curve control policy in December when the BOJ widened the trading band of the benchmark 10-year bond yield.

The US Federal Reserve is expected to raise interest rates by 25 basis points at its policy meeting on Wednesday.

Among stocks, chip-making equipment maker Tokyo Electron fell 0.51%. Technology investor SoftBank Group lost 0.88%.

Electric motor maker Nidec slipped 3.25% to become the worst performer on the Nikkei.

Uniqlo brand owner Fast Retailing fell 1.27%.

Seven & i rose 0.48% after local media reported that the convenience store operator has reached an agreement to sell its department store operations to US investment fund Fortress Investment Group as early as September, ending stalled negotiations with local people where the flagship outlet is located.

(Reporting by Junko Fujita; Editing by Varun H K and Savio D’Souza)

China’s property firms rally after Beijing pledges economic support

HONG KONG – Investors piled into Chinese property developers’ shares and bonds on Tuesday following a sharp selloff in the previous session, after policymakers said they would step up support for the embattled sector.

Hong Kong’s Hang Seng Mainland Properties Index jumped 12%, while the CSI 300 Real Estate benchmark gained over 7%.

Property giant Country Garden and its management unit Country Garden Services, both listed in Hong Kong, rebounded 15% and 22%, respectively, after shedding nearly 9% and 18% on Monday.

Country Garden’s May 2025 dollar bond firmed to 21.675 cents on the dollar, versus 15 cents on Monday evening. Its Shanghai-traded bond surged 25% to 38 yuan, while a Shenzhen-traded bond rose 44% to 33.6 yuan.

China’s top leaders on Monday pledged to ramp up policy support for the economy amid a torturous post-COVID recovery, focusing on boosting domestic demand.

For the property sector, the Politburo, a top decision-making body of the ruling Communist Party, said it is necessary to adapt to significant changes in market supply and demand and optimise property policies in a timely manner.

While few details of the support measures were provided, investors focused on one change in tone in particular, which they thought could mean more property stabilisation steps were imminent.

The Politburo did not mention the oft-repeated phrase “houses are for living in, not for speculation” in the statement after the meeting.

“Most important, (Beijing) sent a signal of further easing property restrictions by dropping the phrase…and mentioning streaming property policies,” Nomura chief China economist Ting Lu said.

Shares of major developers Sunac China also rose 14% while Longfor Group rallied 23%. Seazen Group and KWG Group both firmed 19%.

Sino-Ocean Group’s onshore bond rose 8.6% to 23.5 yuan in Shanghai. The state-backed firm is currently negotiating with creditors to extend the repayment for the yuan bond due Aug. 2.

While the overall statement by Politburo exceeded low market expectations, analysts said further property easing was unlikely to be large and may simply be on “city by city” basis.

Nomura’s Lu maintained the view that there is no quick fix for the property sector, and that the central government would only marginally ease some existing restrictive measures in large cities.

Morgan Stanley expected policymakers would likely roll out a “more sensible and forceful package” that could include easing second home purchase restrictions in second tier cities.

In recent weeks, investors were wary of a deepening debt crisis in the property sector as new signs of trouble emerged among state-backed property developers Sino-Ocean Group and Greenland Holdings 600606.SS, as well as property giants Country Garden and Dalian Wanda Group.

(Reporting by Clare Jim; Additional reporting by Jason Xue in Shanghai; Editing by Sherry Jacob-Phillips and Sam Holmes)

Oil prices rise on tighter supply, China hopes

Oil prices edged higher for a third straight session on Tuesday, as signs of tighter supplies and pledges by Chinese authorities to shore up the world’s second-biggest economy lifted sentiment.

Brent futures gained 25 cents, or 0.3%, to USD 82.99 a barrel by 0633 GMT, while US West Texas Intermediate (WTI) crude rose 27 cents, also 0.3%, to USD 79.01. Both benchmarks settled over 2% higher the previous day at their highest closing levels since April.

The crude benchmarks have already climbed for four weeks in a row with supplies expected to tighten due to cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, a group known as OPEC+. Some analysts say it could rise further in the short term.

“Energy traders are growing confident that global central bank tightening will soon come to an end, which should provide some support for global growth,” said Edward Moya, an analyst at OANDA.

In China, the world’s second-largest economy and second-biggest oil consumer, leaders pledged to step up policy support for the economy amid a tortuous post-COVID recovery, focusing on boosting domestic demand.

Still, bearish data in the euro zone and United States underlined weakness across the global economy.

In the euro zone, business activity shrank much more than expected in July as demand in the bloc’s dominant services industry declined while factory output fell at the fastest pace since COVID-19 first took hold, a survey showed.

In the US, business activity slowed to a five-month low in July, dragged down by decelerating service-sector growth, a closely watched survey showed, but falling input prices and slower hiring indicate the Federal Reserve could be making progress on important fronts in its bid to reduce inflation.

Investors have priced in quarter-point hikes from the Fed and European Central Bank (ECB) this week, so the focus will be on what Fed Chair Jerome Powell and ECB President Christine Lagarde say about future rate increases.

Later on Tuesday, industry data on U.S. crude inventories is expected. Four analysts polled by Reuters estimated on average that crude inventories fell by about 2 million barrels in the week to July 21.

(Reporting by Sudarshan Varadhan and Stephanie Kelly;
Editing by Shri Navaratnam and Stephen Coates)

Oil prices hit 3-month highs on tightening supplies

NEW YORK, July 25 (Reuters) – Oil prices rose to three-month highs on Tuesday, as signs of tighter supplies and pledges by Chinese authorities to shore up the world’s second-biggest economy lifted sentiment.

Brent LCOc1 futures settled up 90 cents at USD 83.64 a barrel, after hitting USD 83.87 earlier, the highest since April 19.

US West Texas Intermediate (WTI) crude rose 89 cents to USD 79.63. The contract earlier rose to USD 79.90 a barrel, also the highest since April 19.

The crude benchmarks have already clinched four weekly gains in a row, with supplies expected to tighten due to output cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allies.

Earlier-loading Brent contracts are selling above later loadings, a price structure known as backwardation indicating traders see tight supply, with the six-month spread near a 2-1/2-month high.

“The market is getting more concerned about the trend of tightening oil supplies, and it’s becoming more obvious to the naysayers that the expected drop-off in demand isn’t happening,” Price Futures Group analyst Phil Flynn said.

In China, the world’s second-biggest oil consumer, leaders pledged to step up economic policy support.

Still, some economic data limited gains. In the euro zone, business activity shrank more than expected in July, a survey showed.

In the United States, business activity slowed to a five-month low in July, a closely watched survey showed. But falling input prices and slower hiring indicate the Federal Reserve could be making progress in its bid to reduce inflation. Markets anticipate 25-basis-point rate hikes from both the Fed and the European Central Bank this week.

US crude oil and distillate inventories gained last week, while gasoline stockpiles fell, according to market sources citing American Petroleum Institute figures on Tuesday.

Crude stocks gained by about 1.32 million barrels in the week ended July 21, according to the sources who spoke on condition of anonymity. Gasoline inventories fell by about 1.04 million barrels, while distillate inventories rose by about 1.61 million barrels.

US government data on inventories is due on Wednesday.

Sending a bearish signal, a 110,000 barrel-per-day unit at the huge US refinery in Baton Rouge will be shut for up to four weeks, sources said.

(Reporting by Stephanie Kelly; additional reporting by Shadia Nasralla and Sudarshan Varadhan; Editing by Susan Fenton, Sharon Singleton and Bill Berkrot)

Gold trades narrow range as Fed verdict draws near

July 24 (Reuters) – Gold prices traded in a tight range on Monday as traders braced for a widely anticipated interest rate hike along with clues on future monetary policy from the Federal Reserve this week.

Spot gold was mostly unchanged at USD 1,959.00 per ounce by 1:57 p.m. EDT (1757 GMT). US gold futures settled 0.2% lower at USD 1,962.20.

“Gold is slow and steady, with traders betting that the Fed is getting close to their point where they stop hikes,” said Bob Haberkorn, senior market strategist at RJO Futures.

Bullion may have found some safe-haven demand after Russia destroyed Ukrainian grain warehouses on an export route for Kyiv after pulling out of the Black Sea grain deal last week, Haberkorn added.

But the focus was still on the Fed’s decision on interest rates on Wednesday, followed by the European Central Bank on Thursday, with both seen hiking rates.

Gold is highly sensitive to rising interest rates as they increase the opportunity cost of holding non-yielding bullion.

“Any dovish surprise, particularly from the Fed, could be positive for gold, with good chances of seeing a new attack to the USD 2,000 mark,” said Carlo Alberto De Casa, market analyst at Kinesis Money, in a note.

The dollar index inched 0.2% higher, limiting gold’s upside by making it more expensive for holders of other currencies.

Gold priced in euros hit its highest since July 5 earlier in the day after data showed euro zone business activity shrank much more than expected in July.

Silver fell 0.7% to USD 24.39 per ounce, platinum slipped 0.1% to USD 961.01 and palladium dropped 1% to USD 1,277.84.

UBS analysts in a note predicted platinum would be under-supplied for the rest of 2023 due to substitution in autocatalysts and lower South African production.

(Reporting by Deep Vakil in Bengaluru; editing by Barbara Lewis and Krishna Chandra Eluri)

Funds build biggest short dollar position since March 2021

ORLANDO, Florida, July 23 (Reuters) – Hedge funds have ramped up their bearish dollar bets by more than USD 7 billion in a week, and are now sitting on their biggest net short dollar position in over two years.

The move was largely down to shifts in net euro and yen holdings, and comes ahead of monetary policy decisions from the Federal Reserve, European Central Bank, and Bank of Japan.

Foreign exchange speculators’ long sterling positions are now the biggest on record, although decent interest in shorting the pound means the overall net long position remains at a 16-year high, not an all-time peak.

Commodity Futures Trading Commission data for the week to July 18 show speculators’ increased their net short dollar position against a range of G10 and emerging currencies to USD 20.6 billion from USD 13.17 billion the week before.

It is the most substantial bet on the dollar falling since March 2021, and marks the 37th week in a row funds have been net short.

The USD 7.4 billion bearish shift in funds’ overall dollar position was the largest since March 2020, and was mostly accounted for by the USD 5.8 billion and USD 2.3 billion moves in euro and yen positions, respectively.

To be ‘short’ an asset is essentially a bet that it will fall in value, while to be ‘long’ is effectively a bet that it will appreciate. Investors often use futures contracts to hedge positions, but the CFTC data are often a pretty good guide to hedge funds’ directional view on a given asset.

The value of funds’ short dollar position is big, but not extreme. It was much larger for long spells around 2006-2008, 2010-2011, and 2020-2021, and it is still only half of the record bets in 2011 that topped USD 40 billion.

But the net long euro position is nearing record levels, perhaps not a total surprise given that the trade-weighted euro last week hit its strongest level ever.

Funds increased their net long position by almost 40,000 contracts to just under 180,000 contracts, nearing the all-time high of more than 200,000 contracts in August 2020.

That’s a USD 25 billion bet on the euro rising.

It’s a different story with the yen, where funds are still heavily short, but they scaled that bet back significantly in the week through July 18. Earlier this month, their net short position was the largest in five and a half years.

We will only get the full picture of CFTC funds’ pre-G3 central bank positioning with data for the week ending July 25, which will be released after the policy decisions.

The latest snapshot for the week through July 18, however, suggests speculators may be positioning for a more dovish Fed relative to the ECB, and are trimming a large and profitable short yen position.

(By Jamie McGeever; Editing by Shri Navaratnam)

Oil prices up 2% to near 3-month high on tight supply, China stimulus hopes

NEW YORK, July 24 (Reuters) – Oil prices climbed about 2% to a nearly three-month high on Monday on tightening supply, rising US gasoline demand, hopes for Chinese stimulus measures, and technical buying.

Brent futures rose USD 1.67, or 2.1%, to settle at USD 82.74 a barrel, while US West Texas Intermediate (WTI) crude rose USD 1.67, or 2.1%, to settle at USD 78.74.

Those were the highest closes for Brent since April 19 and for WTI since April 24, as both contracts were pushed into technically overbought territory above their 200-day moving averages.

The 200-day moving average had been a key point of technical resistance for both benchmarks since August 2022.

Bob Yawger, director of energy futures at Mizuho Bank, said a move above the 200-day moving average “generally stops out the (speculative) shorts (and) attracts traders looking for new entry points.”

Both crude benchmarks have already climbed for four weeks in a row with supplies expected to tighten due to cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, a group known as OPEC+.

Oil’s rise has reflected “tightening conditions as Saudi oil output cuts impact the market … even as summer demand has been somewhat stronger for gasoline and jet fuel,” Citi Research said in a note.

Strong demand and worries about supply issues boosted US gasoline futures RBc1 to their highest level since October 2022.

“The rally in crude oil is impressive as it occurs as Europe is looking very weak right now, the US is slowing down, and China’s Politburo isn’t expected to unveil major stimulus this week,” Edward Moya, senior market analyst at data and analytics firm OANDA, said in a note.

In the eurozone, business activity shrank much more than expected in July as demand in the bloc’s dominant services industry declined while factory output fell at the fastest pace since COVID-19 first took hold, a survey showed.

In the US, business activity slowed to a five-month low in July, dragged down by decelerating service-sector growth, closely watched survey data showed, but falling input prices and slower hiring indicate the Federal Reserve could be making progress on important fronts in its bid to reduce inflation.

A majority of economists polled by Reuters still expect this will be the last increase of the current US tightening cycle, after data this month showed signs of disinflation, eliminating the need for the Fed to lift rates further.

Higher interest rates increase borrowing costs and can slow economic growth and reduce oil demand.

Analysts at Deutsche Bank said demand for oil in China “is now surpassing expectations,” which “helps to add confidence in the ability of China to make up (two-thirds) of oil demand growth this year.”

(Reporting by Scott Disavino in New York; Additional reporting by Noah Browning in London and Florence Tan and Emily Chow in Singapore; Editing by Susan Fenton and Matthew Lewis)

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