Philippines revises 2022, 2023 c/a projections

MANILA, Dec 9 (Reuters) – The Philippine central bank on Friday revised its current account projections for 2022 and 2023 to take into account the weaker global growth outlook, elevated inflation and the domestic economy’s pace of expansion.

The central bank now expects a current account deficit of USD 20.5 billion, or 5.1% of gross domestic product (GDP), this year, compared with its previous projection of USD 20.6 billion, or 5% of GDP.

For 2023, it expects a current account deficit of USD 19.9 billion, or 4.7% of GDP, compared with its earlier deficit forecast of USD 20.1 billion, or 4.5% of GDP.

The central bank said the revisions reflected intensifying external risks from a more subdued global growth outlook, persistent inflation pressures, the protracted Ukraine-Russia conflict, and supply chain disruptions.

Central bank officials also took into consideration the positive outlook for the Philippine economy which was on track to meet its growth target of 6.5%-7.5% this year, with the pace of expansion forecast to remain at least 6% next year.

The central bank revised its balance of payments (BOP) forecasts for both years, which are now expected to show a deficit of USD 11.2 billion in 2022 and USD 5.4 billion in 2023, wider than previous estimates.

Forecasts for gross international reserves were lowered to USD 93 billion for both 2022 and 2023, from the central bank’s previous estimate of USD 99 billion and USD 100 billion respectively.

Remittances from Filipinos working and living abroad were seen on track to grow 4.0% this year and next.

(Reporting by Neil Jerome Morales and Karen Lema; Editing by Ed Davies)

Dollar slips on recession fears; eyes on US CPI, central bank meetings

SINGAPORE, Dec 9 (Reuters) – The dollar retreated on Friday as worries over a slowdown in the United States mounted, with traders on guard ahead of a slew of central bank meetings next week, with the Federal Reserve taking centre stage.

Against the greenback, the euro rose 0.25% to USD 1.0581, edging toward its six-month peak hit at the start of the week and on track for a third straight week of gains.

Sterling firmed 0.27% and stood at USD 1.2274, not far off Monday’s six-month high of USD 1.2345. The Japanese yen jumped about 0.4% to 136.13.

The number of Americans filing new claims for jobless benefits increased moderately last week, data showed on Thursday, with the so-called continuing claims rising to a 10-month high in late November, adding to fears that the world’s largest economy may slide into recession next year.

“We’ve got a very awkward outlook the next year, which is playing into traders’ thought process. We’re looking…at much lower growth globally, lower growth out of the US as well,” said Jarrod Kerr, chief economist at Kiwibank.

The US dollar index fell 0.23% to 104.57, after slipping 0.3% overnight.

It has fallen nearly 7% this quarter, putting it on track for the largest quarterly decline since 2010.

“It’s (also) very much positioning at the moment,” Kerr added, ahead of the Fed’s policy meeting next week.

Money markets are pricing in a 93% chance that the Fed will raise rates by 50 basis points, with rates now seen peaking at just below 5% in May.

Closely-watched US inflation data is also due next week, with any downside surprise in November’s CPI likely to trigger another greenback selling spree.

Last month, the dollar dived after data showed that US consumer prices had risen less than expected in October.

Expectations that the Fed will scale back the pace of its interest rate hikes and that rates may not rise as high as previously feared have knocked the dollar more than 8% off its two-decade peak against a basket of currencies hit in September.

Yields on US Treasuries have also slumped, with the two-year yield, which typically reflects interest rate expectations, last at 4.2838%, away from its 15-year high of nearly 4.9% hit last month.

A closely watched part of the US Treasury yield curve, measuring the gap between yields on two- and 10-year Treasury notes was inverted at -83 bps.

An inversion of this yield curve is typically a precursor to recession.

The European Central Bank and the Bank of England will also announce their monetary policy decisions next week, with markets keenly watching for guidance on 2023’s outlook.

Elsewhere, the Aussie was up 0.26% at USD 0.67875, while the kiwi gained 0.42% to USD 0.6407.

The antipodean currencies have been beneficiaries of China’s recent easing of its stringent COVID restrictions, given that they are often used as liquid proxies for the Chinese yuan.

Against the dollar, the offshore yuan rose roughly 0.1% to 6.9541.

Optimism over China’s path to reopening has overshadowed the country’s recent dismal data releases. China’s factory-gate prices showed an annual fall for a second month in November while consumer inflation slowed, highlighting very weak demand.

“The China reopening theme is a big one, especially (coming) from a low base,” said Christopher Wong, a currency strategist at OCBC.

“Chinese assets were deeply oversold prior to the recent rebound. More reallocation back to RMB-assets will support RMB.”

(Editing by Jacqueline Wong and Kim Coghill)

Oil bounces on pipeline shutdown, but heads for weekly loss on demand woes

Dec 9 (Reuters) – Oil prices bounced higher on Friday as closure of a major Canada-to-US crude pipeline disrupted supplies, but both benchmarks were headed for a weekly loss on worries over slowing global demand growth.

Brent crude futures were at USD 76.73 a barrel, up 58 cents, or 0.76%, at 0716 GMT, after dropping 1.3% on Thursday.

US West Texas Intermediate crude rose 52 cents, or 0.73%, to USD 71.98 a barrel, having settled 0.8% lower in the previous session.

News of an accident closing Canada’s TC Energy’s Keystone pipeline in the United States prompted a brief rally on Thursday, but prices finally eased as the market took a view that the closure would be brief. More than 14,000 barrels of crude oil spilled into a creek in Kansas, making it one of the largest crude spills in the United States in nearly a decade.

Previous spill-induced outages are typically rectified in about two weeks, RBC Capital analyst Robert Kwan said, although the latest outage may prove longer given that it involves a spill into a creek.

Oil prices are set to post their biggest weekly drop in months, since traders expect it will be some time before China easing its COVID controls feeds through to demand.

And surging infections will likely depress China’s economic growth in the next few months, bringing a rebound only later in 2023, economists said.

“The market lacks conviction in calling a bottom to crude despite the strong losing streak of the past several sessions,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Thursday’s price slump despite two major crude supply disruptions is a bit bewildering, she said.

“It is likely exacerbated by thinning trading activity, wherein the few remaining actors are playing it safe by continuing to sell and steering clear of the long side.”

Also on the downside, the US economy is heading into a short and shallow recession over the coming year, according to economists polled by Reuters who unanimously expected the US Federal Reserve to go for a smaller 50 basis point interest rate hike on Dec. 14.

The European Central Bank will also likely lift its deposit rate by 50 basis points next week to 2.00%, another Reuters poll found, despite the euro zone economy almost certainly being in recession, as it battles inflation running at five times its target.

(Reporting by Florence Tan in Singapore and Mohi Narayan in New Delhi; Editing by Bradley Perrett, Stephen Coates and Tom Hogue)

Gold firms on dollar dip; spotlight on Fed policy decision

Dec 9 (Reuters) – Gold firmed just below the key USD 1,800 level on Friday as the dollar eased, with caution ahead of US inflation data and the Federal Reserve’s policy decision due next week limiting overall moves.

Spot gold was up 0.3% at USD 1,794.49 per ounce, as of 0648 GMT, but fell 0.2% this week. US gold futures rose 0.3% to USD 1,807.10.

The dollar index was down 0.2%. A weaker dollar makes gold more attractive to buyers holding other currencies.

There’s a real chance of an upward move in gold heading into next week’s Fed meet and CPI data, said Clifford Bennett, chief economist at ACY Securities.

Investors now expect a 93% chance of a 50-basis point rate hike at the Fed’s policy meeting on Dec. 13-14. The US Consumer Price Index (CPI) report for November is due on Dec. 13.

If the Fed slows the pace as per expectations, along with a relatively moderate CPI print, “then dollar might weaken and all of a sudden you could see a perfect storm rushing over gold’s horizon,” Bennett added.

Lower interest rates tend to be beneficial for bullion as they decrease the opportunity cost of holding the non-yielding asset.

Traders will care to see what the Fed has to say about the trend of inflation and where rates could peak, Edward Moya, senior analyst with OANDA, said in a note.

“Gold looks like it will find a home around the USD 1,800 level, until we have further indications.”

The number of Americans filing new claims for jobless benefits increased moderately last week, pointing to a still-tight and strong labor market despite growing fears of a recession.

Spot silver edged 0.3% higher to USD 23.15, platinum rose 0.7% to USD 1,010.30. Palladium lost 0.5% to USD 1,918.01, but was headed for second straight weekly gain.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich)

Tax-loss selling in battered US stocks could spur January snap-back

NEW YORK, Dec 7 (Reuters) – Investors who sell underperforming US stocks to lock in tax benefits before year-end may be adding to recent pressure on equities while sowing the seeds of a January rebound in some corners of the market.

With the S&P 500 down about 16% year-to-date and many individual stocks nursing even sharper losses, tax-loss harvesting – or investors selling assets with a loss in order to cancel out the income taxes they owe on realized gains elsewhere in their portfolios – may be a stronger than usual headwind to markets this year.

Yet some investors are betting a number of those beaten-down stocks and possibly the broader market could snap back in January, once the selling period is over.

“This is the first time that investors are looking at double-digit declines in about 13 years, and we’ve never seen this level of tax-loss selling before,” said Peter Essele, who oversees roughly USD 11 billion as in assets as head of portfolio management for Commonwealth Financial Network. “That could result in a pretty strong first couple of months as people start reentering long-term assets.”

S&P 500 stocks that are down 10% or more for the year – making them likely targets for tax-loss selling – have historically outperformed the broader index by 8.2 percentage points between November and the end of January during years in which the index fell more than 10%, analysts at BofA Global Research noted in a research report.

The firm identified 159 out of 338 stocks with a 10% or greater loss for the year in the S&P 500 that could bounce following tax selling, including Meta Platforms Inc. (META), Domino’s Pizza Inc. (DPZ), Home Depot Inc. (HD), and Amazon.com Inc. (AMZN). Shares of each company are down 1% or more for December, with Amazon leading the way with a roughly 8% decline.

DoubleLine founder Jeffrey Gundlach told CNBC on Wednesday that risk assets will likely rally in January once retail investors finish tax-loss selling. Strategists at Evercore wrote on Nov. 30 that they were “buyers of stocks whose 2022 Tax Loss selling pressure will soon abate.”

Investors appear to have already started selling underperforming shares. Private clients at BofA, for instance, sold nearly USD 1.4 billion of stocks in likely tax-motivated selling in November, up from roughly USD 800 million last year, and appear poised to continue that outsized rate of selling this month, the firm said.

Vanda Research, which tracks the behavior of retail traders, wrote in a late-November research note that individual investors typically pull an average of approximately USD 1 billion on net from the shares of single US stocks during the last weeks of December and put their funds into ETFs that give exposure to broader markets, helping fuel so-called “Santa Claus rallies” at the end of the year.

Of course, macroeconomic concerns such as monetary policy and worries over a potential recession resulting from the Federal Reserve’s rapid interest rate hikes are likely to remain the main drivers of stock moves in 2023, potentially dwarfing the impact of seasonal flows, said Emily Rowland, co-chief investment strategist at John Hancock Investment Management.

“We wouldn’t want to overplay that trend as we move into more challenging waters next year,” she said.

(Reporting by David Randall; Editing by Ira Iosebashvili and Nick Zieminski)

Emerging markets November foreign inflows most since June 2021 – IIF

Dec 8 (Reuters) – Foreigners dumped the most cash into emerging market portfolios in November than any month since June 2021 even as Chinese debt continues to see outflows, the Institute of International Finance (IIF) said on Thursday.

Overall, foreign investors added USD 37.4 billion to emerging market portfolios last month, with fixed income attracting USD 14.4 billion in the strongest monthly inflows so far this year.

Flows to Chinese equities also posted their largest monthly increase this year at USD 8.5 billion, but Chinese debt continued to see outflows that now total almost USD 77 billion in 2022.

“Non-resident investor flows to China have essentially ground to a halt, which is consistent with anecdotes we pick up from market participants who have become more attuned to geopolitical risk,” said IIF economist Jonathan Fortun in a report alongside the flows data.

China this week eased COVID-19 quarantine rules in a major policy adjustment which could reverse the flow of cash back into portfolios in the world’s second-largest economy.

Chinese stock indexes have had a rough year, and the low prices have enticed investors even before the new COVID rules. Shanghai stocks rose nearly 9% last month and are down 12% YTD while Hong Kong .HSI, down 17% so far in 2022, added 27% last month alone. The China MSCI index, priced in dollars, rose almost 30% in November.

The yuan CNY= gained 3% last month against the dollar but remains down near 9% this year, still on track for the largest yearly losses in almost three decades.

IIF regional data showed an inflow of USD 25.6 billion to Asia, while Latin America took in some USD 8.2 billion, the most since March, and emerging Europe another USD 3.2 billion. Africa and the Middle East took in USD 0.4 billion in the first positive reading since March.

(Reporting by Rodrigo Campos; Editing by Chizu Nomiyama)

Gold firms on softer dollar with focus on Fed’s next move

Dec 8 (Reuters) – Gold prices edged higher on Thursday as the dollar eased, while investors positioned themselves ahead of key US inflation data and the Federal Reserve’s policy meeting due next week.

Spot gold was up 0.2% at USD 1,789.42 per ounce, as of 1901 GMT, after rising more than 1% on Wednesday.

US gold futures settled 0.2% higher at USD 1,801.50.

The dollar index slipped 0.3% against its rivals, making gold less expensive for other currency holders.

“We’re just waiting for some fresh fundamental inputs,” said Jim Wyckoff, senior analyst at Kitco Metals, adding that gold prices are likely to be in “choppy and sideways” trade leading up to the Fed’s policy meeting next week.

Investors are keeping a close eye on the Fed policy decision due on Dec. 14, with market participants largely pricing in a 50-basis-point (bps) rate hike. November’s consumer price data due on Dec. 13 will also be closely watched.

“What traders are going to watch is not only whether the Fed raises (interest rates) by half a point or three-quarters of a point, but also the tenor of their rhetoric on the pace of future rate hikes,” Wyckoff said.

However, recent strong US economic data has led to fears that the Fed may lift interest rates more than recently projected.

“The jobs report was a setback and one that could stand in the way of another break higher before the Fed meeting,” Craig Erlam, senior market analyst at OANDA said in a note.

Interest rate hikes to fight soaring inflation tend to raise the opportunity cost of holding non-yielding gold.

The World Gold Council (WGC) said global gold ETFs (exchange traded funds) holdings fell for a seventh straight month in November, although outflows slowed to a modest 34 tonnes worth USD 1.8 billion.

Spot silver added 1.5% to USD 23.07 per ounce, platinum rose 0.2% to USD 1,004.22 and palladium climbed 4.6% to USD 1,929.98.

(Reporting by Kavya Guduru in Bengaluru; Editing by Sherry Jacob-Phillips and Maju Samuel)

Central banks flash a huge blip on the FX option radar

Dec 8 (Reuters) – One week FX option expiries now capture a swathe of central bank rate decisions from the U.S, Europe, UK and Switzerland, on top of Tuesday’s US CPI data, which has further boosted related implied volatility and warns dealers of the extreme risk of increased actual volatility ahead.

Dealers use implied volatility to gauge actual volatility expectations over the life of the options. Option holders can profit if actual volatility outperforms implied, so the big jump in the latter since capturing the US CPI data and now these central bank meetings flag the additional volatility risk premium.

EUR/USD one-week implied volatility adds 3.0 to match longer term highs at 15.0 since Wednesday and 10.0 before the CPI data – a premium/break-even for a simple vanilla straddle of USD 175-pips in either direction.

USD/JPY one-week implied volatility is up 5.0 on the week to 18.0 – a premium/break-even of 272-JPY pips in either direction.

USD/CHF one-week implied volatility is 13.25 from 8.5 at the start of the week – 137 CHF pips in either direction, with EUR/CHF now 9.5 from 6.5 Wednesday (104 CHF pips either side).

GBP/USD 1-week is up 5.0 on the week to 17.0 – a break-even of USD 228-pips in either direction, while 1-week expiry EUR/GBP implied volatility has added 3.0 to 9.0 since capturing the BoE and ECB to £86-pips in either direction.

AUD/USD and NZD/USD 1-week implied volatilities gain 4.5 to 18.5 this week, which are USD 133-pips and 126-pips in either direction respectively.

(Richard Pace is a Reuters market analyst. The views expressed are his own)

Japan’s Nikkei ends at near 1-month low amid economic worries

TOKYO, Dec 8 (Reuters) – Japan’s Nikkei index closed at near one-month low Thursday, weighed down by Wall Street’s weak finish on economic concerns as well as corporate earnings.

The Nikkei share average fell 0.4% to close at 27,574.43, its lowest close since Nov. 10.

The broader Topix slipped 0.35% to 1,941.50.

The S&P 500 and Nasdaq closed lower overnight after a choppy session on Wall Street, as investors struggled to grasp a clear direction as they weighed how the Federal Reserve’s monetary policy tightening might feed through into corporate America.

“Investors were worried about global economic and corporate outlook, following comments from Goldman Sachs and JP Morgan executives,” Maki Sawada, strategist at Nomura Securities told at a media briefing on the market.

Downbeat comments from top executives at the biggest U.S banks rattled the market, with Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) saying a mild to more pronounced recession was likely ahead.

In Japan, chip-making equipment maker Tokyo Electron lost 0.94%, game and audio equipment maker Sony Group fell 1.93% and robot maker Fanuc slipped 0.6%.

Motor maker Nidec lost 2.89% to become the worst performer on the Nikkei. Toy maker Konami Holdings Group 9766.T slipped 2.7%.

SoftBank Group jumped 2.15% and provided the biggest support to the Nikkei after a report that its billionaire chairman and CEO, Masayoshi Son, has raised his stake in the firm to 34%, taking him closer to a buyout of the conglomerate.

(Reporting by Junko Fujita; editing by Uttaresh.V)

Oil falls on weakening demand, shrugs off Keystone closure

NEW YORK, Dec 8 (Reuters) – Oil settled lower for a fifth straight session on Thursday as traders shrugged off the closure of a major Canada-to-US crude pipeline, focusing instead on concerns that global economic slowdowns would slash fuel demand.

Brent crude settled at USD 76.15 a barrel, losing USD 1.02, or 1.3%. US West Texas Intermediate (WTI) crude settled at USD 71.46 a barrel, shedding 55 cents, or 0.8%.

Canada’s TC Energy said it shut its 622,000 barrel-per-day Keystone pipeline, which is the primary line shipping heavy Canadian crude from Alberta to the US Midwest and Gulf Coast, after a spill into a Kansas creek.

The line has had several spills since it began operating in 2010.

Oil prices rose after the company announced the closure, but the rally dissipated as analysts noted that the US Gulf is likely to have enough inventory to handle short-term outages. Several analysts also said the section of the line that goes to Midwest refiners could be restarted soon. TC Energy has not announced when the pipeline would reopen.

“I would tend to think that, any minute here, you’re going to see a headline hit the tape that’s going to say that Keystone is going to be back sooner rather than later,” said Bob Yawger, director of energy futures at Mizuho in New York.

The energy markets are weighed down by fears of an economic slowdown, weakening fuel demand amid the prospect of more US interest rate hikes, with the Federal Reserve widely expected to raise interest rates by 50 basis points next week.

While US crude inventories fell last week, gasoline and distillate inventories surged, adding to concern about easing demand.

Limiting losses was an announcement by China on Wednesday detailing the most sweeping changes to its strict anti-COVID regime since the pandemic began, while at least 20 oil tankers faced delays in crossing to the Mediterranean from Russia’s Black Sea ports.

The 14-day relative strength index for Brent was below 30 on Thursday according to Eikon data, a level taken by technical analysts as indicating an asset is oversold and could be poised for a rebound.

Both Brent and US crude hit 2022 lows on Wednesday, unwinding all the gains made after Russia’s invasion of Ukraine exacerbated the worst global energy supply crisis in decades and sent oil close to its all-time high of USD 147.

Western officials were in talks with Turkish counterparts to resolve the tanker queues, a British Treasury official said on Wednesday, after the G7 and European Union rolled out new restrictions aimed at Russian oil exports.

(Reporting by Laila Kearney; Additional reporting by Jeslyn Lerh in Singapore and Alex Lawler; Editing by Jason Neely, Kirsten Donovan, Lisa Shumaker and John Stonestreet)

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