Dollar gains with yen, Aussie drops as investors fret over recession risks

TOKYO, July 1 (Reuters) – Worries about the risk of a global recession drove rallies in the safe haven Japanese yen and US dollar on Friday while the risk-sensitive Australian dollar dipped to a two-year low.

The yen gained to 135.105 per dollar, pulling away from the mid-week low of 137.00, which was its weakest in 24 years.

The dollar index – which measures the greenback against six counterparts including the yen, euro and sterling – gained 0.18% to 104.85.

The euro sank 0.31% to USD 1.0449 and sterling lost 0.53% to USD 1.21145.

The Aussie tumbled 1.12% to USD 0.6826, and touched USD 0.6822, a level not seen since June 2020.

The New Zealand dollar plunged 1.15% to USD 0.6175 for the first time since May 2020.

Risk assets were already under pressure in the Asian morning, but losses accelerated quickly in the afternoon.

Regional stocks sank along with US Treasury yields in Tokyo trading.

Wall Street saw selling overnight, setting the tone, after weaker-than-expected US consumer spending data stoked fears for an economic slowdown, driven by aggressive Federal Reserve policy tightening.

The dollar is performing a complex balancing act, rising amid risks of a global downturn but falling on signs of a US recession.

The dollar index slid 0.32% overnight after the spending data, only to rally on Friday as that same data drove declines in Asian equities.

“USD sentiment has been deteriorating on the back of rising recession fears, but focusing on US growth in isolation has never been a good way to trade USD,” RBC Capital Markets strategists wrote in a note to clients.

The odds are extremely low of the United States sliding into recession without dragging the rest of the world with it, the strategists said.

The dollar and other haven currencies like the yen and Swiss franc would benefit at the expense of commodity currencies and sterling for the duration of a global downturn, they added.

For the week, the dollar index is on track for a 0.75% gain, which would be its best week in four.

The Fed has lifted the policy rate by 150 basis points since March, with half of that coming last month in the central bank’s biggest hike since 1994. The market is betting on another of the same magnitude at the end of this month.

Meanwhile, the European Central Bank is expected to raise interest rates this month for the first time in a decade, although economists are divided on the size of any hike.

Markets will look to euro zone inflation data due later in the day for a better sense of how aggressive the ECB might be.

The euro is headed for a 0.94% weekly slide, after touching a two-week low at USD 1.0381 on Thursday, with investors judging Europe’s economic predicament to be more precarious than in the United States, compounded by an energy crisis stoked by the war in Ukraine.

Sterling has dropped 1.21% this week.

The Aussie has tumbled 1.66% since last Friday.

The Reserve Bank of Australia decides policy on Thursday of next week, and markets expect a half point hike to the key rate. But that has not helped Aussie much, which has instead tracked commodity prices lower as the global economic outlook deteriorates.

“We have been arguing for some time for weakness below USD 0.70, and that we would give this dip time to unfold, especially given widespread stagflationary/recessionary pressures,” Westpac strategists wrote in a note, picking USD 0.6750 as “the next obvious target” for the currency.

(Reporting by Kevin Buckland; Editing by Himani Sarkar & Simon Cameron-Moore)

Philippines’ Marcos appoints career diplomat as foreign minister

MANILA, July 1 (Reuters) – Philippine President Ferdinand Marcos appointed career diplomat Enrique Manalo as foreign affairs secretary, the president’s press secretary said on Friday.

Before the appointment, Manalo served as the Philippine Permanent Representative to the United Nations in New York. Prior to that, he was undersecretary for policy at the Department of Foreign Affairs.

Manalo has asked for a few days before he takes over the position previously held by Teodoro Locsin so he could wind up affairs in his previous post, press secretary Trixie Cruz-Angeles said in a text message.

Marcos, who was sworn in as president on Thursday, has said his administration would have an independent foreign policy and recognized that international partnerships were key to a stable region.

“A veteran diplomat is more likely to appreciate the need to navigate difficult nuances and choices in geopolitics,” retired political professor Temario Rivera said.

“By appointing Manalo, (Marcos) might be sending a signal of trying not to antagonize any of the major powers in the region, especially the US and China.”

Manalo, whose foreign service career began in 1979, also served as Philippine Ambassador to the United Kingdom, Ireland Belgium and Luxembourg.

Marcos’ cabinet appointments would have to be approved by a house appointments commission.

(Reporting by Karen Lema; Editing by Ed Davies)

Oil prices up 2% on supply outages

LONDON, July 1 (Reuters) – Oil prices rose 2% on Friday, recouping most of the previous session’s declines, as supply outages in Libya and expected shutdowns in Norway outweighed expectations that an economic slowdown could dent demand.

Brent crude futures were up USD 2.07, or 1.9%, at USD 111.10 a barrel by 0911 GMT, having dropped to USD 108.03 a barrel earlier in the session.

WTI crude futures gained USD 1.80, or 1.7%, to USD 107.56 a barrel, after retreating to USD 104.56 a barrel earlier.

Both contracts fell around 3% on Thursday, ending the month lower for the first time since November.

We “still see risks to prices as skewed to the upside on tight inventories, limited spare capacity and muted non-OPEC+ supply response,” Barclays said in a note.

Libya’s National Oil Corporation declared force majeure on Thursday at the Es Sider and Ras Lanuf ports as well as the El Feel oilfield. Force majeure is still in effect at the ports of Brega and Zueitina, NOC said.

Production has seen a sharp decline, with daily exports ranging between 365,000 and 409,000 bpd, a decrease of 865,000 bpd compared to production in “normal circumstances”, NOC said.

Elsewhere, 74 Norwegian offshore oil workers at Equinor’s (EQNR) Gudrun, Oseberg South and Oseberg East platforms will go on strike from July 5, the Lederne trade union said on Thursday, likely halting about 4% of Norway’s oil production.

Ecuador’s government and indigenous groups’ leaders on Thursday reached an agreement to end more than two weeks of protests which had led to the shut-in of more than half of the country’s pre-crisis 500,000 bpd oil output.

On Thursday, the OPEC+ group of producers, including Russia, agreed to stick to its output strategy after two days of meetings. However, the producer club avoided discussing policy from September onwards.

Previously, OPEC+ decided to increase output each month by 648,000 barrels per day (bpd) in July and August, up from a previous plan to add 432,000 bpd per month.

US President Joe Biden will make a three-stop trip to the Middle East in mid-July that includes a visit to Saudi Arabia, pushing energy policy into the spotlight as the United States and other countries face soaring fuel prices that are driving up inflation.

Biden said on Thursday he would not directly press Saudi Arabia to increase oil output to curb soaring prices when he sees the Saudi king and crown prince during a visit this month.

Oil prices are expected to stay above USD 100 a barrel this year as Europe and other regions struggle to wean themselves off Russian supply, a Reuters poll showed on Thursday, though economic risks could slow the climb.

India introduced export duties on gasoil, gasoline and jet fuel on Friday to help maintain domestic supplies, while also imposing a windfall tax on oil producers who have benefited from higher global crude oil prices.

(Additional reporting by Stephanie Kelly and Yuka Obayashi; editing by Jason Neely)

Oil prices rise after falling 3% in previous session

July 1 (Reuters) – Oil prices edged up in early trade on Friday, after sinking in the previous session as OPEC+ said it would stick to its planned oil output hikes in August and investors worried about the strength of the global economy.

Brent crude futures rose 83 cents, or 0.8%, to USD 109.86 a barrel by 0012 GMT. WTI crude futures for August delivery rose 70 cents, or 0.7%, to USD 106.46 a barrel.

Prices fell around 3% on Thursday.

US traders squared positions ahead of the long Fourth of July weekend.

Previously, OPEC+ decided to increase output each month by 648,000 barrels per day (bpd) in July and August, up from a previous plan to add 432,000 bpd per month.

US President Joe Biden said on Thursday he would not directly press Saudi Arabia to increase oil output to curb soaring crude prices when he sees the Saudi king and crown prince during a visit next month.

(Reporting by Stephanie Kelly; editing by Richard Pullin)

MSCI global stock index has biggest first-half drop on record

NEW YORK, June 30 (Reuters) – The MSCI global stock index notched its biggest first-half of a year percentage drop on record on Thursday, while the US benchmark S&P 500 had its steepest percentage drop for the first six months since 1970.

Behind the slides have been concerns over the Ukraine-Russia war, soaring inflation, higher interest rates and, more recently, a possible US recession.

Yields on the benchmark Treasury note are up about 150 basis points year-to-date, the largest first-half increase since the first six months of 1994.

Adding to jitters Thursday, a Commerce Department report showed US consumer spending rose less than expected in May. While the report suggested inflation had probably peaked, price pressures were still strong enough to leave the US Federal Reserve on its aggressive policy-tightening path.

“Inflation is not something that we don’t have to worry about anymore. It is expected to be with us for quite some time,” said Sam Stovall, chief investment strategist at CFRA in New York.

Central bank chiefs from the Fed, the European Central Bank and the Bank of England met in Portugal this week and voiced their renewed commitment to control inflation no matter what pain it caused.

The Dow Jones Industrial Average fell 253.88 points, or 0.82%, to 30,775.43, the S&P 500 lost 33.45 points, or 0.88%, to 3,785.38 and the Nasdaq Composite dropped 149.16 points, or 1.33%, to 11,028.74.

Since the start of the year, the S&P 500 has lost 20.6%.

The pan-European STOXX 600 index lost 1.5% and MSCI’s gauge of stocks across the globe shed 1.12%.

The MSCI global stock index was down 20.9% for the first half of 2022.

The Fed’s hawkishness and an investor desire for liquidity in difficult times have helped support the US dollar.

The US dollar index gained 6.5% for the quarter in its biggest quarterly jump since the last quarter of 2016. The index is up 9.4% for the year to date.

On Thursday, the dollar index fell 0.343%, with the euro down 0.01% to USD 1.0481.

Bitcoin last fell 5.92% to USD 18,904.06.

Treasury yields slid for a third straight day on Thursday as investors continued to worry about a possible US recession. The yield on 10-year Treasury notes fell 10.4 basis points to 2.989% as safe-haven buying at the long end pushed prices up and yields lower.

Oil prices fell about 3% on the day. OPEC+ confirmed it would only increase output in August as much as previously announced, but left investors wondering about future output.

Brent crude futures for September delivery fell USD 3.42, or 3%, to settle at USD 109.03 per barrel. The August contract, which expires on Thursday, fell USD 1.45, or 1.3%, to settle at USD 114.81 a barrel. US crude futures fell USD 4.02, or 3.7%, to settle at USD 105.76.

Spot gold dropped 0.5% to USD 1,807.21 an ounce.

(Reporting by Caroline Valetkevitch in New York; Additional reporting by Thomas Wilkes in London and Wayne Cole in Sydney and Amruta Khandekar; Editing by Gareth Jones, Matthew Lewis and Deepa Babington)

Gold bound for worst quarter in over a year on hawkish Fed

June 30 (Reuters) – Gold slipped on Thursday, heading for its worst quarter in five as a hawkish tone from global central banks dimmed appeal for the non-yielding asset.

Spot gold fell 0.6% to USD 1,806.55 per ounce by 2:36 p.m. ET (1836 GMT), on track to fall more than 6% for the quarter. US gold futures settled down 0.6% at USD 1,807.3.

“Gold is ending lower this quarter due to the tighter Federal Reserve policy suggestions. Also, there’s a good chance that recession worries will bring down demand across commodities,” said Jim Wyckoff, senior analyst at Kitco Metals.

Bringing down high inflation will be painful and could even crash growth, but it must be done quickly to prevent rapid price growth from becoming entrenched, the world’s top central bank chiefs said at the European Central Bank’s annual conference in Portugal.

The dollar index hovered near its recent two-decade peak and was headed for a 6% rise this quarter, making gold more expensive for overseas buyers.

Gold briefly bounced after US data showed the personal consumption expenditures price index rose 6.3% in May after advancing by the same margin in April. However, gold prices quickly moved back into the tight range it has been in for the past few sessions.

“The data initially gave traders the idea that since inflation wasn’t any worse than last month, maybe the Fed won’t be so aggressive, helping gold. However, the market is still firmly bearish and speculative sellers jumped in to push prices down,” added Wyckoff.

Gold usually benefits from high inflation, but rising rates translate into higher opportunity cost of holding the non-interest bearing asset.

Spot silver XAG= fell 1.8% to USD 20.33 per ounce, platinum dipped 2.1% to USD 897.90 and palladium was down 1.3% at USD 1,936.07.

“If you’re talking recession, it means less automotive production and industrial activity; this is hurting palladium,” said Bart Melek, head of commodity strategies at TD Securities.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Krishna Chandra Eluri and Lisa Shumaker)

TIMELINE-The rise, fall and return of the Philippines’ Marcos dynasty

June 30 (Reuters) – Ferdinand Marcos Jr took the oath of office on Thursday as Philippines president, 36 years after a people’s revolt drove his father from office after two decades in power. nL1N2YH03Q

Below is a timeline of key events for the Marcos family, the country’s most famous and politically influential dynasty.

1965 – After 15 years as a lawmaker, Ferdinand Marcos wins a presidential election, following a campaign portraying him as a decorated World War Two hero, claims that historians have disputed. Marcos is popular in his first term after borrowing from abroad to modernise infrastructure.

1969 – Marcos wins a second term, but an earlier debt-fuelled spending spree triggers an economic crisis and soaring inflation. Public discontent and social unrest simmers and opposition against Marcos grows on several fronts.

1972 – Marcos declares martial law to restore order and dissolves Congress, which allows him to stay in power beyond the constitution’s two-term limit. Thousands of opponents are arrested, beaten, tortured or killed or disappear during nine years of martial law.

1981 – Martial law is lifted. A presidential election is held and Marcos wins by a huge margin, with much of the opposition boycotting.

His son and namesake, Ferdinand Marcos Jr, returns to the Philippines after studying in Britain and the United States and becomes Ilocos Norte governor.

1983 – The president’s biggest political rival, Benigno Aquino, is assassinated upon his return from exile, triggering anger against the Marcos administration.

1985 – As domestic discontent grows, Marcos calls a snap election. Aquino’s widow, Corazon, decides to run and opposition starts to unite against Marcos.

1986 – Marcos wins an election that observers and the United States say is fraudulent. Opponents call for protests and civil disobedience and are threatened with arrest for sedition. The president’s defence chiefs quit and side with a growing “people power” movement.

The Marcos family and an entourage of dozens flee into exile in Hawaii, with a customs inventory that includes 22 crates of cash and millions of dollars worth of jewellery, including diamond-studded tiaras, a gold crown and dozens of pearl necklaces.

A special panel is created to retrieve an estimated $10 billion of wealth that disappeared during the Marcos era. It will eventually recover about half of that.

1989 – Marcos Sr dies in Hawaii age 72.

1991 – The Marcos family return home to face graft and tax evasion charges, but are cleared. Over the next two decades, Marcos Jr, sister Imee, and mother Imelda, rebuild the family’s political network, between them serving concurrently as governor of Ilocos Norte and its representatives in Congress and several stints in the Senate.

1992 – Imelda Marcos contests the presidency, finishing fifth out of six candidates in the first of two failed presidential runs.

1993 – The body of Marcos Sr is returned to the Philippines but is denied a burial in a heroes’ cemetery for former presidents, a decision the family challenges for years.

2016 – After six years as senator, Marcos Jr contests the vice presidential election but narrowly loses.

President Rodrigo Duterte agrees to the Marcos family’s request to bury Marcos Sr with military honours at the heroes’ cemetery.

2018 – Imelda, now aged 89, is found guilty in absentia of seven counts of corruption involving use of Swiss bank accounts, collectively worth up to 77 years in prison. She is bailed pending appeal.

2022 – Marcos Jr wins a presidential election by the biggest margin since his father’s rule and takes the oath of office pledging to work for a bright future, while praising his late father’s achievements.

(Reporting by Martin Petty and Enrico dela Cruz
Editing by Gareth Jones)

((martin.petty@tr.com; +66896070413))

Japan minister: agreed with new Philippine leader Ukraine invasion is outrage

TOKYO, June 30 (Reuters) – Japanese Foreign Minister Yoshimasa Hayashi said on Thursday he agreed with new Philippine President Ferdinand Marcos that Russia’s invasion of Ukraine is an “outrage” that should not be tolerated anywhere in the world.

“We shared a view that Russian invasion of Ukraine is an outrage that shakes the core of the international order, and that unilaterally changing the status quo by force should not be tolerated in any region,” Hayashi said.

Hayashi made the comment to reporters after making a courtesy call on Marcos.

(Reporting by Kiyoshi Takenaka; Editing by Jon Boyle)

((kiyoshi.takenaka@thomsonreuters.com; +81 3 4563 2788;))

Euro zone bond yields fall as investors focus on growth risks

June 30 (Reuters) – Euro zone bond yields fell as financial markets continued to focus on growth risks on Thursday.

The fastest rate-hiking cycle in decades to combat soaring inflation has hit consumer demand, elevating investor fears of a growth slowdown or outright recession.

Data from France showed annual June inflation came in slightly higher than expected at a record 6.5% ahead of a euro zone-wide print on Friday, the last the ECB will scrutinize ahead of its July 21 policy meeting, where it is expected to hike rates by 0.25%. Monthly figures were in line with a Reuters poll’s expectations.

Thursday’s moves follow volatile trading on Wednesday, when bond yields tumbled after German inflation unexpectedly fell in June, though economists warned this was driven by one-off effects and was unlikely to be a sign that inflation has peaked.

They ended the session sharply lower, even after Spanish data showed inflation rising much higher than expected to more than 10%, but ended the session sharply lower.

On Thursday, 0739 GMT, Germany’s 10-year yield, the benchmark for the bloc, was down nearly 7 basis points (bps) to 1.44%, adding to a 13 bps fall on Wednesday.

Italy’s 10-year yield was down 6 bps to 3.45%, with the closely-watched spread to German peers at 199 bps.

“It’s probably a combination of things. A little bit of a relief rally that French inflation wasn’t higher, but also risk assets are really starting to deteriorate now. It’s a pessimistic drop on risk assets that’s probably leading to some short covering or a bit of buying in rates,” said Peter McCallum, rates strategist at Mizuho.

Stock markets also dropped sharply on Thursday.

“Markets are feeling more confident that central banks are going to be on top of inflation, so you’ve had breakevens falling fairly sharply, but to get to that inflation falling situation, central banks will probably have to stay the course with their tightening,” McCallum added.

For example, the US 5-year breakeven rate, a market gauge of inflation expectations, fell to its lowest since October 2021 on Wednesday, at 2.66%.

In another sign of those growth fears, the iTraxx Europe crossover index, which measures the cost of insuring exposure to sub-investment grade European corporate high yield bonds, rose above 600 basis points for the first time since April 2020, the height of the COVID-19 pandemic.

Later in the session investors will also eye the US Federal Reserve’s favoured inflation gauge, the core personal consumption expenditures index, which a Reuters poll expects to rise slightly on a monthly basis, but drop slightly year-on-year.

In the primary market, Italy will raise up to 7 billion euros from a new 5-year bond, and re-openings of a 10-year and seven-year floating-rate bond.

(Reporting by Yoruk Bahceli; Editing by Alex Richardson)

Philippines begins new era of Marcos rule, decades after overthrow

MANILA, June 30 (Reuters) – The son and namesake of late dictator Ferdinand Marcos was sworn in as president of the Philippines on Thursday, completing a stunning comeback for one of Asia’s most famous political dynasties, 36 years after it was ousted in a popular uprising.

Marcos Jr. scored a rare landslide victory in last month’s election, helped by what his critics see as a decades-long effort to alter public perceptions of a family that lived lavishly at the helm of one of the world’s most notorious kleptocracies.

In a speech that echoed his campaign slogans of unity, Marcos Jr, better known as “Bongbong”, vowed to take the country far on his watch with policies benefiting everyone, and thanked the public for delivering what he called “the biggest electoral mandate in the history of Philippine democracy”.

“You will not be disappointed, so do not be afraid,” he said at his inauguration ceremony, surrounded by his immediate family and with his sister Imee, a senator, and 92-year-old mother Imelda, a former four-time congresswoman, seated close by.

Marcos Jr, 64, also praised his late father’s rule, but said his presidency was not about the past, but a better future.

“I once knew a man who saw what little had been achieved since independence ….but he got it done sometimes with the needed support, sometimes without,” he said.

“So will it be with his son. You will get no excuses from me.” He added: “No looking back in anger or nostalgia.”

The elder Ferdinand Marcos ruled the Philippines from 1965 for two decades, almost half of it under martial law, helping him to extend his grip on power until his overthrow and his family’s retreat into exile during a 1986 “people power” revolution.

Thousands of Marcos opponents were jailed, killed or disappeared during his rule, and the family name became synonymous with cronyism, extravagance and the disappearance of billions of dollars from state coffers. The Marcos family has rejected accusations of embezzlement.

Hundreds of activists were expected to protest against the inauguration of Marcos Jr, angered by a campaign buoyed by a powerful network of supporters and social media influencers determined to debunk historical narratives of the Marcos era.

The former senator and congressman campaigned on the slogan “together, we shall rise again”, invoking nostalgia for his father’s rule, which his family and supporters have portrayed as a golden age for the Philippines, a former US colony.

Voters are counting on him to deliver on pledges to create jobs and bring down consumer prices in a country of 110 million people, nearly a quarter of whom live on less than $2 per day.

In a stirring 30-minute speech, Marcos Jr pledged education reforms, to improve food sufficiency, infrastructure, waste management and energy supply and to give full support for millions of overseas Filipino workers.

“I fully understand the gravity of the responsibility you put on my shoulders. I do not take it lightly but I am ready for the task,” he said.

“I will get it done.”

(Editing by Martin Petty and Michael Perry)

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