Author

The International Monetary Fund’s executive board will hold a meeting on Egypt next week as the North African nation awaits final approval for a $3bn loan deal.The board’s calendar on the IMF website shows a December 16 meeting scheduled on Egypt’s request for an extended arrangement under the so-called Extended Fund Facility.Cairo and the Washington-based lender reached a staff-level agreement for the 46-month facility in late October. The financing is key to helping shore up Egypt’s economy as it grapples with the fall-out from Russia’s invasion of Ukraine.One of the world’s largest wheat importers, Egypt has raced to secure financial backing from its Gulf allies and sharply devalued its currency twice this year. The same day in October that Egypt announced the IMF deal, authorities said they were adopting a flexible exchange-rate for the pound, a policy analysts say has yet to be fully tested.In a sign investors are betting on a further depreciation, 12-month non-deliverable forwards for the Egyptian pound slumped to 30 against the US dollar on Tuesday for the first time. In the spot market, the pound was steady at 24.6 per dollar.Egypt is also trying to clear trade backlogs caused by requests from importers seeking hard currency.“A combination of increased FX price volatility and liquidity injection is needed to clear the existing overhang,” EFG Hermes Research said on Tuesday. That “will help regain the momentum in the FX market, clear the remaining existing backlogs and help accommodate new demand, once import controls are removed.”A weaker currency is driving up prices for the nation of about 104mn people, with inflation data due this week expected to show the further impact of the pound’s plunge.Egypt’s net international reserves climbed slightly in November, as the North African country awaits the final approval of an International Monetary Fund loan key to shoring up the economy.The figure reached $33.5bn, compared with $33.4bn at the end of October, the central bank said on Tuesday.Three major declines in Egypt’s reserves earlier this year have starkly illustrated the economic impact of Russia’s invasion of Ukraine on the Arab world’s most populous nation.Egypt’s Gulf allies have already pledged more than $20bn in deposits and investments for the country that’s dealing with a surge in fuel and food import bills and an exodus of portfolio investment. More funding would ease pressure on Egypt’s pound, which has already seen two dramatic falls this year, in March and late October. The central bank said it has adopted a more flexible foreign-exchange regime.

Tesla Inc opened bookings for its cars in Thailand yesterday, becoming the latest entrant into Southeast Asia’s largest market for passenger electric cars currently dominated by its Chinese rivals.The US automaker will start delivering its Model 3 and Model Y cars in the first quarter of next year, Yvonne Chan, Tesla’s country director for Thailand, told reporters at a launch event in Bangkok.Tesla will also open its first service centre in Thailand in the first quarter of 2023 and its first super-charger facility will be functional by February. At least 10 more super charging sites will be opened in Bangkok next year, Chan said.Tesla’s foray into Thailand — its second in the region after Singapore — comes as competition is heating up with Chinese players such as Great Wall Motor, BYD and Hozon already battling for a share of the fast-growing EV market.The Model 3 is priced from 1.76mn baht ($50,200) and Model Y from 1.96mn baht, according to Chan. Dozens of prospective buyers flocked to Bangkok’s Siam Paragon shopping mall yesterday to inquire about prices and view the cars on display.“Buying a Tesla car means buying its ecosystem,” said Nonnalin Thugsoonthorn, a Bangkok-based investment strategist, who is looking to replace her combustion engine car with the Tesla Model 3. “I’m very happy with the price and the quality.”Tesla will compete with cars such as Great Wall Motor’s Ora Good Cat that’s priced from 763,000 baht and benefits from a slew of tax incentives offered by Thai government to promote electric vehicles.Chan didn’t say if Tesla plans to set up a plant in Thailand, the region’s largest auto manufacturing hub. BYD, which started selling its first electric SUVs in Thailand last month, has chosen the country for its first overseas EV car plant. It is scheduled to begin manufacturing in 2024, mostly for exports to Southeast Asia and Europe.Thailand, a longstanding auto manufacturing powerhouse, has a comprehensive supply chain that feeds scores of factories, mainly owned by Japanese companies, producing internal combustion engine cars. But the Thai government has said it wants 30% of its total car output to be electric by 2030, and earlier this year allocated about 43bn baht through 2025 to promote the use of EVs. Tesla registered its Thai unit in April with a capital of 253mn baht, according to the nation’s commerce ministry. It has also advertised more than a dozen jobs for its operations.

China’s exports and imports shrank at a much steeper-than-expected pace in November, as feeble global and domestic demand, Covid-induced production disruptions and a property slump at home piled pressure on the world’s second-biggest economy.Exports contracted 8.7% in November from a year earlier, a sharper fall from a 0.3% loss in October and marked the worst performance since February 2020, official data showed yesterday.They were well below analysts’ expectations for a 3.5% decline.Outbound shipments have lost steam since August as surging inflation, sweeping interest rate increases across many countries and the Ukraine crisis have pushed the global economy into the brink of recession.Exports are likely to shrink further over coming quarters, Julian Evans-Pritchard, senior China Economist at Capital Economics, said in a note to clients.“Outbound shipments will receive a limited boost from the easing of (China’s) virus restrictions, which are no longer a major constraint on the ability of manufacturers to meet orders,” he said. “Of much greater consequence will be the downturn in global demand for Chinese goods due to the reversal in pandemic-era demand and the coming global recession.”Overall, the bleak data also underlined the impact of fresh Covid restrictions across many Chinese cities including manufacturing hubs Zhengzhou and Guangzhou as infections spiked last month. Apple supplier Foxconn said that revenue in November dropped 11.4% year-on-year, after production problems related to Covid controls at the world’s biggest iPhone factory in Zhengzhou.Freight rates indexes from Chinese ports to Europe and the US west coast were down by 21.2% and 21.0% in November from October respectively, according to the Shanghai Shipping Exchange, highlighting the weakening exports trend due to poor external demand conditions.The widespread Covid curbs hurt importers too.Inbound shipments were down sharply by 10.6% from a 0.7% drop in October, weaker than a forecast 6.0% decline.The downturn was the worst since May 2020, partly also reflecting a high year-earlier base for comparison.This resulted in a narrower trade surplus of $69.84bn, compared with a $85.15bn surplus in October and marked the lowest since April when Shanghai was under lockdown.Analysts had forecast a $78.1bn surplus.The government has responded to the weakening economic growth by rolling out a flurry of policy measures over recent months, including cutting the amount of cash that banks must hold as reserves and loosening financing curbs to rescue the property sector.But analysts remain sceptical the steps could achieve quick results, as Beijing has not announced a full reopening from Covid containment yet.Almost three years into the pandemic, some local governments in recent days began to relax some lockdowns, quarantine rules and testing requirements that have exacted a heavy economic toll and caused widespread frustration and fatigue.“The shift away from zero-Covid and step up in support for the property sector will eventually drive a recovery in domestic demand but probably not until the second half of next year,” Evans-Pritchard said. With the Chinese yuan already down sharply this year, policymakers’ room for manoeuvre is also limited as hefty monetary policy stimulus at home at a time of rapidly rising interest rates globally could trigger large scale capital outflows.The Ukraine war, which sparked a surge in already high inflation globally, has intensified geopolitical tensions and further undermined the business outlook.China’s economy grew just 3% in the first three quarters of this year, well below the annual target of around 5.5%. Full-year growth is widely expected by analysts to be just over 3%.The aerial photo taken yesterday shows cranes and shipping containers at a port in Lianyungang in China’s eastern Jiangsu province. Outbound shipments have lost steam since August as surging inflation, sweeping interest rate increases across many countries and the Ukraine crisis have pushed the global economy into the brink of recession.

For European Central Bank officials considering how to wind down €5tn ($5.3tn) in bond holdings, benign financial markets are offering both a blessing and a curse.A sense of calm that has narrowed the gap between German and Italian debt yields will embolden policymakers next week as they announce principles for so-called quantitative tightening (QT). But whatever they devise under such placid conditions must accommodate the danger of renewed volatility.“It’s a tricky situation,” said Ute Rosen, a senior derivatives specialist at Union Investment. “The ECB could be thinking that they can risk it with more QT because spreads have tightened so much. The risk is that we could see a situation where it’s too much for the market.”That’s the challenge for ECB President Christine Lagarde and her colleagues as they unveil a strategy to reduce their balance sheet on December 15 along with an interest-rate increase of at least 50 basis points.While getting it right will let officials stay focused on bringing a once-in-a-generation inflation shock under control, a market showdown would be a costly diversion.The moment to act is fortuitous. With the US Federal Reserve hinting at a downshift in aggression, investors are speculating that the global tightening cycle will slow. Uncertainty over the eurozone economic outlook, the path for rates and governments’ borrowing needs may disrupt the calm. The UK’s market turmoil of recent months is instructive on what could then happen.Aware of the fissile nature of their challenge, ECB officials have already congealed around the idea of running QT in the background to minimise the distraction to investors, and to use rates as their main policy tool.Most Governing Council members seem to favour what Lagarde describes as a “measured and predictable” approach, rolling off maturing bonds rather than selling them outright.What’s not clear is whether they’ll want to use caps on the wind-down to be extra cautious.Bundesbank President Joachim Nagel hinted last week that such measures probably won’t be needed, observing that markets show “sufficient resilience” and “should be able to cope with a passive rolling off.” That theory may be tested before long. Economic uncertainty may be the biggest risk. Sentiment surveys have raised hopes that Europe’s recession this winter may not be too deep, possibly meaning inflation may be high for longer. Meanwhile a turn for the worse could damp demand and price pressures faster than anticipated.Also unclear is how much more debt governments will have to issue if energy relief needs to be propped up — and how investors will respond. The ECB has warned that excessive support may force additional rate hikes.Any concerns about debt sustainability risk being complicated by a possible watering down of eurozone fiscal rules that remain suspended in 2023.Showing how quickly bond markets can seize up was the UK’s recent selloff prompted by expansive tax-cut plans under former Prime Minister Liz Truss, forcing the Bank of England into crisis-fighting mode.Italy shows the greatest such vulnerability in the eurozone, as newly appointed Prime Minister Giorgia Meloni struggles to contain the fiscally looser demands of her populist coalition. Moody’s Investors Service has warned that public-finance targets may be missed.The yield gap between 10-year German and Italian bonds — a key gauge of risk — has narrowed to around 190 basis points from a high of over 250 basis points in September.But much of that reflects traders removing short bets rather than adding long positions that signal confidence. Even without an Italian crisis, investors shouldn’t forget the cascade effect of repricing affecting core markets, according to Jon Levy, senior sovereign analyst at Loomis Sayles.Goldman Sachs strategists anticipate 10-year German yields will hit 2.75% by the end of the first quarter, an increase of over 90 basis points from current levels.The ECB’s two-step approach itself may also carry risks, if delaying the details and timing of QT then creates room for market speculation.

Trade and investment ties between China and Gulf Arab states are expected to feature prominently in President Xi Jinping’s visit to Saudi Arabia this week as the region increasingly looks East to drive economic transformation at home for a post-oil era.China, the world’s biggest energy consumer, is a major trade partner of Gulf oil and gas producers and while economic ties remain anchored by energy interests, bilateral relations have expanded under the region’s infrastructure and technology push.Saudi Arabia is China’s top oil supplier, making up 18% of China’s total crude oil purchases, and state-run Saudi Aramco has annual supply deals with half a dozen Chinese refiners.Riyadh has said that strengthening trade ties and regional security would be priorities during Xi’s visit, during which the kingdom will host a China-Gulf summit and a China-Arab summit that diplomats say will involve dozens of agreements and MoUs.Outside energy, Gulf Co-operation Council (GCC) states provide markets for Chinese goods, construction contracts and investment opportunities in infrastructure, manufacturing and digital economies that fit Beijing’s Belt and Road Initiative.“The GCC wants FDI (foreign direct investment) which not only caters to local demand but also allows these economies to integrate into global supply chains,” said Fareed Mohamedi, managing director at SIA Energy International. “The Chinese companies will help do that, first on an Asia regional level, then beyond.”Saudi Arabia, the world’s top crude exporter and largest Arab economy, aims to reduce reliance on oil by creating new industries that can generate jobs for Saudis, with the government driving projects as FDI lags.It is vying with the UAE to become a transport and logistics hub, including by developing sea ports to capitalise on the region’s strategic position between Asia, Africa and Europe.Saudi Arabia and the UAE are also investing in future technologies as a pillar of economic diversification, which has gained impetus in a global transition away from fossil fuels.Chinese tech giant Huawei — which has participated in building 5G networks in most Gulf states despite US concerns — is finalising a location for a new data centre in Saudi that would be the region’s second after Abu Dhabi, a senior regional executive told local media in August.Online giant Alibaba has partnered with STC Group for cloud services in Saudi Arabia.Chinese firms are looking at construction in Saudi mega projects like the $500bn NEOM zone, and opportunities in mining and manufacturing as the kingdom moves to build local content, including in nascent defence and automotive industries.How Saudi Arabia and other Gulf states handle both Chinese and Western supply chains in sensitive areas like critical national infrastructure is likely to remain a point of friction with key security partner the United States, analysts say.“Managing these digital divides, dividends, decouplings, and disaggregations is central to economic progress in Saudi Arabia, GCC and the broader Middle East and North Africa,” said Adel Hamaizia, managing director at Highbridge Advisory.Gulf Arab officials have said that while Washington remains a key strategic partner, it is important for the region’s national economic and security interests to deepen ties with other partners, which have included both China and Russia.“Our trade relations increasingly look to the East, while our primary security and investment relations are in the West,” senior UAE official Anwar Gargash said last month.GCC-China trade has doubled between 2010 and 2021, London-based think tank Asia House said in a report.However, discussions on a free trade deal have dragged since 2004 and sources say talk of an agreement in the near future appears premature.Beijing’s primary motivation for greater co-operation with the Gulf remains embedded in its dependence on energy imports while Arab producers are still heavily reliant on hydrocarbon revenues to deliver on their diversification drive.Russia, a member of the Opec+ oil producer alliance alongside Saudi Arabia, has been increasing its sales volumes to China with discounted oil after facing Western sanctions over its invasion of Ukraine, which Moscow calls a “special military operation”.“All of the region’s oil exporters will want more information on China’s plans for lifting Covid restrictions, especially those like Iraq and Oman who are so dependent on that market,” said Karen Young, senior research scholar at Columbia University’s Center on Global Energy Policy.

Tesla Inc plans to lower production at its Shanghai factory, according to people familiar with the matter, in the latest sign demand in China isn’t meeting expectations.The output cuts will take effect as soon as this week, said the people, who asked not to be identified because the information isn’t public. They estimate the move could reduce production by about 20% from full capacity, which is the rate at which the factory ran in October and November.The decision was made after the automaker evaluated its near-term performance in the domestic market, one of the people said, adding that there’s flexibility to increase output if demand increases.A Tesla representative in China declined to comment. The carmaker’s shares fell as much as 2.4% to $190.10 at 5.25am Monday in New York, before the start of regular trading.The trimming marks the first time Elon Musk’s EV maker has voluntarily reduced production at its Shanghai plant, with previous reductions caused by the city’s two-month Covid lockdown or supply chain snarls. Recent price cuts and incentives such as insurance subsidies, along with shorter delivery times, suggest demand has failed to keep up with supply after an upgrade doubled the plant’s capacity to about 1 million cars a year.Tesla’s China deliveries were a record 100,291 in November, China’s Passenger Car Association said yesterday, as lead times for the Model 3 and Model Y - the two vehicles Tesla makes in Shanghai - shortened markedly, another sign the factory is pumping out more cars than it’s selling.Any Model 3 and Model Y ordered in China today should be delivered within the month, Tesla’s website shows, down from as long as four weeks in October and up to 22 weeks earlier this year. The Shanghai factory mainly serves the Chinese market, although some cars are exported to Europe and other parts of Asia.Full production capacity at the Shanghai factory is around 85,000 vehicles per month, Junheng Li, chief executive officer of equity research firm JL Warren Capital LLC, said in a November 22 note. “Without more promotions, new orders from the domestic market will likely normalise to 25,000 in December,” she said, adding that increased production couldn’t all be absorbed by exports.Tesla is facing intensifying competition from local automakers such as BYD Co and Guangzhou Automobile Group, which are raising prices in the world’s largest EV market. BYD posted a ninth consecutive month of record sales in November, with deliveries topping 230,000, including almost 114,000 pure-electric models.This has contributed to Tesla - which has long eschewed incentives and traditional advertising - deciding to offer extended insurance subsidies, reinstating a user-referral program and even advertising on television.Tesla’s reliability also is back in the spotlight after two recalls in China in the past month that required both over-the-air software fixes and some vehicles to be returned for maintenance. A recent fatal crash involving a Model Y that killed two people has again sparked discussion of Tesla’s safety record.A Tesla sign is seen at its factory in Shanghai. Tesla plans to lower production at its Shanghai factory, according to people familiar with the matter, in the latest sign demand in China isn’t meeting expectations.

Commodities trader Trafigura Group signed a $3bn German government-backed loan for gas supply, as Berlin steps up efforts to secure natural resources following Russia’s invasion of Ukraine.Trafigura, which will primarily tap its global gas and liquefied natural gas portfolio, made the first delivery on November 1, the trading house said yesterday in a statement. The loan deal confirms an earlier report by Bloomberg News.It’s the second such deal in recent months, after Trafigura in October announced it had secured an $800mn loan to supply metals to Germany. Increasingly, trading companies that have historically been major off-takers of Russian energy, grains and metals are now being tapped by governments to find alternatives from international markets.Germany has had to retool its energy policy since the war in Ukraine forced it to end a longstanding dependence on cheap Russian gas. Chancellor Olaf Scholz has travelled to Saudi Arabia and Qatar seeking energy deals, and last week Qatar announced a long-term agreement to supply Germany with LNG starting in 2026. The nation used to get more than a half of its gas via pipelines from Russia.The country is becoming increasingly concerned about supplies of other critical materials like metals that underpin technologies needed for the transition away from fossil fuels. The government is considering a state-backed fund to help find alternative suppliers to China, an initiative spearheaded by Economy Minister Robert Habeck.Germany is offering backing for commodity traders through a program known as untied loan guarantees, managed via Euler Hermes AG - an export-credit unit that’s now part of Allianz SE. The guarantees insure the majority but not all of the loans and were originally for encouraging Germany’s manufacturing exports.The four-year loan with Trafigura for gas supplies was jointly arranged and underwritten by Deutsche Bank AG and another bank, and syndicated to more than 25 other lenders.For trading houses like Trafigura, the deals represent a key means of obtaining financing at a time when high commodity prices and extreme volatility have increased their need for credit and have left some banks reluctant to add exposure to the sector.The loan means Trafigura has committed to delivering “substantial volumes of gas into the European gas grid, and ultimately into Germany, over the next four years,” according to the statement. Trafigura will supply the gas to SEFE Securing Energy for Europe GmbH, a former unit of Gazprom PJSC that was recently nationalized by the German government.We are supplying a “significant volume of gas to Germany backed by our extensive portfolio and long term US LNG contracts,” said Richard Holtum, head of gas and power trading for Trafigura.An LNG filling station for trucks in Dortmund, western Germany. The country has had to retool its energy policy since the war in Ukraine forced it to end a longstanding dependence on cheap Russian gas.

Cristiano Ronaldo’s shadow looms large over Portugal at the World Cup, but away from the flash of camera phones and rolling headlines, Bruno Fernandes has taken the reins.Fernando Santos’ team are synonymous with their leading man, a black hole for media attention and fan admiration, reducing his colleagues to a supporting cast, inadvertently or not.However in Qatar, playmaker Fernandes is emerging as the team’s true creative leader, sealing qualification for the last 16 with a game to spare.With several changes but Ronaldo still leading the side, Portugal fell to a 2-1 defeat by South Korea on Friday but finished top of their group and face Switzerland.Fernandes was rested, wrapped in cotton wool, and without him Portugal failed to create many clear chances.Still, supporters swooned over veteran striker Ronaldo — save some Korea fans who instead chanted for “Messi” — even as the all-time record international goalscorer floundered up front.Instead it is Fernandes, no longer a club teammate of Ronaldo after his dramatic departure by mutual consent ahead of the World Cup, who has been the beating heart of the side this year.It was Fernandes who picked up the pieces in Portugal’s press conference ahead of their opening game against Ghana, fielding questions on the Ronaldo drama.Then on the pitch he was a quiet mastermind, providing two assists in the 3-2 win, even as Ronaldo basked in the limelight after winning a soft penalty and dispatching it to open the scoring.The former Real Madrid forward became the first man to score in five separate World Cups, at 37 years old. It’s an age where most players would have retired by, but Ronaldo chugs on, having pledged to play until 40, at least.So that shadow stretches further, but under it, Portugal have a lot of younger, dynamic talent, itching for a chance to break through.FIGUREHEAD FERNANDESRafael Leao, Andre Silva and Goncalo Ramos are all interesting, young attacking options but started on the bench against Korea, with Ronaldo failing to make an impact.Manchester City midfielder Bernardo Silva is another underrated, smooth presence but at the 2022 World Cup it is Fernandes who has taken on the role of floor manager, the man running the show at the tip of the midfield.In Portugal’s 2-0 win over Uruguay, Fernandes’ brace clinched qualification, with only the post denying him a hat-trick.Even when Ronaldo is not involved, he still creeps in, appearing to claim a goal against Uruguay which was ultimately given to Fernandes.The 28-year-old, like Ronaldo a former Sporting Lisbon player, is set to return to the side against Switzerland tomorrow, and Portugal should look more like themselves again after their Korea blip.Fernandes is an established star, but still young enough to take on the role of creator-in-chief, and as a figurehead is a different prospect to Ronaldo — where all roads end, the man who applies the finishing touch.Even on that front, Fernandes is ahead in 2022, with seven goals for his country in 11 games, to Ronaldo’s three in 10.The Manchester United playmaker is also capable of providing them, unselfishly saying he thought Ronaldo had headed home his cross against Uruguay which found the net.“I celebrated as if it had been Cristiano’s goal,” he explained. “It seemed to me that he had touched the ball. My aim was to cross the ball for him. We are happy with the victory regardless of who scored.”Fernandes has often been diplomatic when speaking to the media, even when repeatedly questioned about Ronaldo. “It was a dream to play with him,” he said, of their days together at Manchester United. “But nothing lasts.”Wise, measured responses, issued like the kind of perfectly weighted passes Fernandes aims to deliver Ronaldo and co, as Portugal set their sights on a first World Cup trophy.

Japan will “fight like samurai” in today’s World Cup last-16 clash with Croatia as they battle to reach the quarter-finals for the first time, defender Yuto Nagatomo said.Japan reached the knockout round after stunning Germany and Spain to top Group E but they are not satisfied with what they have achieved so far in Qatar.Veteran Nagatomo is appearing at his fourth World Cup and urged his teammates to “show the Samurai spirit to the world” against Croatia.“Before battle, the Samurai would polish their weapons and refine their technique, but if they were scared in battle, all that would count for nothing,” the former Inter Milan left-back said yesterday.“It’s the same as football. Of course tactics and technique are important, but if we’re scared, it doesn’t matter how much we’ve trained over the past four years because our technique will be no use.“The most important thing is to have courage,” the 36-year-old added.Japan have reached the last 16 at three previous World Cups but they have yet to make it as far as the quarter-finals.They were eliminated in the first knockout round four years ago in Russia when they threw away a two-goal lead to lose 3-2 to Belgium with the last kick of the game.Nagatomo said the defeat had been on his mind for the past four years and he is ready to wipe away the memory against Croatia.“The past four years have been tough for me but I think we have all overcome that and improved as players,” he said.“I have been playing for Japan for almost 15 years and as far as I can see, this is the strongest team we’ve ever had at the World Cup.”Four years of sacrificeJapan had to come from behind to beat both Germany and Spain, and were forced to defend for long periods against opponents who dominated possession.Coach Hajime Moriyasu wants his players to have more of the ball against Croatia but urged them to show “resilience” whatever the situation.“The players showed their ability against Germany and Spain, they were united as a team and dug in and fought until the end,” he said. “They have proved that when they play like that, it brings results.“Of course it’s important to think about our opponents but first of all I want our players to show what they can do.”Japan will be playing in the knockout phase of the World Cup in successive tournaments for the first time.Captain Maya Yoshida said the players have had to “sacrifice a lot over the past four years” and urged them to make it worth the effort. “For Japanese football to move up a level, we have to become the kind of team that can consistently get through to the knockout rounds at the World Cup,” he said.“We can’t be satisfied with what we’ve achieved – we have to write a new chapter in our history.”

Opec+ responded to surging volatility and growing market uncertainty by keeping its oil production unchanged.The outcome of the brief online meeting yesterday reflects the unpredictability of supply and demand in the coming months, and the wild gyrations in prices of the past week.The oil producers’ group has only just implemented the hefty 2mn barrel-a-day reduction agreed at its last gathering. Meanwhile, European Union sanctions on crude exports from Russia come into effect today, and China is tentatively easing the Covid measures that have eroded its fuel consumption.Brent crude plunged to its lowest level since September on November 28, but ended up posting its biggest weekly gain in a month.“With massive and offsetting fundamental and geopolitical risks bearing down on the oil market, ministers understandably opted to hold steady and hunker down,” said Bob McNally, president of Rapidan Energy Advisers LLC.The decision by the Organisation of Petroleum Exporting Countries (Opec) and its allies should hold for at least a few months. The group’s Joint Ministerial Monitoring Committee, led by Saudi Arabia and Russia, will meet again in February. The outlook could be clearer by then, and the panel has the power to call extraordinary meetings if it thinks output policy may need to change.The oil market could look quite different by early 2023, with several potentially historic shifts in supply and demand unfolding in the coming days and weeks.As Opec+ ministers convened their video conference, officials in Shanghai had just eased some of their Covid restrictions, joining other top-tier Chinese cities as authorities accelerate a shift toward reopening the economy after thousands of demonstrators took to the streets.Top government officials over the past week have signalled a transition away from the harshest containment measures, which have weighed on the economy in the world’s largest oil importer.Today, the EU will ban most seaborne imports of Russian crude and block anyone else from using the region’s shipping or insurance services for purchases of Russian oil, unless it’s done so below a $60-a-barrel price cap.It’s unclear to what extent those measures will curtail Russian exports. The price cap is comfortably above the $50 that the country’s flagship Urals grade of crude currently trades at, according to data from Argus Media. Yet Moscow has said it would rather cut production than sell oil to anyone that adopts the price cap.With these powerful forces poised to push oil markets in unpredictable directions, Opec watchers said the group’s decision was understandable.

After the euro’s best month since 2010, traders counting on a traditional year-end rally may be disappointed.History shows the single currency tends to gain against the dollar in December. But after a surge of more than 5% in November, the bar for further seasonal cheer is much higher.That’s even before investors consider an array of macroeconomic headwinds for the region as it braces for a potential energy crunch this winter. Throw in some major central bank meetings as well, and euro bulls have a lot of risks to navigate.“The seasonal euro bias is strong but the rally in October and in particular November may mean the move has started earlier than usual,” said Derek Halpenny, a head of research at MUFG, who sees a drop back to parity for the euro in early 2023. “The fundamentals for a sustained selloff of the US dollar are not yet really in place.”The euro soared last month as bets that the Federal Reserve will decelerate its hiking campaign weakened the dollar and investors speculated China will reopen its economy. Some data suggesting the pace of the euro area’s downturn has slowed also raised hopes that a widely expected recession may turn out to be less severe than initially feared. Seasonal currency trends are often dismissed as mere coincidence, although the argument for time-specific flows is more plausible for December. It’s when investors wind up positions as liquidity evaporates going into the holiday season, while European end-of-year reporting requirements can trigger repatriation flows.The euro has rallied in 15 of the 23 Decembers since its inception. That tots up to an average rally of 1.5% - more than double the next-best month.The historical performance may have partly been a by-product of Europe’s negative interest rates, says Simon Harvey, head of currency analysis at Monex Europe. There would be capital outflows from Europe as investors sought higher-yielding assets elsewhere, only for those flows to return home over year-end reporting periods.But now, markets are grappling with a new regime of inflation and higher rates. “This year will be interesting for two reasons: dollar strength has already been trimmed throughout November following October’s CPI release and the ECB has exited negative rates.”Risks could rise mid-month, when the European Central Bank and the Federal Reserve are both expected to slow the pace of interest rate rises. If the Fed continues to flag upside inflation risks, it could prompt investors to return to the dollar at the expense of the euro.

FIFA World Cup Qatar 2022 has multiple successes since its launch on November 20 and one of the outstanding results is that it is the first edition of the tournament that changed bad habits associated with soccer games, especially those targeting women, and have changed a range of ideas and stereotypes that have long been associated with the world’s largest sporting event.A report by British newspaper ‘The Times’ quoted a group of female fans who accompanied their country’s team to Doha to support the “Three Lions”, as saying that they were not harassed, describing the Qatar World Cup stadiums as more suitable for women to watch matches than in their own country.Under the ‘Her Game Too’ campaign, British citizen Ellie Molloson, 19, is leading a broad campaign in her country to make the stadiums more welcoming to women because of the harassment they experience during matches.She pointed out that before she came to Qatar to support her country’s national team, she had asked her father to accompany her to Doha. However, in a statement to the British newspaper, she admitted that she “did not need to disturb her father, because the World Cup stadiums in Qatar are different than in her country, there were no cynical chants or gender discrimination of any kind”.The report considered that Qatar’s stadiums provided a more favourable environment for women than in England, and Molloson - a student from Nottingham - said: “I did not suffer from any of the harassment I experienced in England,” adding that “it was a great environment when I tried it”.Molloson said: “I’ve got to say coming here has been a real shock to my system. There have been no catcalls, wolf whistles or sexism of any kind.”She adds: “I felt incredibly safe. I’ve not had any catcalling or any of the strange comments that you would perhaps get in England sometimes. They’ve just been incredibly hospitable.”Molloson’s 49-year-old father and a teacher explained that he had come to Qatar to care for his daughter but admitted that he had discovered that he did not need to do so because of what he found in this country.English fan Joe Glover, 47, who has attended World Cup tournaments since the 2010 South African edition, has not hid her fascination with a distinct version of the World Cup at all levels in Qatar, describing the general atmosphere here as less nervous, “everyone is wearing their elected colours, and without any trouble”.Besides the cheerleaders’ testimony, the British newspaper report quoted former English player Lianne Sanderson, 34, and the presenter of “Talk Sport” programme, praising the organisational atmosphere of the Qatar World Cup.In the same context, a senior British police officer considered that the absence of riots in Qatar during the World Cup competition is evidence that the British Government should not ease restrictions on alcohol in football stadiums, adding that the United Kingdom could learn from the experience in Qatar.Chief Constable Mark Roberts, in charge of the UK’s Football Police, said the atmosphere in Qatar was “friendly”, like last summer’s Women’s Euro 2022 finals.It seems that female fans in the Arabic edition of the World Cup noticed not only the difference in the stands, but also inside the stadium, as Stephanie Frappart (38 years) became the first woman to referee in a men’s World Cup match, one between Germany and Costa Rica. (QNA)

Across Wall Street, this year’s bleak expectations for banker bonuses are rapidly proving true, as a slump in deal-making ends the industry’s war for talent and firms regain the upper hand in setting pay.JPMorgan Chase & Co, Bank of America Corp and Citigroup Inc are all weighing plans to cut bonus pools for their investment bankers by as much as 30%, according to people with knowledge of the internal deliberations. Some firms are planning to give low performers no reward at all. The proposals are still under discussion and could change in coming weeks, the people said.Such are the early snapshots of the industry’s year-end bonuses after corporate deal-making and sales of new securities waned amid 2022’s market swoon. Investment-banking revenue across the five biggest US banks plummeted 47% - a whopping $18.8bn decline - in the first nine months. At Goldman Sachs Group Inc, even traders who reeled in more aren’t immune to bonus cuts.For legions of bankers and traders, their annual bonuses can stretch into millions of dollars and is many multiples of their annual salary. Wall Streeters spend months banking on their bonuses to pay for tiny private schools, luxury vacation homes and private-club memberships.Less than a year ago, employers were locked in a vicious bidding war for talent, with some firms forgoing firings almost entirely as they struggled to maintain adequate staffing. Dismissals restarted a few months ago and now, with a growing number of Wall Streeters freshly unemployed, banks have more leverage to keep a lid on pay. Many employees lack other viable options.“Star performers will be looked after,” said Anthony Keizner, a managing partner at the executive search firm Odyssey Search Partners. “But as opposed to highly compensating some bankers and letting go of others, it seems like the more common strategy will be to cut bonuses more broadly.”Representatives from JPMorgan, Citigroup and Bank of America declined to comment.It’s not all doom and gloom. Rates and commodities traders have helped propel fixed-income trading revenue to $53.7bn across Wall Street, the second-best performance on record.At Bank of America and Citigroup, that means executives may hold bonus pools for traders around last year’s levels, some of the people said. And executives at those banks are discussing rewarding top rates, currencies and commodities traders with higher pay packages.Goldman is set to break with rivals by reducing the bonus pool for traders by a low double-digit percentage, people with knowledge of the matter said earlier Friday. The firm is under particular pressure to limit pay after spending more than forecast on an expansion into consumer banking. Executives dialled back that campaign in October.Four months ago, Goldman also stood out when it signalled plans to resume periodic culls of underperformers. But since then, Morgan Stanley, Citigroup and Barclays Plc have followed suit.In recent months, job-cutting holdouts have qualified their assurances, with Bank of America saying there’s no plans for firings “at this stage.” But the common practice of culling of underperformers is expected to resume next year, the people said.“Some people are going to be let go,” Morgan Stanley chief executive officer James Gorman said on Thursday at the Reuters NEXT conference. “We’re making some modest cuts all over the globe. In most businesses, that’s what you do after many years of growth.”On Wall Street, bonuses and other incentives are notoriously volatile as the industry cycles through booms and busts. In the final months of the year, banks grade their workers’ performance and set bonus pools that they can share, with the most generous portions for rainmakers.The outlook for banker bonus pools has been dimming for months.Typical deal advisers may see their bonuses drop as much as 20%, while awards to their counterparts in underwriting plunge 45%, compensation consultant Johnson Associates Inc. estimated last month.“This is going to be a more difficult compensation season,” Jefferies chief executive officer Rich Handler and President Brian Friedman warned their employees this week, “just like it will be for every firm in our industry.”This year, banks including Citigroup, Bank of America and Barclays are considering giving dozens of their lowest performers no bonus at all - known as getting “zeroed out,” or receiving a “goose egg,” “doughnut” or “bagel.” At Goldman, the number of bankers getting nothing could surpass 100.A Barclays spokesperson declined to comment.Bonus snubs are often a precursor to a firing but also sort of a dare: If a company wants to lower headcount it can throw out a bunch of them and see if enough people get the message to speed up attrition.Or, with terminations at other firms on the rise, some managers may bet that recipients will keep showing up to their desks, cheaply.“Where else are these bankers going to go?” Keizner said. “The banks want their teams to stick around because when things turn back around the banks don’t want to find themselves understaffed and scrambling again.”Indeed, some smaller firms may resist their normal urge to snap up talent with the outlook on Wall Street now so uncertain. Evercore Inc, for example, is limiting replacement hires for those bankers who leave.The lower payouts to bankers may not inspire much sympathy outside finance.In New York City, the securities industry’s overall bonus pool will decline 22% from last year, when the average payout was $257,500, according to estimates from the state’s comptroller, Thomas DiNapoli.That would still be more than four times higher than what a typical private sector employee earns in the city.

The Group of Seven is set to impose a price cap on Russian oil that’s well above where it now trades. If there was ever any doubt what the premise of the cap was, it’s now clear: the US and its allies want Russia’s crude to keep flowing.European Union ambassadors backed limiting the price of Russian oil, a key source of income for President Vladimir Putin’s war machine, at $60 a barrel after fraught talks that dragged into the night more than once. Crucially, that’s above the $50 that Russia’s flagship Urals grade already trades at, according to data from Argus Media.“The key point in our view is the signal that the G7 seeks to keep Russian oil on the market,” said Joel Hancock, an analyst at Natixis. “The market has shifted to a view that Russian crude oil exports will remain more resilient than previously expected and largely unaffected by the price cap.”Now, Moscow’s reaction will be key. Russia has opposed the measure, and threatened to stop production in response. But on Thursday Russian Foreign Minister Sergei Lavrov said the cap was irrelevant, the strongest hint yet of a possible softening. With such a generous cap, buyers and sellers can easily claim it’s just business as usual.“We don’t care what the price cap will be. We’ll negotiate with our partners directly,” Lavrov said. “And partners who continue working with us won’t look at those caps.”The G7 has mostly decided to stop its own imports of Russian crude so the move is aimed squarely at other big buyers such as China, India and Turkiye. Those countries have not signed up, but the US hopes they will use the threshold as a bargaining chip. Crucially, if they don’t buy below the threshold, they won’t be able to access European insurance and shipping.The plan, driven by the G7, comes at a time when Europe is fighting high inflation and at risk of a recession. Companies and households are reeling from exorbitant energy bills triggered by Russia’s invasion of Ukraine, and the Opec+ alliance is keeping a tight rein on supply. As governments spend billions to stave off a backlash from voters, increased economic risks are now being taken into account in political decision-making.“The price cap will encourage the flow of discounted Russian oil onto global markets and is designed to help protect consumers and businesses from global supply disruptions,” US Treasury Secretary Janet Yellen said in a statement on Friday, after the G7 announced its endorsement of the $60 level. She added that even if countries buy outside the cap coalition, it will “enable them to bargain for steeper discounts on Russian oil and benefit from greater stability in global energy markets.”The EU sanctions agreed earlier this year had initially shocked many in the market for being so strict. The idea was to ban companies from providing insurance to transport Russian oil anywhere in the world. It would have meant even Chinese and Indian customers would have had to find their own insurance from December 5.The US argued that the sanctions risked provoking a spike in oil prices that would have been ruinous for the world economy, and also potentially end up even benefiting Putin. The price cap was a kind of off-ramp - those services would be available but only for oil sold under the designated level. The idea was to limit revenues but keep the oil flowing to the global economy.“We think the number at $60 a barrel is appropriate” to balance limiting Moscow’s ability to profit and ensuring supply meets demand, John Kirby, spokesman for the US National Security Council, said on Friday, adding that the cap can be adjusted going forward.Some in Europe saw the US plan as a way to water down sanctions, and Poland led a group of countries pushing for the cap to be closer to production costs. Shipping nations wanted a more generous level, and the discussions were often fraught as countries’ interests didn’t always align.For its part, Ukraine said the level should be set as low as $30.“Given that Urals is currently traded far below the level of the cap, in principle it could be a good deal,” said Jorge Leon at Rystad Energy.A complicating factor is that oil is priced very differently in Asia. There, the key ESPO grade is trading at over $70 a barrel. It’s not clear if all that crude will end up under the cap or not.When the price cap was first floated as an idea, many thought it unworkable without key buyers such as India and Turkey on board, or extraterritorial penalties to deter breaches and incentivise adoption.Now it looks like the US can claim some kind of victory if Russia does sell under the ceiling. Washington also argues that if Russian oil is already trading at a deep discount, the threat of the price cap can take some of the credit. For its part, Poland, after long negotiations, has secured some extra conditions, including a review mechanism going into next year.Still, there remain questions over enforcement, as the EU has watered down its rules, and there are no secondary sanctions to add teeth. A spat over insurance in Turkiye could still pose problems. And the Kremlin’s reaction remains a big unknown.

US employers added more jobs than forecast and wages surged by the most in nearly a year, pointing to enduring inflation pressures that boost chances of higher interest rates from the Federal Reserve.Non-farm payrolls increased 263,000 in November after an upwardly revised 284,000 gain in October, a Labor Department report showed yesterday. The unemployment rate held at 3.7% as participation eased. Average hourly earnings rose twice as much as forecast after an upward revision to the prior month.The median estimates in a Bloomberg survey of economists called for a 200,000 advance in payrolls and for the unemployment rate to hold at 3.7%. US stocks opened lower and Treasury yields surged as investors anticipated a more aggressive stance from the Fed.“The net read is that the labour market is still far too tight and cooling only very gradually,” Mizuho economists Alex Pelle and Steven Ricchiuto said in a note. “It suggests that the economy is resilient and can handle more rate hikes and restrictive policy for longer.”Job gains were concentrated in a few categories, led by growth in leisure and hospitality, healthcare and government. Meanwhile, employers in retail, transportation and warehousing and temporary help services cut staff.The better-than-expected payrolls increase underscores the enduring strength of the jobs market despite rising interest rates and concerns of a looming recession. The persistent mismatch between the supply and demand for workers continues to underpin wage growth and has led many economists to expect businesses will be more hesitant to lay off workers in a potential downturn.That said, some sectors are beginning to show more notable signs of weakening. Many economists expect unemployment to rise next year – significantly in some cases – as tighter Fed policy risks pushing the US into recession.“The resurgence of average hourly earnings growth shows labour shortages are still pressuring inflation, pushing back against the idea – supported by a few Fed officials, as indicated in the November FOMC minutes – that wage growth is cooling fast. Given the slow adjustment in the labour market, Fed officials will likely have to raise their terminal-rate forecast from what they wrote down in the September dot plot, ” say Anna Wong and Eliza Winger, economists at Bloomberg.Fed Chair Jerome Powell said earlier this week that a moderation in demand for labour is needed to bring the jobs market back into balance, and the central bank has only seen “tentative signs” of that so far. He also noted the importance wage growth – and the labour market more generally – will play in determining the path of inflation.The jobs report showed average hourly earnings rose 0.6% in November in a broad-based gain that was the biggest since January, and were up 5.1% from a year earlier. Wages for production and nonsupervisory workers climbed 0.7% from the prior month, the most in almost a year. The pace of pay raises is inconsistent with the Fed’s 2% inflation target. This is the last jobs report Fed officials will have in hand before their December policy meeting, where the central bank is expected to step down the pace of interest-rate hikes to a still-aggressive half percentage point. Inflation data over the past month have indicated that price pressures are slowly cooling, but remain very elevated.The US jobs report is made up of two surveys – one of households and one of businesses. Similar to last month, the two data sets pointed in different directions. While the business survey showed strong hiring, that of households – which can be more volatile – indicated lower employment for a second month.The labour force participation rate – the share of the population that is working or looking for work – edged lower to 62.1%, a four-month low. Among those ages 25 to 54, it declined for a third month, led by women.While the unemployment rate fell for Asian and Hispanic workers, it was due in part to lower participation. A drop in the jobless rate for Black Americans was driven by lower participation among women while men saw outsize gains.Employed Americans who missed work because of illness rose to the highest since last year’s omicron wave.The average workweek ticked down for the first time since June. Within manufacturing, hours and overtime fell. That’s consistent with other reports of declining factory activity.Separate data have pointed to some cooling in labour demand. Job openings have eased and continuing claims for unemployment insurance have steadily climbed in recent weeks to the highest since February. And a November survey showed only 18% of small business owners plan to hire in the coming months, the smallest share since early 2021.

Saudi Arabia’s central bank has stepped up the use of a mechanism to pump money into the financial system as it looks to tackle a liquidity crunch that has helped push borrowing costs for lenders to the highest in decades, according to people familiar with the matter.The latest intervention is relying on open market operations, the people said, transactions that allow the central bank to provide or drain short-term liquidity in exchange for securities from lenders.Unusually for a period of high oil prices, Saudi banks are facing a shortage of liquidity. A rapid rise in lending that’s not been matched by deposit growth has left banks clamouring for funding. Meanwhile, an expected influx of government deposits from soaring crude receipts has not materialised and a previous central bank liquidity injection provided only temporary relief.The monetary authority has stepped up its use of open market operations over the past few weeks to tackle the issue, the people said, asking not be named because the information is private. The effort by SAMA, as the central bank is known, helped stabilize the interest rate banks charge one another for loans, though it remains near a record high.SAMA didn’t immediately respond to a request for comment.Policymakers are trying a new tack months after bank liquidity came under unprecedented pressure as an expansion of credit outpaced deposit growth and Saudi Arabia largely matched four successive 75 basis-point rate hikes by the US Federal Reserve to maintain its currency peg against the dollar.Around June, the Saudi central bank placed about 50b riyals ($13bn) as deposits with commercial lenders, Bloomberg reported at the time. The injection of funds at a discount to the three-month Saudi Interbank Offered Rate, or Saibor, eased liquidity conditions through the summer before they started to tighten again.The funding stress intensified last month, with the three-month Saibor peaking at a record of just under 6% in late October. It’s since dropped by nearly half a point even as Saudi Arabia followed the Fed again in November and raised its policy rates by 75 basis points.“Higher policy rates are partly to blame for the higher Saibor rates but a domestic liquidity squeeze is adding to the pressures,” said Farouk Soussa, an economist at Goldman Sachs Group Inc. “Banks are competing strongly for market share through aggressive loan-book expansion which is happening at a rate that far exceeds deposit growth.”Saudi authorities are trying to assert control over the cost of money for banks because the liquidity crunch threatens to undermine the ability to fund the kingdom’s construction pipeline estimated at over $400bn over the next five years, part of an economic makeover to diversify away from oil.Fitch Ratings warned this month that lending growth risks decelerating next year if the central bank doesn’t step in with further liquidity support. Higher interbank rates can also ricochet across the economy by boosting the cost of borrowing for consumers and businesses.Pressure in the kingdom’s banking system has been building by a degree unmatched except during periods when oil prices were crashing or global crises like the credit crunch of 2008-2009. This year, by contrast, Saudi Arabia is on track to run its first budget surplus in about a decade after seeing revenues soar on the back of a rally in oil prices above $100 and higher production.Earlier this year, the government said it would hold billions of dollars worth of windfall revenue in a current account until the end of the year and only then decide how to distribute it.Saudi banks have tried to cope by raising capital in the market and tapping more interest-bearing deposits. Lenders including Al Rajhi Bank and Riyad Bank issued about $7bn in debt this year, an amount comparable to their counterparts in the United Arab Emirates but at a higher spread.The question is if the latest intervention will leave a more lasting mark on the local interbank market as the Fed delivers further rate hikes, with a plan to raise its benchmark by 50 basis points at its final meeting of the year on December 13-14.“The rising Saibor premium appears to be driven by strong demand so an injection of liquidity by SAMA will help,” said Tarek Fadlallah, head of Nomura Asset Management’s Middle East business. “But banks may need to additionally lure substantial private-sector deposits in order to maintain the current pace of lending.”

Chair Jerome Powell cemented expectations that the Federal Reserve will step down from its aggressive pace of tightening in December and presented a case for achieving lower inflation without tipping the economy into a deep recession.Just how high rates will go and how long policymakers will hold them there depends on how the economic data rolls in as officials fight the highest inflation in 40 years.But Powell, in a speech and question-and-answer session on Wednesday, offered guarded optimism that price pressures will slow, sending US stocks sharply higher as investors cheered the lack of a sharper-edged message from the Fed chief.His remarks, as officials prepare to enter their blackout period ahead of the Fed’s December 13-14 meeting, hardened bets they will downshift to a 50 basis-point rate increase after delivering four straight 75 basis-point moves.“Powell tried to walk a fine line between signalling a possible turning point and not sounding too encouraging for risk appetite,” said Derek Tang, an economist at LH Meyer in Washington. “His main goal was to pin down a message of no easing in 2023, a signal that got across. The market was encouraged because a longer-hold strategy means not hiking too much more,” Tang added.The Fed’s actions – the most aggressive since the 1980s – have lifted the target range of their benchmark rate to 3.75% to 4% from nearly zero in March. Powell said rates are likely to reach a “somewhat higher” level than officials estimated in September, when the median projection was for 4.6% next year. Those projections will be updated at the December meeting.“The time for moderating the pace of rate increases may come as soon as the December meeting,” Powell said at the Brookings Institution in Washington. “The timing of that moderation is far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level.”He noted that goods prices had decelerated and shelter inflation was also decreasing by some measures. On the other hand, service costs remain a challenge, particularly the cost of scarce labour to deliver them.“It will take substantially more evidence to give comfort that inflation is actually declining,” he said. “The truth is that the path ahead for inflation remains highly uncertain.”The data has shown “tentative signs” of moderating labour demand he said. But more cooling is needed, and his remarks imply that the Fed will continue to raise rates until the three conditions – further deceleration of goods prices, lower shelter inflation, and softening labour demand – fall clearly into place.When asked if the Fed could reduce inflation without tipping the economy into a steep downturn, Powell said he was optimistic that it could do so.

A rally in US stocks and bonds powered ahead after a speech by Federal Reserve Chairman Jerome Powell on Wednesday, but some investors believe a looming recession could cap gains in both asset classes.Though asset prices have been battered by the Fed’s rate rises this year, momentum has been on the side of the bulls in recent weeks.The S&P 500 has soared nearly 14% from its October low while yields on the 10-year benchmark Treasury, which move inversely to prices, are down at around 3.6%, from a 15-year high of 4.3% earlier this year.The immediate reaction to Powell’s speech on Wednesday showcased investors’ recently optimistic mood.The S&P 500 soared more than 3% after Powell said the Fed could scale back the pace of its rate increases as soon as December, although he warned there was little clarity on how high rates will ultimately need to rise as the central bank fights the worst outbreak of inflation in decades.Still, some market participants believe the weeks-long upswing in stocks and bonds is bound to fizzle, a fate that has met a handful of other rebounds this year.The S&P 500 is down 14.4% year-to-date.Upcoming employment and inflation reports — due on December 2 and December 13, respectively — could become near-term stumbling blocks if they fail to show that the rate rises the central bank has already delivered this year have sufficiently cooled the economy.US consumer prices rose less than expected in October, supporting the view that inflation was ebbing.Further ahead, some of Wall Street’s biggest banks are now forecasting that the Fed’s monetary policy tightening will bring on a recession next year.The inversion of the US Treasury yield curve — a signal that has preceded past downturns — has lent weight to recession predictions.Yields on two-year Treasuries recently exceeded those on 10-year Treasuries by their biggest margin since the dot com bubble.“Our view is that this is not an enduring rally,” said Jake Jolly, senior investment strategist at BNY Mellon. “The odds are there’s going to be a recession next year, and that’s going to pressure risk assets like equities.”Citi’s analysts wrote that the rise in risk asset prices on Wednesday was due to “hawkish expectations that had built up ahead of Powell’s remarks, the assurance of a slowdown to a 50bp rate hike pace, and the absence of a clear escalation of the hawkish message delivered at the early November FOMC meeting.”Their takeaway: Powell is shifting his focus to non-shelter service inflation, which will be more difficult to slow, “given still very-tight labour markets.” On Wednesday, Powell noted that key price measures for services remain high.Data released earlier in the day showed there were still about 1.7 job openings for each unemployed person.“Powell seemed to come today and express that they are confident that the brakes are working,” said Jake Schumeier, a portfolio manager at Harbor Capital Advisors, referring to the Fed’s spate of jumbo 75 basis point increases aimed at slowing the economy.Over the longer term, however, “the market seems positioned for a slowdown, so that will limit the upside once we get past seasonal trends at the end of the year,” he said.Among the banks predicting a downturn is Bank of America, whose analysts see a broadly flat S&P 500 as markets deal with “recession shock.”BlackRock Investment Institute said on Wednesday that while a recession is likely, “equity valuations don’t yet reflect the damage ahead.” They are also underweight long-dated government bonds, betting that central banks are unlikely to stop cutting rates in a downturn if inflation stays high.To what degree economic worries impact the market’s near-term bullish sentiment remains to be seen.The S&P 500 on Wednesday traded above its 200-day moving average for the first time since April, a move that some chart-watching investors view as a sign of short-term equity strength.In options markets, traders appear more preoccupied with not missing out on more gains in stocks than guarding against future declines.The one-month moving average of daily trading in bearish put contracts against bullish calls on the S&P 500 index-tracking SPDR S&P 500 ETF Trust’s options is at its lowest since January 2022, according to Trade Alert data.