Natural Gas and Oil Forecast: Rising OPEC Output and Trendline Breaks Challenge Bullish Outlook

The U.S. trade deficit unexpectedly narrowed in September, touching the lowest level in more than five years, as exports accelerated and imports rose marginally, suggesting that trade likely provided a boost to economic growth in the third quarter.

The trade gap contracted 10.9% to $52.8 billion, the lowest level since June 2020, the Commerce Department's Bureau of Economic Analysis and Census Bureau said on Thursday.

Economists polled by Reuters had forecast the trade deficit increasing to $63.3 billion. The report was delayed because of the 43-day shutdown of the government.

Exports climbed 3.0% to $289.3 billion in September. Goods exports surged 4.9% to $187.6 billion, with shipments of consumer goods increasing to a record high.

Imports rose 0.6% to $342.1 billion. Goods imports advanced 0.6% to $266.6 billion. But imports of automotive vehicles, parts and engines were the lowest since November 2022.

The goods trade deficit compressed 8.2% to $79.0 billion, the lowest level since September 2020.

President Donald Trump's protectionist trade policy, marked by sweeping tariffs, has caused big swings in the trade deficit, distorting the overall economic picture.

Trade sliced off a record 4.68 percentage points from gross domestic product in the first quarter before adding all that back to GDP in the April-June quarter.

Prior to the trade data, the Atlanta Federal Reserve estimated GDP increased at a 3.5% annualized rate in the third quarter. The government will release its first estimate of third-quarter GDP on December 23 after it was delayed by the longest shutdown in history.

The economy grew at a 3.8% pace in the April-June quarter.

Source: Kitco

Mizuho Financial Group Inc.'s chief executive officer expressed optimism that momentum in investment banking will continue both at home and in the US, where Japan's third-biggest lender has been expanding.

Tokyo-based Mizuho has completed the integration of US boutique investment bank Greenhill & Co., which it purchased two years ago, and is now reaping the benefits, CEO Masahiro Kihara said in a Bloomberg Television interview on Thursday. "We're now able to pursue large-scale M&A deals," he said.

The Federal Reserve's interest-rate cut overnight will have a positive effect on Mizuho's business in the US, Kihara said. "The momentum will continue probably, and that's good for us." He expects the Fed to reduce rates two or three more times.

In Japan, CEOs have changed their mindsets to improve returns for shareholders, particularly at large-cap companies, Kihara said. Now that trend is spreading to midcaps, and Mizuho has expanded its capabilities in the sector, he said.

Japan's biggest banks are forecasting another year of record profits as higher interest rates boost lending income and tariffs do little to derail business. Mizuho raised its annual profit forecast in November, its second upward revision for the fiscal year ending in March.

Kihara said new Prime Minister Sanae Takaichi is keen to grow the economy, making Japan "very, very interesting."

Takaichi recently unleashed the country's biggest burst of spending since pandemic restrictions eased, adding to concerns about the country's public debt. Japanese government bonds have tumbled this year, sending yields to the highest in decades.

But Kihara said he doesn't expect any huge shocks as long as the government maintains fiscal discipline. He said 10-year JGB yields may exceed 2% — a level they haven't breached in 19 years — but will remain relatively low.

Kihara anticipates the Bank of Japan will raise interest rates this month, in line with market expectations. And even if the BOJ hikes again next year, he doesn't see the yen appreciating much. Japan's currency is likely to trade around 145-150 per dollar, he said.

The yen was at 155.63 on Thursday morning in Tokyo.

Source: Bloomberg Europe

Canada recorded a trade surplus for the first time since January as exports rebounded sharply and imports declined.

New data from Statistics Canada shows the country's trade balance flipped to a narrow surplus of C$153 million in September from a deficit of C$6.4 billion in August.

Economists surveyed by Bloomberg expected the trade deficit to come in at C$4.5 billion.

Total exports jumped by 6.3% amid increases across product categories, though metal and non-metallic mineral products posted the largest increase, rising by 22.7%.

"Since the beginning of 2025, these exports have been showing an up-and-down trend. On one hand, products hit by high tariff rates, such as aluminum and steel products, saw strong declines, while on the other hand, exports of unwrought gold rose sharply," Statistics Canada said in its report.

On a monthly basis, exports of aluminum jumped 18.6% in September, but are still down significantly from a year earlier.

Meanwhile, imports were down 4.1%. Statistics Canada says two-thirds of that decline can be attributed to lower imports of metal and non-metallic mineral products as imports of unwrought gold declined significantly.

In volume terms, exports were up 4.1% in September, while import volumes fell 3.3%.

Canada continues to face steep US tariffs on steel, aluminum, autos and lumber as trade talks with the Trump administration remain halted. It's widely expected those talks will be folded into the US-Mexico-Canada Agreement review next year, leaving a cloud of uncertainty over the country's trade outlook.

Exports to the US in September increased 4.6% while imports fell 1.7% in the third consecutive decline. Taken together, Canada's trade surplus with the US widened to C$8.6 billion from C$6 billion, marking the largest surplus since February.

Exports to countries other than the US rose 11% in September, led by shipments of gold to Switzerland, oil to Germany and oil and aircraft to Singapore. Meanwhile, imports from countries other than the US fell 7.3%, helping to narrow Canada's trade deficit with non-US countries to C$8.5 billion, the lowest since October 2024.

After a steep decline in exports in the second quarter, total exports rose 2.4% between July and September, driven by higher exports of energy products and consumer goods. Imports fell by 2% in the third quarter, helping to narrow Canada's trade deficit with the world to C$10.1 billion, down from $18.6 billion in the second quarter.

Tuesday's report comes after Statistics Canada delayed the release of international trade data twice due to the US government shutdown.

Source: Bloomberg Europe

Source: cnbc

source: reuters

The Bank of England will cut interest rates by a quarter point to 3.75% on December 18, according to all economists polled by Reuters, with evidence showing still-elevated inflation drifting downwards convincing most that a tightly split policy committee will flip towards easing.

Governor Andrew Bailey was among those voting on the nine-member Monetary Policy Committee in November to keep Bank Rate unchanged at 4.0%, but hinted that positive news on inflation moving closer to the 2% target might change his mind.

British inflation fell in October for the first time since May, to 3.6% from 3.8%, in line with the central bank's expectations, and November data due next week could show a further drift downwards.

That, alongside a tax-raising budget from British finance minister Rachel Reeves since the last meeting and news of a slight rise in unemployment, will probably be enough to convince at least a slim majority of five MPC members to vote for a cut to 3.75% on December 18.

NO CONSENSUS ON RATE PATH BEYOND MARCH

All 64 economists in a Reuters poll taken December 5-11 expected that outcome, up from a near-80% majority last month. A decision to change rates outside of the quarterly forecasting schedule would be the MPC's first since June 2023.

Around two-thirds of economists polled expected a follow-up cut in Bank Rate to 3.50% by end-March.

"A December cut looks pretty much nailed on. There's a fair debate about the final cut to 3.5%, when and whether that happens. For us it's a base case," said James Rossiter, head of global macro strategy at TD Securities.

"That said, if the economy and the labour market continue to soften rapidly and inflation eases away a bit next year, then I can start to see a scenario... where the Bank of England has to cut closer to 3%," Rossiter said.

There is no majority among economists for any further cuts, even though the median forecast shows Bank Rate bottoming at 3.25% in the third quarter of 2026.

A BoE rate cut on December 18 would follow the U.S. Federal Reserve's decision on Wednesday to cut its federal funds rate by a quarter point.

Economists at HSBC recently changed their December forecast to a cut, in part because of strong expectations built into financial markets that the BoE has done nothing to dislodge.

"While the BoE isn't averse to surprising the market in general, in our view the last thing the sterling rate market needs right now is the BoE adding to a sense of confusion. Governor Bailey will be aware of this," noted Simon Wells, chief European economist at HSBC.

INFLATION PATH

Inflation was expected to slow to 3.1% next quarter and 2.4% in the second quarter of 2026, roughly similar to the previous poll.

Economic growth was forecast to average 1.4% this year and 1.1% next, unchanged from last month's poll.

A separate Reuters poll of 19 property market experts also published on Thursday showed the average British home price was expected to rise 2.0% this year and 3.8% in 2026, less than the respective 2.6% and 3.1% median forecasts in a survey three months ago.

Asked to identify the biggest barriers to homeownership for first-time buyers, 13 of 14 housing market experts chose difficulty in saving up for a deposit.

Ray Boulger, of mortgage broker John Charcol, said "there is still scope for mortgage rates to fall a bit further," based on expectations for further cuts in Bank Rate.

Source: Investing