- Treasury Will Hold Auctions Next Week To Raise $126 Billion
- Eurozone Services Fastest Growth In 15 Years
- China’s Reining In Steel Industry Lowers Iron Prices
Treasury Will Hold Auctions Next Week To Raise $126 Billion
On Wednesday, the Treasury Department stated that it would use emergency procedures to raise $126 billion in a series of auctions next week to protect the government from exceeding the newly mandated debt limit.
The US Treasury Department announced that it would sell $126 billion in government bonds with maturities of 3, 10, and 30 years.
In the statement, it was noted that on August 10, 58 billion dollars of 3-year maturity bonds would be issued, 41 billion dollars of 10-year maturity on August 11, and 27 billion dollars of 30-year maturity bonds on August 12.
In the statement, which stated that a total of 126 billion dollars of government bonds would be sold, it was noted that the said issuance would create approximately 67.4 billion dollars of new cash.
The government’s debt limit, which had been suspended for two years, was reestablished on August 1 at $28.4 trillion, the highest level of debt since the suspension.
Treasury Secretary Janet Yellen has urged Congress to raise or suspend the borrowing limit as soon as possible to avoid the government defaulting on its debt, which she described as “catastrophic.”
Eurozone Services Fastest Growth In 15 Years
The Eurozone Service Purchasing Managers Index (PMI) rose to 59.8 points in July, from 58.3 points in June, and grew at the fastest pace since June 2006.
Seen as a good indicator of economic health, IHS Markit’s final composite Purchasing Managers Index (PMI) climbed to 60.2 last month from 59.5, its highest level since June 2006, but stood at 60.6. It came in less than expected.
The vaccine rollout in Europe has gathered pace in recent months after a sluggish start, which has helped to dampen the severity of health implications from Covid infections.
As a result, policymakers in the Eurozone have been able to lift restrictions on sectors of the economy that rely on social and face-to-face contact to generate income.
As measures have eased, consumers have released pent-up demand by rushing to high streets, cafes, and bars to purchase goods and services that have been largely unavailable since the onset of Covid.
Chris Williamson, Chief Business Economist at IHS Markit, said: “Europe’s service sector is springing back into life. Easing virus restrictions and further vaccination progress are boosting demand for a wide variety of activities, especially in the tourism, travel, and hospitality sector.”
However, supply chain disruptions and labor shortages, input prices rising at the fastest pace in more than two decades, and concerns of the more contagious Delta variant of Covid-19 fueled fears of further restrictions.
China’s Reining In Steel Industry Lowers Iron Prices
Expectations that China, the world’s largest steel producer, will reduce its steel production to reduce its carbon emissions and keep prices under control in the face of decreasing demand caused a sharp decline in iron mine prices.
On Thursday, iron mining contracts in Singapore fell close to 6 percent, continuing their losses amid China’s production restrictions and worsening demand outlook.
China’s top industry organizations and Citigroup’s reports that increasing production restrictions in the coming months played an essential role in the decline in iron prices used in steelmaking.
China, the world’s largest steel producer, is trying to rein in the sector responsible for 15 percent of carbon emissions by reducing production and imposing export tariffs, which hit a record last year.
In a note shared on Tuesday, Citigroup stated that China is considering reducing its steel production, which reached a record level last year, to reduce its carbon emissions.
The steel sector is one of the biggest polluters in China, producing around 10% to 20% of carbon emissions in the country. Beijing has targeted the industry as part of its bid to reduce carbon emissions and reach net-zero by 2060.
Iron mine futures fell more than 5% to $174 on Thursday, dropping close to 18% since the beginning of August.