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Bond-market rout eases, euro-area growth is mixed, and there's a commodity reversal. Here are some of the things people in markets are talking about today.

Bonds find a bid

The bond-market selloff that had seen a decline of $1.4 trillion in the amount of negative-yielding debt since Nov. 4 is easing this morning. U.S. Treasuries rallied, with the yield on the 10-year falling 7 basis points to 2.2 percent by 4:51 a.m. ET after a technical indicator implied they were at their the most oversold since 2007. In Japan, the yield on the 10-year bond rose above zero for the first time since September. 

Mixed euro-area growth

Growth in Germany, Europe's largest economy, fell short of analysts expectations and slowed to 0.2 percent in the third quarter, down from 0.4 percent in the previous period. There was better news in Italy for embattled Prime Minister Matteo Renzi. GDP grew 0.3 percent, beating expectations. Dutch growth also came in ahead of forecasts. 

Commodity reversal

Base metals which had staged a huge rally following the election of Donald Trump in the U.S. are in full blown retreat this morning. Iron ore in Asia, which had jumped as much as 27 percent last week dropped as much as 11 percent this morning, while copper is down more than 2.5 percent. Crude, which had fallen to an eight-week low yesterday is also seeing a change in fortunes, with a barrel of West Texas Intermediate for December delivery rising 2.5 percent to $44.41 by 5:08 a.m. ET. 

Markets mixed

Overnight, the MSCI Asia Pacific Index increased 0.2 percent, with Japan's Topix index also rising 0.2 percent, extending the rally to a fourth session. In Europe, the Stoxx 600 was unchanged at 5:10 a.m. ET as a rally in energy shares was offset by a slump in bank and mining shares. S&P 500 futures added 0.3 percent. 

U.K. inflation, Carney testimony

Inflation in the U.K. unexpectedly slowed in October to 0.9 percent, below expectations from economists who had factored in a larger hit from the weakening pound. Sterling briefly slipped below $1.24 after the data was released, before trading 0.6 percent lower at $1.2426 by 5:35 a.m. ET. Governor of the Bank of England Mark Carney is giving testimony to the U.K. Parliament this morning. Coming up this morning in the U.S., retail sales data for October is due at 8:30 a.m. ET, while there are four regional Federal Reserve presidents due to speak today.

What we've been reading 

This is what's caught our eye over the last 24 hours.

It’s a potential point of agreement in a politically polarized government: U.S. highways, bridges and airports are in need of repair and rehabilitation. The current president, Democrat Barack Obama, and incoming president, Republican Donald Trump, have both said that a boost to so-called infrastructure spending would be good not just for roads and bridges but for the workers such projects would employ. Trump pledged in his victory speech to "rebuild our highways, bridges, tunnels, airports, schools, hospitals," an effort that "will put millions of our people to work." The details are still to come.

1. What does Trump say he’ll do?

To fix a system that’s "literally falling apart," Trump vowed, on his transition website, "to invest $550 billion to ensure we can export our goods and move our people faster and safer." He said during the campaign that he would take advantage of low interest rates to finance an infrastructure program, while also promising to reduce taxes and the national debt.

2. How exactly would he pull that off?

Two Trump senior policy advisers, Wilbur Ross and Peter Navarro, have spelled out what Ross called a "totally self-financing" plan that would produce up to $1 trillion worth of projects at no net cost to the government. The idea: Offer up to $137 billion in income-tax credits to lure private companies -- and their cash parked overseas -- to needed infrastructure projects. Tax the wages paid to construction workers and the profits collected by the companies. Under their estimates, the tax income balances out the revenue lost to the income-tax credits.

3. Is that realistic?

Trump and his team are hardly alone in suggesting that big public-works projects can pay for themselves in times of low interest rates. But Trump’s potential reliance on private financing is an added challenge. While some toll roads, airports and water systems can produce the revenue needed to make projects profitable, other big-ticket projects might require public dollars to get off the ground. Public-private partnerships, used by nations worldwide to finance long-term infrastructure projects, are another possible route.

4. What are the stumbling blocks?

Republican fiscal hawks in Congress shot down an economic stimulus program built on infrastructure work when Obama was the person proposing it. The tolls that might be needed to make highway work profitable are unpopular, impractical, or both in many areas of the country. And the bond market is sending reminders that America’s creditors won’t sit idly by while public spending rises. Yields are already rising, making it more expensive for the U.S. to borrow.

5. Is the U.S. really ‘falling apart’?

The American Society of Civil Engineers gave America’s infrastructure a grade of D+ on its 2013 report card and estimated that roads, highways, bridges, water systems, schools and transportation systems collectively need $3.6 trillion in investment by 2020. Though civil engineers might be seen as having a stake in painting a dire picture, the raw numbers are pretty bleak: 28 percent of major urban roads in substandard or poor condition, 240,000 water main breaks each year, 58,791 structurally deficient bridges at the start of the year. The average age of the nation’s fixed assets in 2015 was 22.8 years, the oldest in data back to 1925.

6. Doesn’t ‘infrastructure’ mean more than transportation?

Yes, though they’re often equated. The Trump transition’s "Transportation & Infrastructure" page mentions "roads, highways, bridges, tunnels, airports, and railways." But power plants, ports, water pipes (like those in Flint), sewage treatment plans, electrical grids, even parks and schools, can fit under the expansive definition of infrastructure. Trump’s campaign website promised "investments in transportation, clean water, a modern and reliable electricity grid, telecommunications, security infrastructure, and other pressing domestic infrastructure needs."

7. Why have highways and bridges been underfunded?

The U.S. collects a federal fuel tax for the Highway Trust Fund, which helps finance improvements to roads, bridges and transit systems. At its inception in 1956, the fund got all its revenue from the fuel tax. Now the tax contributes about 65 percent, with Congress usually making up the difference out of the general budget. The tax isn’t adjusted for inflation and hasn’t been raised since 1993. Making the problem worse, budget-constrained state and local governments have been reluctant to borrow and spend on infrastructure, especially in the aftermath of the last recession.

The Reference Shelf

• A QuickTake explainer on the needs of highways worldwide.
• A story on whether Trump’s infrastructure push would really help the economy.
• Bond vigilantes are ready to pounce.
• Bloomberg View columnist Conor Sen says an infrastructure program is seven years too late.
• The full Ross-Navarro report on Trump’s self-financing infrastructure plan.
• Trump’s promises, in his own words.

If they were anywhere else in Beijing, the five young women in cowboy hats and matching red, white, and blue costumes would look wildly out of place.

But here at the city’s biggest international property fair -- a frenetic gathering of brokers, developers and other real estate professionals all jockeying for the attention of Chinese buyers -- the quintet of wannabe Texans fits right in. As they promote Houston townhouses (“Yours for as little as $350,000!”), a Portugal contingent touts its Golden Visa program and the Australian delegation lures passersby with stuffed kangaroos.

Welcome to ground zero for the world’s largest cross-border residential property boom. Motivated by a weakening yuan, surging domestic housing costs and the desire to secure offshore footholds, Chinese citizens are snapping up overseas homes at an accelerating pace. They’re also venturing further afield than ever before, spreading beyond the likes of Sydney and Vancouver to lower-priced markets including Houston, Thailand’s Pattaya Beach and Malaysia’s Johor Bahru.

The buying spree has defied Chinese government efforts to restrict capital outflows and shows little sign of slowing after an estimated $15 billion of overseas real estate purchases in the first half. For cities in the cross-hairs, the challenge is to balance the economic benefits of Chinese demand against the risk that rising home prices spur a public backlash.

“The Chinese have managed to accumulate very large amounts of wealth, and the opportunities to deploy that capital in their own market are somewhat restricted,” said Richard Barkham, the London-based chief global economist at CBRE Group Inc., the world’s largest commercial property brokerage. “China has more than a billion people. Personally, I think we have just seen a trickle.”

While a dearth of government statistics makes it difficult to gain a comprehensive view of cross-border real estate investments, most industry projections point to a surge in Chinese purchases. Ping An Haofang, an online real estate platform owned by China’s second-largest insurer, says its $15 billion first-half estimate, derived from market data, nearly matches the figure for all of 2015.

Fang Holdings Ltd., the country’s most popular property website, predicts overseas buying on its system will increase 130 percent this year, while transactions through September at Shenzhen World Union Properties Consultancy Inc., China’s largest broker for new-home sales, were already 50 percent above last year’s level. The country overtook Canada as the largest source of residential purchases in America last year after an estimated $93 billion of buying from 2010 to 2015, according to a May report by the Asia Society and Rosen Consulting Group.

It adds up to the world’s biggest-ever wave of overseas residential property investment, according to Susan Wachter, a professor at the University of Pennsylvania’s Wharton School who specializes in real estate markets. While Japan had a similar boom in the 1980s, it was mainly focused on commercial buildings, Wachter said.

Read more: China’s growing influence in the West

Today’s Chinese buyers have a long list of reasons to flock overseas. The yuan’s slump is eroding their purchasing power, while returns on local financial assets -- including stocks, bonds and wealth-management products -- are shrinking as the $11 trillion economy slows.

Chinese real estate, meanwhile, has grown increasingly out of reach after a speculative boom sent domestic home prices to all-time highs. Residential property values in Shenzhen, Beijing and Shanghai all jumped more than 30 percent in the year through September, according to the National Bureau of Statistics.

“Properties in Shanghai are ridiculously expensive,” Chen Feng, 38, said as he evaluated prospects at a property fair in Shanghai in September, lured by television commercials for the event the night before. “With the amount of money it takes to buy a small apartment here, I can buy a building of apartments in many places in the world.”

That line of reasoning is nothing new, of course. Sydney, Vancouver, Hong Kong, London and a handful of other cities have long been popular destinations for Chinese buyers.

The difference now is that those traditional hotspots are starting to lose their appeal, due to soaring prices and new measures to deter an influx of overseas money. In Hong Kong, the government enacted a 30 percent tax on foreign property owners this month after Chinese demand pushed home values toward record highs.

The risk of similar measures in other cities can’t be ruled out as politicians including Donald Trump, the U.S. president-elect, tap into local discontent over rising living costs, according to CBRE Group’s Barkham.

Ocean Views

Chinese buyers have responded by branching out to cheaper cities. In the U.S., they’re increasingly searching for properties in Houston, Orlando and Seattle, which displaced San Francisco in the first quarter as the third-most viewed U.S. market on Juwai.com, a Chinese search engine for offshore real estate.

At the national level, countries in Southeast Asia have grown more popular. Juwai.com’s queries on Thailand are surging at a 72 percent annual rate, helping it surpass Britain as one of the top five most-targeted destinations worldwide earlier this year.

In Pattaya Beach, Chinese investors have snapped up 20 percent of the luxury condos on offer from Kingdom Property Co. over the past year. The properties offer Gulf of Thailand views for as little as $120,000, or less than a quarter of what buyers would pay for a typical apartment in central Shanghai, according to Han Bing, a 30-year-old anchor in Chinese television shows who doubles as a sales agent for the Bangkok-based developer.

“It’s a cool bargain for a retirement plan,” Han said.

Capital Controls

In the Malaysian state of Johor, across the Northern border of Singapore, major Chinese builders including Country Garden Holdings Co., Greenland Holdings Corp. and Guangzhou R&F Properties Co. are all developing new projects. Country Garden agents handed out fliers for the firm’s $37 billion Forest City development at the Beijing property fair in September, advertising permanent property rights, zero inheritance taxes, long-term residence visas and high-quality hospitals.

One challenge for Chinese investors is getting money out of a country that caps individuals’ foreign-currency purchases at $50,000 a year. While that limit hasn’t always been strictly enforced, the yuan’s slump is prompting policy makers to clamp down. This year, they’ve banned the use of friends’ currency quotas, curbed on the cross-border activities of underground banks and asked lenders to reduce foreign-exchange sales.

Still, alternative routes abound. Many business owners finance their homes through offshore trading companies, while some Chinese developers allow clients to pay for overseas units in yuan. Foreign-currency mortgages also play a role, helping to fund more than 80 percent of China’s international property purchases, according to an estimate by Fang Holdings based on user searches and surveys.

Planning Ahead

“Where there’s a will, there’s a way,” said David Ley, a professor at the University of British Columbia who wrote a book on the flood of wealthy migrants from east Asia in the 1980s and 1990s.

This year’s purchases could be just be the tip of the iceberg. Chinese holdings of global real estate, including commercial properties, will probably swell to $220 billion by 2020 from $80 billion in 2015, according to Juwai.com.

As the first generation born after China’s opening in the late 1970s approaches middle age, many of them want an overseas base for family members to travel, study and work. Chinese parents with children at foreign schools have been a major source of demand, accounting for an estimated 45 percent of cross-border buying, according to Fang Holdings.

Zha Liangliang, a 31-year-old owner of commercial wheat farms in China’s eastern Jiangsu province, said he purchased a $587,000 apartment in Sydney in August and plans to add five more before sending his children to high school in Australia. He’s flying to the country this month to view homes and farmland, hoping to buy before the yuan weakens any further.

For some investors, it’s never too early to pull the trigger. Richard Baumert, a partner at Millennium Partners Boston, tells the story of a 33-year-old Chinese man who purchased a luxury home for his future children in August, convinced they’re destined to attend one of the city’s prestigious universities.

The buyer shelled out $2.4 million for the property, Baumert said, unfazed by the fact that he’s single and it could be two decades before he has kids old enough for college.

— With assistance by Sree Vidya Bhaktavatsalam, and Dingmin Zhang

PopSci asked the hard questions and got answers. But you’re not going to like them.

Stop me if you've heard this one before...

Allegations of cheating pollution standards have reached U.S. automakers as Chrysler was sued by consumers who said engines in some Dodge trucks were rigged to hide that emissions were as much as 14 times higher than permitted by law.

The Michigan-based unit of Fiat Chrysler Automobiles NV is the first U.S. carmaker to be sued by consumers. Similar claims were made against German carmakers. Volkswagen AG admitted that it installed devices designed to fool emission testing in 11 million cars worldwide in a scandal that may cost it 18.2 billion euros ($19.5 billion). Claims of rigging vehicles have also been made against Mercedes, which has denied the allegations.

Chrysler and its diesel technology partner Cummins Inc. hid from consumers that pollutants that were supposed to have been broken down inside the diesel engines instead had a tendency to escape, almost doubling the emissions and reducing the vehicle’s fuel efficiency, according to the lawsuit. The companies are accused of fraud, false advertising and racketeering in the complaint, filed Monday in Detroit federal court on behalf of the owners of almost 500,000 Dodge Ram model trucks.

The lawsuit against Fiat Chrysler -- created in 2014 through the merger of Chrysler and Fiat -- further calls into question the credibility of clean-diesel technology. Excessive emissions from the vehicles exposed the general public to noxious levels of smog, according to the consumer complaint.

The claims involving Dodge Ram pickups from 2007 and 2012 predate the first known sales of emissions-cheating vehicles by Volkswagen by two years.

Regulatory Shift

The alleged fraud was prompted by a regulatory shift in 2001, according to the filing. Companies saw an opportunity for growth after the U.S. Environmental Protection Agency announced stringent new emissions standards for heavy-duty diesel engines effective 2010. Chrysler and Cummins bet they could leapfrog the industry and produce a vehicle to meet those standards three years ahead of schedule, according to the complaint.

Cummins increased its research and development budget by 60 percent from 2002 to 2007 to $321 million, about a quarter of which was dedicated to meeting the new standards. The outcome, though, was a flawed engine with limited capacity for trapping excess emissions, according to the complaint.

Diesel engines, while more fuel-efficient, produce greater volumes of nitrogen oxide pollutants, or NOx. Cummins’s engines had limited capacity to store or dispose of the NOx. Instead of NOx being broken down in a process called regeneration, the pollutant had a tendency to escape from the vehicle, sometimes nearly doubling emissions and reducing the vehicle’s fuel efficiency as much as 4 percent, according to the complaint.

The process concealed the true emissions output and wore down the car’s catalytic converter, which could cost as much as $5,000 to replace.

Reimbursement Sought

The companies failed to disclose the engines’ shortcomings, which would have prompted drivers to reconsider Chrysler’s marketing and ultimately the value of the vehicles, according to the complaint. The suit seeks reimbursement and damages for truck owners.

Rushing to the market to beat competitors was only part of the reason for the fraudulent design, according to the complaint. Cummins also sought to “bank emissions credits to spend on other, dirtier engines,” according to the complaint.

VW resolved a major chunk of its dispute in the U.S. in October when a San Francisco federal judge approved a $14.7 billion settlement with drivers intended to get 480,000 cars with polluting 2.0-liter diesel engines off the road by June 2019. The company is still trying to reach a settlement covering about 80,000 VW and Audi models with 3.0-liter diesel engines. This month, the company was accused in a lawsuit of installing defeat devices on more than 100,000 vehicles with 3.0-liter gasoline engines.

The German carmaker’s technology partner Robert Bosch GmbH is also accused in the lawsuits of playing a key role in the development of VW’s emission-cheating technology.

The case is Bledsoe v. FCA USA LLC, 16-cv-14024, U.S. District Court, Eastern District of Michigan (Detroit).

Ford O’Neil, who oversees about $100 billion in bonds for Fidelity Investments, says the sharp run-up in yields since the election of Donald Trump may not be justified. 

O’Neil said he’s skeptical about the assumptions that a Trump agenda of increased government spending and tax cuts will be fully enacted and lead to faster growth, higher inflation and bigger budget deficits.

“It is all based on speculation,” he said in an interview Friday in Fidelity’s Boston offices. “The market has glommed on to the good news about growth, but not how challenging it would be to enact such a program or negatives like restrictions on trade.”

Yields on U.S. Treasuries have surged the most since the “taper tantrum” in 2013 as traders assess the implications of some of the president-elect’s campaign promises. Trump has pledged to reduce personal taxes across the board, cut corporate taxes to 15 percent from 35 percent and spend from about $500 billion to $1 trillion to rebuild the nation’s crumbling infrastructure. Based on the lower end of that range, his plans would boost the nation’s debt by $5.3 trillion, according to an estimate by the non-partisan Committee for a Responsible Federal Budget.

Reining In Rates

O’Neil, one of the managers of the $26 billion Fidelity Total Bond Fund, said rising bond yields could be reined in by at least three forces: Federal Reserve Chair Janet Yellen’s commitment to a very gradual program of rate hikes, the traditional aversion to budget deficits by the Republican-controlled Congress, and buying by overseas investors who may use the recent jump in rates to snap up more Treasuries.

“While there will be upward pressure on rates, we don’t expect that rates will be materially higher a year from now,” said O’Neil.
 
The 10-year Treasury note yielded 2.21 percent Monday, up from 1.86 percent on Election Day on Nov. 8.

If Trump follows through with campaign promises to take a tougher line on global trade, that could act as a brake on U.S. growth, said O’Neil. As a candidate Trump said he would renegotiate or scrap international trade deals like Nafta.

O’Neil said that he likes Treasury Inflation-Protected Securities, leveraged loans and corporate credit, both high yield and investment grade.

Fidelity Total Bond gained 6.1 percent this year, better than 88 percent of peers, according to data compiled by Bloomberg. Over five years the fund topped 78 percent of rivals.

LoL by: (via GallowBoob)

Donald Trump is defying tradition in more ways than one.

The most unconventional president-elect in modern times, who happens to be “really rich,” says he has no plans to take the presidential salary to which he’s entitled.

Plus, advisers reportedly say the billionaire businessman wants to continue to spend time at his penthouse apartment in downtown Manhattan when he can – and might return to Trump Tower and other locations he calls home on weekends, working from the White House during the week.  

Trump gave a direct answer when asked about the presidential salary of $400,000.

“I'm not going to take the salary. I'm not taking it,” he told CBS’ “60 Minutes.”

He said he thinks he has to take $1 by law, “so I’ll take $1 a year.”

Trump said he didn’t even know what the salary was, before CBS’ Lesley Stahl told him.

Meanwhile, The New York Times reports that the family is still working out the particulars of where they’ll live and work. Melania Trump is expected to move to Washington, but it’s unclear when that will happen since their young son Barron is in the middle of a school year.

Trump reportedly is talking to advisers about splitting his time between the White House and New York.

According to the report, advisers said Trump might spend most of the week at the White House, and return to Trump Tower or Mar-a-Lago in Palm Beach or even his New Jersey golf course in Bedminster on the weekends.

While members of Congress often travel home on weekends, and modern presidents travel occasionally back to their home cities or states, it would be unusual for a president to routinely leave on the weekends.

As noted by Heat Street, George W. Bush often brought his staff to the “Western White House” in Crawford, Texas. But he and other presidents were still full-time Washington residents.