Bucaram, 74, who was in power from August 1996 to February 1997, may serve his sentence under house arrest due to his age, in accordance with Ecuadorean law

International News via Reuters:

An Ecuadorean court sentenced former President Abdala Bucaram to nine years and four months of imprisonment on Wednesday for his involvement in a criminal organization that fraudulently sold medical supplies during the COVID-19 pandemic. 

Bucaram, 74, who was in power from August 1996 to February 1997, may serve his sentence under house arrest due to his age, in accordance with Ecuadorean law.

One of Bucaram’s sons, Jacobo Bucaram, was also convicted in the same case.

“The defendants formed an organized criminal structure that, repeatedly and in a concerted manner, committed crimes,” the prosecutor’s office said in a statement on the ruling.

Bucaram’s lawyers did not comment on the ruling, but he still has the option to appeal the sentence. 

A total of four individuals were accused by the Attorney General’s Office of having obtained financial benefits by negotiating the purchase of some 21,000 rapid COVID-19 tests and other medical supplies between March and August 2020, while Ecuador was experiencing one of the worst outbreaks of the pandemic in the region.

Bucaram’s son was sentenced to the same term as his father. The others were a former traffic officer who was sentenced to 13 years and four months, while an Israeli citizen received a reduced sentence of two years and eight months for his cooperation during the trial.

Bucaram listened to the hearing via video conference from a hospital in the coastal city of Guayaquil, where he has been hospitalized due to heart problems.

CASE INTRICACIES

Prosecutors said that traffic police officers provided security for two foreign nationals who were transporting the supplies to Bucaram’s residence in the coastal city of Guayaquil. 

“According to the investigation, those involved pretended to be members of the diplomatic corps or agents of the Drug Enforcement Administration (DEA),” the prosecutor’s office said in a statement.

One of the involved foreigners — identified by the prosecutor’s office as Shy D — was murdered in a Guayaquil prison in August 2020, days after testifying in the case.

Reporting by Alexandra Valencia; Editing by Saad Sayeed

Adding to the uncertainty were U.S. inflation reports due on Thursday and Friday that could either reinforce expectations of a Federal Reserve rate increase next week or weaken the case for tighter policy

International News via Reuters:

The pound was little changed against the euro and the dollar on Thursday as investors awaited an expected European Central Bank interest-rate rise, while oil held above $100 a barrel, limiting appetite to take strong positions across markets.

Adding to the uncertainty were U.S. inflation reports due on Thursday and Friday that could either reinforce expectations of a Federal Reserve rate increase next week or weaken the case for tighter policy.

Sterling has traded in a narrow range against the euro for much of the past six weeks, with the single currency largely holding between 85.4 pence and 85.6 pence. On Thursday, the euro traded at 85.89 pence, little changed on the day.

The pound edged up against the dollar to $1.355. 

Money markets expect the ECB to raise euro zone rates by a quarter point to 2.5% on Thursday, with another increase almost fully priced in by the end of this year and an 80% chance of a third by March. 

By contrast, the Bank of England is not expected to raise rates next week. Markets have priced in only two increases between now and March, a path many analysts view as too aggressive, particularly after Governor Andrew Bailey pushed back against such expectations. 

UK GDP data for July are due on Friday. Economists polled by Reuters expect the economy to have stalled after growing 0.3% in June, leaving annual growth at 1.2%, up from 1.1% the month before. 

Strong growth in the first half of the year has put Britain on track to be one of the G7’s fastest-growing economies.

However, support from unusually warm weather and the soccer World Cup is likely to fade, posing risks to both the pound and the interest-rate outlook, said George Vessey, lead FX and macro strategist at Convera.

“For sterling, that creates an important test. A stronger (GDP) reading would help justify the roughly three rate hikes currently priced by summer 2027. However, any evidence that growth is losing momentum could trigger a dovish reassessment of those expectations, eroding sterling’s yield advantage and leaving the pound more vulnerable to downside pressure.”

UK inflation and wage growth data are due next week.

Reporting by Amanda Cooper. Editing by Mark Potter

There was respite of sorts in Europe as steadier oil and gas prices helped stem the bond selling that has pushed borrowing costs in many large economies to decades-long highs in recent weeks

International News via Reuters:

Markets were bracing for the European Central Bank’s second rate hike of the year and key U.S. inflation data on Thursday after the return of $100-a-barrel oil due to escalating Middle East attacks, causing fresh angst on global bond markets.

There was respite of sorts in Europe as steadier oil and gas prices helped stem the bond selling that has pushed borrowing costs in many large economies to decades-long highs in recent weeks.

The region’s stocks [.EU] and the euro and sterling were all holding their ground too as traders moved into the traditional holding pattern ahead of the ECB’s interest rate decision later in the day.

Columbia Threadneedle’s Global Head of Absolute Return Fixed Income, Keith Patton, said with the ECB almost guaranteed to hike later, the key will be President Christine Lagarde’s response to the inevitable questions about further increases ahead.

“Depending on the language she uses, the market is probably waiting for a more dovish, data dependent call,” Patton said.

“The key question for me is have they done any modelling on what the detriment to growth will be if they did do another hike?”

Traders currently price ECB rates rising to 2.74% by December, implying almost two 25-basis-point hikes. But they are also pricing in an additional one by this time next year and roughly a 40% chance of a fourth move.

Germany’s 10-year bond yield was hovering at 3.43%, after reaching 3.4389% on Wednesday, the highest since the heat of the euro zone crisis in April 2011.

France’s OAT yield was at 4.335% after it had surged to a post-2008 high of 4.34% while the UK’s 10-year and 20-year yields bobbed near respective post-2007 and 1998 highs of 5.26% and 5.87%.

Benchmark 10-year U.S. Treasury yields meanwhile nudged up to 4.85% after an eventful previous session that had seen Donald Trump promise to pay every U.S. adult a $5,000 “Trump dividend” if his party wins November’s congressional elections.

The Treasury Department had also announced a $6 billion buyback of longer-dated U.S. bonds that disappointed some investors.

“Spending 4% of GDP to win an election,” while the Treasury is buying bonds at the long end, “policy is not coherent,” Columbia Threadneedle’s Patton said.

OIL PRESSURE

In the commodity markets, Brent crude futures edged up to $102 a barrel, having broken through the psychological $100 mark on Wednesday for the first time since July amid the re-escalation of the Iran war and as traders grappled with the prospect of yet more inflationary pressure. [O/R]

“I think that Brent pushing through the $100 level will be seen by many in the market as a significant event in the current scheme of things,” said Nick Twidale, chief market strategist at ATFX Global.

Twidale said traders who had been holding off in hopes of a Middle East peace deal may now “hit the trigger as the realities of a longer conflict kick in.”

Overnight, MSCI’s broadest index of Asia shares <.MIAP00000PUS> fell 0.5%. Japan’s Nikkei finished 0.2% higher while South Korea’s KOSPI dipped 0.25%.

Wall Street futures rose 0.1% ahead of U.S. inflation data later in the day that will set expectations for the Federal Reserve’s meeting next week.

Investor attention will stay on the bond market. After the global ​selloff pushed 30-year yields to their highest level since 2007, Treasury Secretary Scott Bessent in August said that the ⁠government would increase buybacks of longer-dated bonds.

“Bessent has laid down the gauntlet to a group of sophisticated traders who don’t like to be told what to do,” said Matt Simpson, senior market analyst at StoneX.

“He may win a battle or two, but he’ll only win the war if bond traders let him.”

Reporting by Marc Jones