Monday, January 01, 2024

 

Russia Claims New Record for Cargo on the Northern Sea Route

Northern Sea Route
Talnakh arriving with the record cargo for 2023 (FSUE Atomflot)

PUBLISHED DEC 29, 2023 3:56 PM BY THE MARITIME EXECUTIVE

 

 

As of the last week of 2023, Russian officials were claiming to have reached a record level of cargo moving along the Northern Sea Route while expecting to continue to increase the total to the end of the year. The reports are saying that volumes recovered from the 2022 downturn which was due to “geopolitical factors” and laying the groundwork for the continued expansion of the route.

On the night of December 20-21, the Talnakh (17,940 dwt), a Russian cargo ship, established the record for the year. The vessel which operates for Norilsk Nickel between the inland port of Dudinka on the Kara Sea and Murmansk on the Barents arrived in Murmansk carrying 17,000 tons of cargo. 

The trip was in part made possible by two of FSUE Atomflot’s nuclear icebreakers which operate under long-term contract to Norilsk Nickel. The vessels were required to lay and maintain a channel from Dudinka along the Yenisei River to the Kara Sea. It was one of 730 vessel supports provided by the icebreakers in 2023, which is up from 653 in 2022.

With the arrival of the cargo, FSUE Atomflot reports they surpassed 35 million tons of cargo transported on the route in 2023. By comparison in 2022, 34.117 million tons of cargo were moved on the route. While it is a 2.5 percent increase year-over-year, they report that the target is to move 100,000 tons a day on the route. By the end of 2023, they expect the increase could reach 2.127 million tons over last year.

The figure is also significant because it also passed the previous record of 34.9 million tons transported along the route in 2021. They contend that freight traffic in the waters of the Northern Sea Route is showing stable growth.

Russian officials highlight that it is part of the long-term plan to redirect cargo from the Suez Canal and grow the Northern Sea Route, which is over 3,452 miles long connecting the Barents Sea and the Bering Strait. They highlight that the route has grown from 7 million tons of cargo 36 years ago, in 1987, under the old Soviet Union.

President Vladimir Putin has named the growth of the Northern Sea Route as one of Russia’s top priorities. In addition to the approval to begin year-round transit on the route, they point to plans to increase the infrastructure capacity to accommodate 80 million tons by 2024 and 110 million tons by 2030. Russia’s goal is to reach 220 million tons of cargo transported annually on the Northern Sea Route.

 

Video: China Unveils its Fourth Research Icebreaker

Ji Di
Guangzhou Shipyard (file image courtesy CSSC)

PUBLISHED DEC 31, 2023 6:54 PM BY THE MARITIME EXECUTIVE

 


China is further expanding its icebreaker fleet with a new polar class vessel set to join service in the second quarter of 2024. Last week, China revealed the designs of its next-generation research vessel Ji Di, currently under construction at Guangzhou Shipyard International.

The vessel measures 89 meters long with a width of 17.8 meters, with displacement of 5,600 tonnes. It has capacity for 60 crew members and a range of 26,000 kilometers, with at-sea endurance of up to 80 days. 

Additionally, the vessel will be equipped to carry drones and underwater autonomous robots for deep polar seabed exploration.

Construction of Ji Di at Guangzhou Shipyard is happening concurrently with that of another Polar Class 4 icebreaking research vessel, which is tentatively named Tan Suo San Hao. Its construction began in June and is slightly bigger than Ji Di with a length of 103 meters and a displacement of about 9,200 tons. The vessel will have enough capacity for 80 crew members.

Ji Di is expected to be delivered in 2025, bringing the total number of Chinese research icebreakers to four. The first two icebreakers include Xuelong 1 and Xuelong 2, which China is currently using for missions to replenish supplies in its seven stations in the Arctic and Antarctic regions.

The expansion of China’s icebreaking fleet has empowered the country to make year-round scientific expeditions to the geopolitically-important polar regions. China has conducted 40 scientific expeditions in the Antarctic since 1984 and another 12 in the Arctic since 1999. This translates to a wealth of scientific and environmental data on these regions, positioning China as a rising power in the Earth’s frozen frontiers.

 

Myanmar Gives China Green Light to Proceed with Strategic Seaport

CITIC port Myanmar
Illustration courtesy CITIC

PUBLISHED DEC 31, 2023 10:01 PM BY THE MARITIME EXECUTIVE

 

 

After years of delay, the construction of the Chinese-backed Kyaukphyu deep sea port in Myanmar is likely to resume after the two countries renewed terms for the deal. Last week, Myanmar’s junta and the Chinese state-owned firm CITIC signed an addendum to the concession agreement for the port project. The signing ceremony was held in Myanmar’s capital Naypyitaw and was attended by top Chinese diplomats.

Although the text of the addendum was not made public, Myanmar government officials said the goal is to restart the project as soon as possible. A statement from the Commerce Ministry said, “the Addendum was signed for clearer and more accurate understanding of the concession agreement regarding the powers and responsibilities of both sides.”

However, some analysts have argued that the addendum is likely to have guaranteed some incentives for China so as to proceed with the project. For instance, key components of the original concession which were thought to be beneficial to China have remained. This includes CITIC holding a 70 percent stake and the Myanmar side 30 percent.

Beijing has been very keen on the Kyaukphyu Port project, with Chinese government officials pushing Myanmar to expedite the negotiation process. In May, Chinese ambassador to Myanmar Cheng Hai implored the junta’s legal affairs minister, Thidar Oo, to speed up the talks on development of the port project.

The plans to build Kyaukphyu Port and its Special Economic Zone (SEZ) began back in 2010, but the Covid pandemic and the military takeover in 2021 significantly delayed the start of construction.

The port project is valued at $7.3 billion and an adjacent Special Economic Zone (SEZ) at $1.3 billion. The site spans around 600 acres in the western state of Rakhine. This area is known best for Myanmar's military campaign to expel the Rohingya, a Muslim minority group long subject to discrimination in the nation's predominantly Buddhist society. China, which has been accused of perpetrating serious human rights violations against its own Muslim minorities, has sponsored a small-scale pilot for repatriating Rohingya refugees back to a detention camp in Myanmar. 

When complete, China's Kyaukphyu port project will be the new southern terminus of the 1,700-kilometer China-Myanmar Economic Corridor (CMEC) connecting to the Chinese city of Kunming. The corridor will provide landlocked Yunnan Province with access to the Indian Ocean. It is also a strategic bypass for Chinese shipping to avoid the congested Malacca Strait, easing trade with the Middle East, Africa and Europe.

Besides its economic benefits, military analysts have also suggested that Kyaukphyu Port is of military advantage to the PLA Navy due to its direct access to the Indian Ocean. China has invested heavily in a string of strategically-situated port projects to its south and west, including a new naval base in Cambodia; commercial ports at Hambantota, Sri Lanka and Gwadar, Pakistan; and a full-scale naval station at the port of Djibouti.  

 

Senegal's First Offshore Oilfield Set to Start Up in Mid-2024

senghor
The FPSO Léopold Sédar Senghor at its sailaway (Seatrium)

PUBLISHED DEC 31, 2023 11:14 PM BY THE MARITIME EXECUTIVE

 

Australian oil and gas company Woodside Energy is targeting first oil from the Sangomar offshore project in Senegal towards the middle of next year now that its FPSO, Léopold Sédar Senghor, has departed Singapore. The Sangomar field is located about 50 nautical miles south of Dakar, Senegal’s capital, and it will be the country’s first offshore oil development. 

The FPSO, a former VLCC converted by Japanese operator Modec, is sailing 12,000 nautical miles to the site.

Senegal is fast emerging as a major hydrocarbon-producing nation. Since 2014, exploratory efforts have turned up more than one billion barrels of oil and 120 trillion cubic feet of natural gas offshore. The country expects to earn $1.4 billion in revenues over the next two years, based on a benchmark price of $90 per barrel from the Sangomar offshore field and BP's Greater Tortue Ahmeyim gas project.

The FPSO, formerly the VLCC Astipal, has been undergoing conversion over the past three years. Built in 2001, Astipal was acquired by Modec in 2020 before sailing to China for the conversion. The hull and marine works, external turret and topsides module installation and conversion work were completed by COSCO Shipyard.  

The FPSO then sailed to Seatrium in Singapore. The (recently-merged) yard's scope of work included topsides integration, as well as support for the onshore commissioning.

The sailing of the FPSO is another step forward for the Sangomar project, which is now on course for first oil in mid-2024. The FPSO will be capable of processing 100,000 barrels of crude oil per day, 130 million cubic feet of gas per day, 145,000 barrels of water injection per day, and will have a minimum storage capacity of 1.3 million barrels of crude oil.

“Sangomar is Senegal’s first offshore oil development and we remain committed to working with the government of Senegal and local communities to ensure that the benefits from our investments are felt broadly across the country,” said Meg O’Neill, Woodside CEO.  

Modec said the conversion of the FPSO was a demanding project in terms of both technical and execution complexity, with the challenges compounded by the COVID-19 pandemic.

The FPSO Léopold Sédar Senghor is Modec’s fifth FPSO to be delivered to West Africa. The company has some 30 years of operational experience in the region and currently operates two FPSOs in Ghana and Côte d’Ivoire.

 

State of Hawaii Moves Closer to Disposing of Historic Sailing Tanker

Sailing vessel Falls of Clyde at her berth in Honolulu
Courtesy Save the Falls of Clyde

PUBLISHED DEC 31, 2023 10:59 PM BY THE MARITIME EXECUTIVE

 

The historic sailing tanker Falls of Clyde could soon be removed from Honolulu's harbor, ending a long-term effort to save the vessel. 

The Hawaii Department of Transportation (HDOT) has prepared a draft environmental assessment (Draft EA) report outlining plans to remove the decaying Falls of Clyde from Pier 7 in Honolulu Harbor, where it has been docked since 2016.

In the report, HDOT revealed plans to issue a request for proposal (RFP) for the removal of the ship, which is severely corroded, leaking and has lost its structural and watertight integrity. The current state of the 1878-built ship, which is the world's last surviving sail-driven oil tanker, means that it poses a risk of structural failure and sinking. The agency warns that this could threaten harbor safety and maritime operations.

Plans to float an RFP for the removal of the ship come just a month after it was delisted from the Hawaii Register of Historic Places. The state government contends that due to significant deterioration, the Falls of Clyde has lost most of the qualities of historic significance and aspects of integrity that originally led to its listing in the National Register of Historic Places and designated a National Historic Landmark in 1989. The ship had been designated owing to its exceptional national significance as the oldest surviving American tanker and the only surviving sailing oil tanker left afloat - not only in the U.S. but the world.

Though owned by the nonprofit Friends of the Falls of Clyde, the state government took over the vessel's management seven years ago over safety concerns.

In the 346-page Draft EA, the state has analyzed the potential environmental consequences of removing the ship and presents alternatives for accomplishing the task. The report highlights that the method of removal and the ship’s ultimate disposition is yet to be determined and will be up to the selected contractor.

In the Draft EA, the state had outlined five alternatives for dealing with the vessel: no action, drydock and repair, removal by dismantling, removal at sea by sinking and third party acquisition.

Falls of Clyde is the world’s only surviving iron-hulled, four-masted, fully-rigged ship. She was built in Glasgow in 1878, during a shipbuilding boom inspired by increased trade with the U.S, and she made several voyages to American ports while under the British flag. In 1898, she was purchased by Captain William Matson of the Matson Navigation Company and reregistered in Hawaii.

From 1899 to 1907, the ship was re-rigged as a bark for sailing with fewer crew, and she made over sixty voyages between Hawaii and San Francisco, carrying passengers, sugar and general cargo. She was sold San Francisco-based Associated Oil Company, which installed large steel tanks in the hull, allowing her to carry 750,000 gallons of liquid bulk. For decades, the ship would bring kerosene to Hawaii and molasses back from Hawaii to California.

 

Shell Fined $1.2M After Worker's Feet Were Crushed in Gangway Accident

Kroonborg and her walk-to-work gangway in operation at a Shell platform (Shell)
Kroonborg and her walk-to-work gangway in operation at a Shell platform (Shell)

PUBLISHED DEC 31, 2023 11:19 PM BY THE MARITIME EXECUTIVE

 

Energy giant Shell and offshore access provider Ampelmann have been fined $1.5 million after the feet of a worker were crushed while walking along a gangway during a transfer in the North Sea.

The feet of worker Martin Hill were crushed while walking along a gangway during a transfer from a supply ship to a gas rig on October 17, 2017. The UK’s Health and Safety Executive (HSE) announced that the two companies pleaded guilty to breaching offshore safety requirements leading to the incident.

Hill, then 63, was part of a maintenance team working for Shell. The men were being transferred from an offshore supply vessel to the company’s Galleon PG offshore gas rig, located more than 30 nm off the Norfolk and Lincolnshire coasts. The ship was fitted with a walk-to-work motion compensated gangway to carry workers to and fro. The gangway had been designed and constructed by Ampelmann, a firm specializing in WTW transfer systems.

The weather conditions were unfavorable, with high wind and heavy seas, but the companies allowed it to proceed. The transfer took place just before dawn, using what the authorities deemed insufficient lighting.

Hill was the last man on the transfer list and while walking along the gangway, the gap between the ship and the rig reduced, causing the booms to telescope together. The approaching step ran over the safety boots of both his feet, trapping them under the step and inflicting serious injuries. The accident almost caused both feet to be amputated.

In its investigation, HSE found that people using the Ampelmann-designed and owned gangway were not protected enough from the risks created by the moving step. 

“Walk to work gangways have an important contribution to make towards providing reliable and safe access, but their design and operation must ensure workers are protected from the risk of needless entrapment and serious injury,” said John Hawkins, HSE inspector.

He added that to have workers exposed to a risk of injury when required to do something as basic as walking to work over a gangway does not reflect the standards expected.

HSE prosecuted Shell and Ampelmann following the incident. The two companies admitted guilt and were fined $1.2 million and $260,000 respectively.

 

N.S. coal mine closed because of rockfalls is allowed to resume production

The Nova Scotia government says a Cape Breton coal mine under a stop-work order since July can resume production. 

The underground operation at Donkin mine has been closed since a July 15 rockfall, and in response owner Kameron Coal Management Ltd. laid off its 130-person workforce.

In a statement today, the province says Kameron Coal can reopen the mine because the company has met the first set of safety requirements imposed by the government's stop-work order.

Those requirements include updating the mine's hazard-assessment classification system and increasing monitoring inside a tunnel.

The province says the mine can operate during the winter months when humidity is low and doesn't impact the mine's infrastructure.

In order to remain open, Kameron Coal must meet the second phase of safety requirements before Feb. 29. 

That phase requires the company to hire a third-party engineer with specialized experience in mining and tunnelling to review the mine's ground control plan.

This report by The Canadian Press was first published Dec. 27, 2023.

The flight attendants who fought sexism in the skies — and won

Even before her job offer was finalized in 1973, Senka Dukovich realized her career as a flight attendant had an expiry date.

“I had to sign a contract as a new hire that I would quit after 10 years, or that I would quit at 32 years old, whichever came first. Can you believe that?” the Toronto resident recalled.

Her initial interview with Air Canada contained another demeaning surprise.

“I was told to wear a skirt and I was told to turn around. That was my first experience with what you might call sexism.”

Before the 1970s, female cabin crew, then known as stewardesses, faced discriminatory hiring and work policies marked by strict weight limits, age ceilings, appearance guidelines and marriage bans. But, amid a swelling tide of second-wave feminism — from Chatelaine to the Royal Commission on the Status of Women — a new generation of flight attendants fought to overturn sexist expectations and bring fair labour standards to the skies.

Susan Barnes was in her early 20s when she signed on with Canadian Pacific Air Lines in 1968. Mandatory retirement was at age 30. Marriage was a fireable offence.

Regular weigh-ins — when cabin crew stepped on a scale before departure — were also required.

“I had a weight restriction of 112 to 116 pounds. So if I weighed less than that or more than that, I got taken off the line with no pay,” Barnes recalled.

“I never saw the boys step on the scale.”

Management regulated appearance down to the last eyelash. Each worker was told during a two-month training program which mascara and eyeliner to wear, available only from the company store.

“When I got hired, I had red hair and freckles. They told me on my trips to Hawaii if I ever got sunburnt they would fire me,” she said, noting the routine uniform and grooming inspections.

In 1970, Canadian Pacific conceded to end the marriage ban following demands from a small group of flight attendants, including Barnes. A wave of “new” nuptials followed immediately.

“Of course, some people had been married for a year. They were just not going to quit,” Barnes recalled. “I was married long before I was allowed to be.”

At the time, pregnancy was also a no-no, until Barnes’s committee demanded accommodation, she said. After the change, stewardesses still went unpaid until they returned from leave.

“You had six weeks — six weeks — after your child was born to have that weigh-in,” she added.

The same year, Barnes formed a group with several other activists who demanded to know why women weren’t allowed to be “pursers” — male crew members who supervised operations in the cabin. Often, there weren’t enough men to fill the roles, so the senior “stewardess” would step in — at lesser pay.

Reform was not immediate. At Air Canada, the policy was in place until at least 1973, she said. At Wardair, the weigh-ins were also a fixture through the mid-1970s, albeit with broader ranges.

Ironically, the changes spearheaded by flight attendants arrived just as the image associated with the job became more sexualized.

Ad campaigns featured young women who mouthed taglines such as “Fly me” — National Airlines — “We move our tails for you” — Continental — and, in print, “Have you ever done it the French way” — Air France.

The portrayal bucked the more competence-driven view of the role apparent in films such as the 1956 thriller “Julie” starring Doris Day, who played a resourceful stewardess who takes the controls and saves the day.

“There was this new, hyper-sexualized stereotype of flight attendants at the exact moment that flight attendants are really finally pushing hard against the airlines to get fair work rules,” said Kathleen Barry, author of “Femininity in Flight: A History of Flight Attendants.”

Before airline deregulation in 1978 in the U.S. and in the 1980s in Canada, carriers had little to distinguish themselves beyond their service, as routes and prices were federally controlled.

“Part of why you see airlines so interested in what their flight attendants look like — and how they can use them as marketing tools — is because they're limited in the other ways they can compete," Barry said.

The battle didn’t end with the 1970s, however.

For years, some airlines failed to provide uniforms for pregnant employees, including pilots. Air Canada offered no maternity clothing for Judy Cameron, the airline’s first woman aviator, before she gave birth in 1984.

“My last child was born in 1990, and I never had a maternity uniform,” she said, with a wry chuckle.

Nor was success unfaltering.

In 1987, Dukovich, who had graduated from Osgoode Hall law school while working as a flight attendant a decade earlier, filed a complaint alleging widespread sex discrimination that detailed “harassing and threatening” practices of dress and appearance regulation.

Dukovich told the Globe and Mail at the time that Wardair, which she'd joined after leaving Air Canada, wanted women to be “squeaky clean sex objects” and pressured older flight attendants to retire, instructed others to lose weight and ensured they all wore a prescribed brassiere.

The comments resulted in a two-week suspension, and the human rights complaint did not proceed.

Initially, even the wins often came on a technicality rather than a recognition of sexist standards.

In 1971, Pacific Western Airlines rolled out a Calgary Stampede policy where all flight attendants on the Vancouver-Calgary route would wear cowboy boots, a western hat, a “short fringed skirt which just covered the buttocks and red bloomers which peeked below,” according to a 1986 publication by the Canadian Air Line Flight Attendants’ Association.

Union members Ursula Warnat and Sharon Gray complained that the uniform drew unwanted sexual attention from men on board, citing a groping incident involving Gray. They refused to wear the red panties. In response, management fired them. But within weeks, the carrier discontinued the uniform and changed the lay-offs to six-week suspensions without pay, which the employees challenged successfully in arbitration.

However, a decision by the tribunal simply stated that the outfit was not the “standard” uniform and found that it was “unnecessary to come to any conclusion” on whether “sexist and demeaning” garb was unreasonable, according to a 2016 journal article by Joan Sangster and Julia Smith.

“Even when they win some of these cases, it's often not challenging the actual sexism and gender inequality,” said Smith, assistant professor of labour studies at the University of Manitoba.

“There was kind of an accepted view that it was men’s prerogative on the plane — in particular men travelling alone — to ogle and to leer and to look at the stewardesses’ legs,” said Sangster, professor emeritus at Trent University specializing in labour history.

Since then, flight attendants have made big gains in workplace equality, she added, though harassment remains an issue.

Harassment-specific complaints that cite sex rose 58 per cent between 2004 and 2018, according to the Canadian Human Rights Commission, far more than in other federally regulated industries.

“I think there’s much more recognition of the difficulties of flying,” said Dukovich. “It’s not seen as just a server in the sky.

“Still, these are societal issues,” she said. “So it’s a work in progress.”

She also took pains to stress the upsides of the work, even 50 years ago. “The camaraderie is wonderful. You’re a team.”

Barnes speculated that the glamour surrounding the industry may initially have undercut the push for change. “We felt like we were special,” said the B.C. resident, who left aviation in the late 1970s and went on to become a marketing executive.

“I can’t say I’m a trailblazer, but I did what was right for us.”

This report by The Canadian Press was first published Dec. 27, 2023.

Markets today: AI mania driving Nasdaq 100’s best run since 1999

1999-2000 DOT.COM.BUBBLE BURST 

Dec 27, 2023

NYSE traders

 

A banner year for stocks is drawing to an end, with the market near all-time highs amid the artificial-intelligence exuberance and dovish Federal Reserve wagers.

In the run-up to the final closing bell of 2023, the Nasdaq 100 wavered — while still set for its best year since 1999 after a US$7 trillion surge. The S&P 500 came close to a record, and was 1 per cent below the average full-year gain predicted in a recent survey with analysts, who forecast the index would end 2024 at 4,833.

“If the stock market can break through that record high in any significant way as we move through January, it’s going to be very bullish on a technical basis,” said Matt Maley at Miller Tabak + Co. “Whenever the market is rallying strongly at the beginning of a new year — when a lot of people are adjusting their investment-game plans — it tends to exacerbate the rally.”

In a rates-obsessed world, the stock market saw a massive reversal this year after suffering its worst annual selloff since 2008. As traders ramped up bets the Fed is done with its hiking campaign — and will start easing policy in 2024 — global bonds were set for their biggest two-month gain on record.

The S&P 500 traded just a few points away from its all-time high of 4,796.56 — extending its 2023 advance to 25 per cent. Treasuries dropped after a weak $40 billion sale of seven-year notes. The dollar rose against most of its developed-market peers. The yen climbed as Bank of Japan Governor Kazuo Ueda continued to prepare the ground for the nation’s first rate increase since 2007.

From Nvidia Corp. to Microsoft Corp., the seven-largest US tech stocks were responsible for 64 per cent of the gauge’s rally this year through last week as the AI frenzy took off. The Nasdaq 100 is up over 50 per cent this year.

The ‘Magnificent Seven’ — which also includes Amazon.com Inc., Apple Inc., Google parent Alphabet Inc., Meta Platforms Inc. and Tesla Inc. — are expected to post 22 per cent earnings growth next year, twice the S&P 500’s advance, data compiled by Bloomberg Intelligence show. The key is how much of that is already baked into share prices, especially with expectations for a soft landing building.

“Companies that have a defined and clear AI strategy with easy-to-follow metrics will likely continue to do well in 2024,” said Michael Landsberg at Landsberg Bennett Private Wealth Management. “Companies that have a hard time explaining their AI value proposition will not see a repeat of 2023, where most large tech was buoyed by the excitement and not necessarily the details of AI.”

Investors have flocked to big tech in part on bets that they are best positioned to capitalize on AI due to their vast scale and financial strength.

Those bigger profits have brought valuations down from nosebleed levels — but they’re still lofty. The Nasdaq 100 is priced at about 25 times profits projected over the next 12 months, according to data compiled by Bloomberg. While that’s down from a peak of 30 in 2020, it’s well above the average of 19 times over the past two decades.

Although there has been a relatively high number of stocks with gains of over 100 per cent, there haven’t been many outperforming the S&P 500, Bespoke Investment Group noted. In a typical year, on average, 48.7 per cent of the benchmark’s members post larger gains than the index itself. In 2023, less than 30 per cent of its members are outpacing the index.

“This leads one to question whether the leaders (or laggards) continue to lead (lag) in the year ahead,” the Bespoke strategists said. “Looking at the past, the picture is not exactly favorable for that sort of rotation in either direction.”

The market is “sitting on big gains” and most participants just want the year to end to register those gains, according to Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter.

“But I’ve been in this industry long enough to know that when everyone seems to be leaning on one side of the proverbial canoe, it pays to move to the middle.”

Warnings about a market that’s flashing overbought signals have been raising concern about a pullback, with some market observers saying that traders have gone too far, too fast in pricing in a dovish Fed pivot.

While the recent ebbing of inflation is positive for the Fed, some other figures showing economic resilience could fuel consumer spending — working against the central bank’s aim to slow the pace of growth. That poses risks for the bond market heading into the new year.

Falling yields have also driven the dollar lower in 2023, with the greenback on pace for its worst year since the onset of the pandemic. Much of the decline materialized in the fourth quarter on growing wagers that the Fed will sharply loosen policy next year.

The drop in Treasury yields has effectively relaxed financial conditions in the US and “are hardly compatible with sustainably low inflation,” said Ipek Ozkardeskaya, a senior analyst at Swissquote.

“The rally in the sovereign space looks overdone — hence the rally in stocks and the selloff in the US dollar look overstretched,” she wrote in a note.

About a week ahead of the all-important U.S. jobs report, traders were unfazed by data showing initial jobless claims rose to 218,000. Economists forecast a still-healthy 170,000 increase in December payrolls, consistent with resilient labor demand that has been key in powering the economy.

Elsewhere, oil retreated for the fourth time in five sessions as rising inventories at the key U.S. storage hub in Cushing, Oklahoma, partly offset a drop in national stockpiles to paint a mixed picture for demand.

Some of the main moves in markets:

Stocks

  • The S&P 500 was little changed as of 4 p.m. New York time
  • The Nasdaq 100 was little changed
  • The Dow Jones Industrial Average rose 0.1 per cent
  • The MSCI World index was little changed

Currencies

  • The Bloomberg Dollar Spot Index rose 0.1 per cent
  • The euro fell 0.4 per cent to $1.1064
  • The British pound fell 0.5 per cent to $1.2730
  • The Japanese yen rose 0.3 per cent to 141.40 per dollar

Cryptocurrencies

  • Bitcoin fell 2 per cent to $42,525.5
  • Ether fell 0.4 per cent to $2,350.53

Bonds

  • The yield on 10-year Treasuries advanced five basis points to 3.84 per cent
  • Germany’s 10-year yield advanced five basis points to 1.94 per cent
  • Britain’s 10-year yield advanced six basis points to 3.49 per cent

Commodities

  • West Texas Intermediate crude fell 3 per cent to $71.91 a barrel
  • Spot gold fell 0.5 per cent to $2,066.51 an ounce

This story was produced with the assistance of Bloomberg Automation.

 

Community bonds: Strengthening the ties of 

community while earning a financial return

Setting aside money for worthy causes can be a challenge, but one option that's gaining momentum both gives back and offers a good return on investment.

Community bonds pay out interest, and eventually return the initial capital, in the same way as more conventional bonds, but the money is directed to social projects, and the not-for-profit entity that initiates one is responsible for the guarantee.

Habitat for Humanity Guelph Wellington in southwestern Ontario used the model to raise money for two affordable housing projects it’s developing. It broke ground on the first, a 32-unit townhouse project, in November. 

The group was able to use the money raised through the bond as an anchor to raise further construction financing, said Ryan Deska, director of engagement and development.

“So the community bond is a way for us to leverage the collective wealth of the community," he said. 

"It's one of the puzzle pieces that help us to move a project forward.”

The group raised about $4.5 million through the model, he said, offering 7.25 per cent interest for a two-year term, or a one-year term that paid 6.85 per cent, both with a minimum $10,000 investment. They also offered a five per cent fixed rate with a minimum investment of $2,500.

Investors ranged from a local developer that committed $1.5 million, to residents putting in a few thousand dollars each.

“It's been a really exciting process because, you know, it's anyone from, like, a city bus driver popping in on their route to drop off a cheque, all the way through to people selling their homes and investing,” said Deska.

“When you extend that across a whole community and beyond, the numbers add up pretty quickly.”

Various models of raising money through community investments have been around for a while, though Toronto-based Centre for Social Innovation claims to have invented and issued the first community bond in 2010 to buy its first building. 

Tapestry Community Capital emerged from an earlier form of community fundraising, using a co-operative model to help build Toronto's first wind turbine in 1998, and now helps numerous groups raise money though community bonds.

Affordable housing is a big focus these days in community bonds, said Jennifer Bryan, senior campaign manager at Tapestry, but they've also been used by groups working in areas like education, marginalized youth, and renewable energy — anywhere the investment can go toward a social benefit.

“You're getting a double return. You're investing in something great and getting that good feeling and supporting something awesome, while also getting a financial return,” said Bryan. 

Unlike some other types of impact investing where there’s often a high investment threshold, many community bonds allow relatively small contributions. 

“What we also love about them is they're inclusive,” said Bryan.

Kamloops, B.C.-based Propolis Housing Cooperative is using the model to raise $1.1 million to buy land, paying out between 2.5 and 3.5 per cent over three years, for its first affordable housing project. 

The group was drawn to the idea of getting local buy-in for the project, said Lindsay Harris, president of Propolis.

“We really loved the idea of there being a component of the project that was really community led, that engaged community investors.”

She said it took them a while to find what model would work because community bonds haven’t been used as much in Western Canada, but the reception has been great so far with over $600,000 raised or pledged since launching the campaign in mid-June.

While the rates Propolis and many other community bonds offer are generally lower than what investors can get from a guaranteed investment certificate these days, there is still interest, said Harris.

"One of the huge benefits of community bonds is that people know that they're getting a financial return and a social return," she said. 

"People are willing to take a slightly smaller financial return if they know that it's having a huge impact."

The model seems to work especially well in the early stages when a group is looking to secure a tangible asset like property, said Harris, because it gives investors a higher level of security.

Taking a close look at the security, or guarantee, of the investment is crucial because there are few regulations or protections for this relatively new model, said Patti Dolan, senior wealth advisor at Wellington-Altus Private Wealth.

Because the investments fall into a grey area between charity and investment, they also fall outside of the kind of products a financial advisor could sell or even recommend, and clients would have to hold them outside of investments managed by an advisor, she said.

She cautions potential investors to be aware of some of the longer lock-ins for these bonds, since there's no secondary market to sell them. Dolan also recommends taking a good look at the offering memorandum that breaks down what the money is for and how the project will be run. 

"[Investors] really do need to do their homework, and then make the decision if it's something they're willing to support."

This report by The Canadian Press was first published Dec. 28, 2023.