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☆ The Fed will likely cut interest rates 4 times next year as the economy remains resilient
▼ + stars: | 2023-12-04 | by ( Filip De Mott | ) www.businessinsider.com time to read: +3 min

US economic growth will remain resilient next year, making the Fed cautious about rate cuts, Barclays said. The central bank will likely cut by 100 basis points in 2024 and another 100 points in 2025. AdvertisementUS economy will remain resilient next year, making the Federal Reserve cautious about rate cuts, Barclays said in a Monday note. AdvertisementThat implies the Fed will make four 25-basis-point rate cuts next year. Meanwhile, analysts at ING have predicted the Fed will deliver six rate cuts next year as the economy slows, amounting to 150 basis points.

Persons: —, they're Organizations: Barclays, Service, Federal Reserve, ING, UBS, White House, Congress

Re-enter risk premia on what should be 'risk free' bonds. The renewed corporate profits upswing riffs off this relatively robust nominal growth picture too - as do still benign corporate debt premia. However, keeping a lid on 5% nominal GDP may well be what's irking bonds as much as anything. While turning 10-year averages takes some time, nominal GDP growth according to a real time model from the Atlanta Fed is closer to 8% right now. CBO deficit projections to 2030US nominal GDP growth running at 8%?

Persons: York Fed's, Ajay Rajadhyaksha, today's, Treasuries, Fitch, Andrew Heavens Organizations: Treasury, Federal, Fed, The, Barclays, Societe Generale's, Atlanta Fed, Moody's, U.S . AAA, Reuters, Thomson Locations: U.S, Washington, York, 35bp, 150bp, Treasuries, China, Europe

☆ 'It's the economy, stupid': 5 reasons why investors should stay bullish on the stock market
▼ + stars: | 2023-10-02 | by ( Matthew Fox | ) www.businessinsider.com time to read: +3 min

AdvertisementAdvertisementDespite rising interest rates, higher oil prices, and ongoing labor strikes, investors should stay bullish on the stock market. But since 2021, 50% more large caps have become small caps than small caps becoming large caps (the reverse of prior decades), suggesting a purge of weaklings. comparing the earnings yield based on the S&P 500 PE of 20x to nominal Tsy yields of 5%. "The equal-weighted S&P 500 ERP is 50bp+ higher than the cap-weighted S&P 500, and trades at 17x on trough earnings. The equal-weighted S&P 500 also almost always beat the cap-weighted S&P 500 in past 'Recovery' cycles."

Persons: Bank of America's Savita Subramanian, Subramanian, —, Savita Subramanian Organizations: Bank of America's, Service, Bank of, Boomers

☆ Carnage in the bond market again with benchmark ETF down 10% on year to lowest since 2011
▼ + stars: | 2023-09-26 | by ( Jesse Pound | In Jesse-Pound | ) www.cnbc.com time to read: +5 min

Treasury yields are spiking to levels not seen in over 15 years, causing sell-offs in many of the market's biggest bond funds. The iShares 20+ Year Treasury Bond ETF (TLT) closed at $89.18 on Monday, which was its lowest close since Feb. 10, 2011, according to FactSet. The Fed's target interest rate is already above 5%, as are short-term Treasury yields. But the long-term decline in bond yields began roughly two decades before that. That trend may finally have reached its turning point, Jim Grant, founder of Grant's Interest Rate Observer, said Tuesday on CNBC's " Squawk Box ."

Persons: Bruno Braizinha, Braizinha, Goldman Sachs, Cecilia Mariotti, Mariotti, Ajay Rajadhyaksha, Jonathan Krinsky, Jim Grant, Grant, BTIG's Krinsky Organizations: Treasury Bond ETF, iShares, Aggregate Bond, Treasury, Bank of America, Barclays, Federal

☆ Morning Bid: Fed leaves shoe dangling in policy parade
▼ + stars: | 2023-09-21 | by ( ) www.reuters.com time to read: +5 min

At least eight major central banks are meeting on Thursday. Central banks in South Africa and Turkey are also meeting. Futures now show the implied Fed policy rate for the end of next year at a new cycle high of 4.85% - up a whopping 35 basis points in just over a week. Key developments that should provide more direction to U.S. markets later on Thursday:* Bank of England policy decision; South Africa Reserve Bank policy decision, Central Bank of Turkey policy decision. European Central Bank President Christine Lagarde speaks* Philadelphia Fed's September business survey, U.S. weekly jobless claims, U.S. Aug existing home sales, U.S. Q2 current account estimate.

Persons: Sarah Silbiger, Mike Dolan, Jerome Powell, Goldman Sachs, Goldman, Jan Hatzius, Robin Brooks, Brooks, BoE, Christine Lagarde, Darden, Christina Fincher Organizations: Eccles Federal Reserve, Washington , D.C, REUTERS, Swiss National Bank, Bank of, Fed, for International Finance, Treasury, Swiss, Africa Reserve Bank, Central Bank of, European Central Bank, Factset, Reuters, Thomson Locations: Washington ,, U.S, Norwegian, Bank of England, South Africa, Turkey, Central Bank of Turkey, Philadelphia

☆ Bank of England's next move divides economists as data paints a mixed picture
▼ + stars: | 2023-08-02 | by ( Elliot Smith | ) www.cnbc.com time to read: +5 min

Andrew Bailey, Governor of the Bank of England, attends the Bank of England Monetary Policy Report Press Conference, at the Bank of England, London, Britain, February 2, 2023. Pool | ReutersLONDON — Market expectations are split over the Bank of England's next monetary policy move on Wednesday, as policymakers near a tipping point in their fight against inflation. The other 38% of market participants expect a second consecutive 50 basis point hike, after the central bank surprised markets with a bumper increase in June. watch nowThe British economy has proven surprisingly resilient, despite a run of 13 consecutive rate hikes from the Bank of England. "While core inflation surprised to the downside in June, services inflation momentum remains strong.

Persons: Andrew Bailey, Goldman Sachs, James Moberly, Ibrahim Quadri, Jari Stehn, BoE, Goldman, —, Abbas Khan, Mariano Cena, Silvia Ardagna, Matthew Swannell, Paul Hollingsworth, Andrew Bailey's Organizations: Bank of England, Press, Bank of, Monetary, British Retail Consortium, MPC, Fed, ECB, U.S . Federal Reserve, European Central Bank, PMI, Bank of England's, Barclays, BNP Paribas Locations: London, Britain, Sintra

☆ Reactions: UK inflation cools in June, pound drops
▼ + stars: | 2023-07-19 | by ( ) www.reuters.com time to read: +6 min

Sterling dropped broadly, falling against the dollar, the euro and the yen, as interest-rate futures showed investors no longer expect UK rates to peak above 6%. COMMENTS:KEVIN BRIGHT, GLOBAL LEADER, CONSUMER PRICING PRACTICE, MCKINSEY & COMPANY, LONDON:"Inflation dipped more than expected; but the gulf between the UK and the Eurozone inflation levels remains. Despite most categories seeing a decline, food & non-alcoholic beverage inflation at 17.3% remains only 1.8% below its peak in March 2023. "Continued rising prices, higher interest rates and below inflation wage growth – are a triple blow to household budgets. NEIL BIRRELL, CHIEF INVESTMENT OFFICER, PREMIER MITON INVESTORS, LONDON:"Some good news on UK inflation at last, coming in below expectations for June and most importantly the core inflation rate fell more than thought.

Persons: Sterling, BoE, KEVIN, JOE TUCKEY, JORDAN, NOMURA, CHRIS BEAUCHAMP, Andrew Bailey, JEREMY BATSTONE, CARR, RAYMOND JAMES, ” KENNETH BROUX, It's, JOSEPH CALNAN, NEIL BIRRELL, Amanda Cooper, Andrew Heavens, Catherine Evans Organizations: Bank of England's, Reuters, Reuters Graphics Reuters, MCKINSEY, COMPANY, LONDON, Bank of England, JORDAN ROCHESTER, CPI, IG GROUP, Bank of, SOCIETE GENERALE, U.S, EMEA, Thomson Locations: homebuilders, Bank of England, EUROPEAN

☆ Morning Bid: Markets bet July 2023 is 'peak Fed'
▼ + stars: | 2023-07-13 | by ( ) www.reuters.com time to read: +4 min

A look at the day ahead in U.S. and global markets from Mike DolanSurprise news of a 2%-plus print on U.S. headline inflation rate for June has world markets betting the peak of the Federal Reserve's interest rate campaign will now be this month. Either way, the latest inflation cheer means U.S. rate futures have wiped out bets of another Fed rate hike after a final quarter-point move to 5.25-5.50% at July 26's meeting. Although they see peak rates held there to year-end, futures now price as much as a full percentage point of cuts by this time in 2024. The VIX "fear index" (.VIX) fell back below 14 to its lowest of the month so far. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Persons: Mike Dolan, That's, Christopher Waller, Mary Daly, Joe Biden, Christine Lagarde, Toby Chopra Organizations: Fed, Nasdaq, PepsiCo, Delta Airlines, Bank of, Swiss, Bank of Canada, Federal Reserve, San Francisco Fed, Nordic, European Central Bank, . Treasury, Reuters, Thomson Locations: U.S, Beijing, Jackson, Fastenal, Helsinki, Brussels, Japan

☆ Bank of England to take Bank Rate to 5.50% over next two meetings: Reuters poll
▼ + stars: | 2023-06-26 | by ( Jonathan Cable | ) www.reuters.com time to read: +3 min

Last week, the central bank surprised investors by raising interest rates half a percentage point, taking Bank Rate to 5.00%, and said there had been "significant" news suggesting persistently high inflation in Britain would take longer to fall. Bank Rate is now expected to peak at 5.50% next quarter following 25 basis point hikes at the BoE's August and September meetings, medians in the poll taken after the Bank's Thursday move showed. In a June 14 poll, policymakers were expected to draw a halt at 5.00% next quarter. "Are they going to be happy with just one more 25 basis points in August? Forty of 52 poll participants said the Bank would dial down the pace to 25 basis points on August 3 but gave a high median 40% chance of another 50 basis point lift.

Persons: James Smith, Stefan Koopman, Jonathan Cable, Aditi Verma, Anitta Sunil, Christina Fincher Organizations: Bank of England, Reuters, ING, Bank, Rabobank, Thomson Locations: Britain

☆ Dollar weakens as Powell's testimony offers little surprise; sterling steady
▼ + stars: | 2023-06-22 | by ( ) www.cnbc.com time to read: +2 min

The dollar languished near a one-month low against a basket of currencies on Thursday, after Federal Reserve Chair Jerome Powell stuck to his usual messaging at his semi-annual testimony, offering little room for surprise. The U.S. dollar index last stood at 102.05 in early Asia trade, not far from its recent five-week low of 102.00. Elsewhere, sterling rose 0.02% to $1.2770, not far from a one-year high of $1.2849 hit last week. Against the Japanese yen , the dollar slipped 0.06% to 141.82, having touched a seven-month peak of 142.37 yen in the previous session. The Japanese currency has come under renewed pressure as the Bank of Japan continues to stick to its ultra-dovish stance.

Persons: Jerome Powell, Sterling, Powell, didn't, Carol Kong, BoE, Seiji Adachi Organizations: Federal, Bank of, Capitol, U.S, Commonwealth Bank of Australia, ANZ, Bank of Japan Locations: U.S, Asia, Powell

☆ Rupee likely higher on dollar decline post Powell's testimony
▼ + stars: | 2023-06-22 | by ( Nimesh Vora | ) www.reuters.com time to read: +2 min

MUMBAI, June 22 (Reuters) - The Indian rupee is expected to rise on Thursday, helped by the dollar's fall despite Federal Reserve Chair Jerome Powell's fairly hawkish comments to U.S. lawmakers. Non-deliverable forwards indicate rupee will open at around 81.94-81.98 to the U.S. dollar compared with 82.0375 in the previous session. The offshore Chinese yuan recovered to 7.1690 to the dollar, having fallen below 7.20 at one point in the previous session. KEY INDICATORS:** One-month non-deliverable rupee forward at 82.03; onshore one-month forward premium at 7 paisa** USD/INR NSE June futures settled on Wednesday at 82.0250** USD/INR forward premium as of Jun. 20** NSDL data shows foreign investors sold a net $46.5mln worth of Indian bonds on Jun.

Persons: Jerome Powell's, Powell, Nimesh Vora, Dhanya Ann Thoppil Organizations: U.S, Fargo Advisors, U.S . Senate, DBS, Brent, Thomson Locations: MUMBAI, Asia

☆ Morning Bid: Dogged central banks rein in risk
▼ + stars: | 2023-06-22 | by ( ) www.reuters.com time to read: +4 min

Markets have been here before over the past year - continually underestimating the economy's resilience and Fed's trajectory. There was far less ambiguity in moves from Europe's central banks on Thursday. The Swiss National Bank raised rates by 25bp earlier, as expected, but also left the door open for more tightening. And Norway's central bank surprised with an aggressive 50bp rise to a 15-year high of 3.75% and signaled another move in August. In the emerging market world, Turkey was expected to more than double its 8.5% interest rate in a post-election macroeconomic policy reset.

Persons: Mike Dolan, Jerome Powell, Powell, Raphael Bostic, BoE, Britain's, Christopher Waller, Michelle Bowman, Loretta Mester, Thomas Barkin, Elaine Hardcastle Organizations: Federal, Financial, Fed, Atlanta Fed, Yahoo Finance, Bank of England, Swiss National Bank, Treasury, The Times, Bank of, U.S, Kansas City Federal, Chicago Fed, Cleveland Fed, Richmond Fed, Accenture, Darden, Graphics Reuters, Reuters, Thomson Locations: U.S, Britain, Europe's, Turkey, Mexico

☆ Asia stocks slip as suspense builds for China, Fed news
▼ + stars: | 2023-06-21 | by ( Wayne Cole | ) www.reuters.com time to read: +4 min

The uncertainty kept S&P 500 futures and Nasdaq futures flat after a slight dip overnight. EUROSTOXX 50 futures edged up 0.2% and FTSE futures 0.1%. A survey showed morale at big Japanese manufacturers edged up in June to stay in positive territory for a second straight month. The currency has been falling for weeks as the Bank of Japan (BOJ) doggedly defended its super easy policies. Oil prices edged higher after a couple of sessions of losses, still struggling with concerns about Chinese demand absent a sizable stimulus package.

Persons: Powell, Jerome Powell, Tapas Strickland, doggedly, BoE, Brent, Wayne Cole, Jacqueline Wong Organizations: SYDNEY, Federal, NAB, Nasdaq, South, Japan's Nikkei, Bank of Japan, Bank of England, JPMorgan, Thomson Locations: Asia, Beijing, Pacific, Japan, South Korea

☆ China opens a new era of 'proactive easing' as the economic recovery turns sour
▼ + stars: | 2023-06-14 | by ( Jihye Lee | ) www.cnbc.com time to read: +3 min

SHANGHAI, CHINA - NOVEMBER 04, 2022: Buildings at Lujiazui Financial District are illuminated to celebrate the opening ceremony of the 5th China International Import Expo (CIIE) on November 4, 2022 in Shanghai, China. Vcg | Visual China Group | Getty ImagesStock Chart Icon Stock chart iconPointing to soft economic figures from China, including credit data, Citi economists said "stimulus seems to be underway with the weak readings." Barclays economists, writing in a Tuesday note titled "Entering a rate cut cycle," predict China will deliver a cut for every quarter until early 2024. China's central bank controls the benchmark one-year lending and deposit rates, which affect the borrowing costs for banks, businesses and individuals across the country. Mizuho Bank's Head of Economics and Strategy for Asia Vishnu Varathan argued that the latest actions from China's central bank "does not cut it."

Persons: 50bp, Jian Chang, Goldman Sachs, Hui Shan, Asia Vishnu Varathan Organizations: Lujiazui Financial, 5th China, Visual China, Getty, Citi, Barclays, Bank's, Economics Locations: SHANGHAI, CHINA, Shanghai, China, Asia

To be sure, the April inflation data hit the UK debt market like a thunderbolt. While the headline consumer price inflation rate dropped to 8.7% from 10.1% in March, as energy prices ebbed, that was still far higher than forecast and core inflation rates hit their highest in 31 years at just under 7%. And a chief concern for many households is ongoing annual food price inflation still near 20%. Sterling and real yield spreadsNew UK gilt shock? Using 5-year real yields from the index-linked bond market, that premium jumped almost 40bp this week to its highest since last October.

☆ Morning Bid: Tech politics, debt cap brinkmanship
▼ + stars: | 2023-05-22 | by ( ) www.reuters.com time to read: +5 min

Well-choreographed brinkmanship over the debt ceiling standoff looks set to go down to the wire, while technology firms have once again become a battleground in tense geopolitics. As AI-fueled U.S. technology stocks have led the way this year, the S&P (.SPX) has gained almost 10% this year and hit its highest level in nine months on Friday. Minneapolis Fed chief Neel Kashkari said on Sunday he could support holding rates steady at the next meeting. Futures markets see more than an 80% chance of a June pause and still price almost 50bp of cuts by yearend. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Euro zone core inflation slows unexpectedly in April, blurring the picture for rate hikes
▼ + stars: | 2023-05-02 | by ( Silvia Amaro | ) www.cnbc.com time to read: +2 min

Headline inflation came in at 7% for last month, according to Eurostat, after it dropped to 6.9% in March. At the same time, core inflation, which excludes food and energy prices, stood at 5.6% in April — from 5.7% in March. Analysts polled by Reuters had estimated a figure of 7% for headline inflation and 5.7% for core. Rather than providing some clarity on how much the central bank might raise rates by, the latest numbers have blurred the picture somewhat. Market players have been debating whether the central bank will hike Thursday by 50 or 25 basis points.

A flood of inflation data releases were also mixed. The International Monetary Fund called on the ECB on Friday to keep raising interest rates until the middle of 2024 to help bring down high inflation. Versus the yen , the euro briefly rose to its highest level since December 2014 at 149.50. It was last up 1.2% at 149.35 yen after the BOJ left its ultra-easy monetary policy unchanged even as it scrapped a pledge to keep interest rates low. However, the central bank removed a pledge to keep interest rates at "current or lower levels" and said it would "conduct a broad-perspective review of monetary policy".

☆ Dollar edges lower; on track for second straight monthly loss
▼ + stars: | 2023-04-24 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

The U.S. dollar dipped against most major currencies in early Asia trade, with the euro and sterling rising 0.05% to $1.0994 and 0.02% to $1.2447, respectively. "There's nothing, as yet, to hang your hat on rate cuts in the second half of the year." Elsewhere, the kiwi gained 0.07% to $0.6143, while the U.S. dollar index slipped 0.02% to 101.66. The index was eyeing a monthly loss of close to 0.9%, having fallen more than 2% in March. In Asia, the Bank of Japan's policy meeting this week takes centre stage, as it marks the first meeting to be chaired by new BOJ Governor Kazuo Ueda.

☆ Instant View: Here’s what experts think of India's surprise rate decision
▼ + stars: | 2023-04-06 | by ( ) www.reuters.com time to read: +16 min

The monetary policy committee (MPC) retained the key lending rate or the repo rate (INREPO=ECI) at 6.50% in a unanimous decision. With the likely softening of CPI to the low- to mid-5% levels in the coming month, the current repo rate of 6.5% implies that India’s real policy rate will hover around 1% during 2023-24, while maintaining a policy rate differential of about 1.5% with the US. Room for additional rate hikes has been retained with MPC’s policy stance continuing to remain unchanged at ‘withdrawal of accommodation’. We believe the bar for future rate hikes has increased, especially since near-term prints of CPI will be sub 6%. Scope for further hikes is limited given our growth-inflation outlook and impact of the past rate hikes on the same.

☆ Morning Bid: Investors adopt the brace position as banks topple
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +3 min

That pretty much sums up the reaction in Asian markets to the extraordinary government-engineered takeover of the storied Credit Suisse by UBS, along with a U.S. dollar supply operation by a Fed-led posse of major central banks. Investors seem torn between relief that Credit Suisse was not allowed to collapse or worries that it had to be saved in such a way in the first place. It's not helping that Credit Suisse shareholders are taking a nasty haircut in the deal, though not as painful as AT1 bond holders who seemingly won't get their $17 billion back. That's a break with convention that could threaten the future of the entire $275 billion CoCo market. Likewise, Fed fund futures fell, rose, then fell again as investors dared to divine what all this might mean for interest rates.

Still, analysts say the worry about a possible banking crisis is far from over. Credit Suisse's chief executive said on Friday the bank was working hard to stem customers outflows, although this could take time. At 0944 GMT, the MSCI world equity index, which tracks shares in 47 countries, was up 0.4% on the day. The central bank's supervisory board met on Friday to discuss stress and vulnerabilities in the euro zone banking sector. The Australian dollar, seen as a liquid proxy for risk appetite, was up 0.7% on the day at $0.6705 .

☆ Asian markets take breather from banking turmoil, capping tumultuous week
▼ + stars: | 2023-03-17 | by ( Stella Qiu | ) www.reuters.com time to read: +4 min

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.9% on Friday, erasing earlier losses this week. S&P 500 futures eased 0.1% and Nasdaq futures were flat after major U.S. stock indices rallied hard on easing fear of a global banking crisis. This is a theme other central banks are likely to echo," said James Rossiter, head of global macro strategy at TD Securities. Yields were, however, headed for the steepest weekly decline since February 2020 when markets were thrown into chaos by COVID-19 fear. "The past week has provided an unwelcome reminder of the inherent fragility of banking systems," said analysts at Capital Economics in a note to client.

Investors know the event risk so they tighten controls, and are generally more cautious. Calendar event risk, or 'known unknowns,' may unleash market volatility, but investors can hedge or sit on the sidelines. chartNominal trading volumes in these contracts often spikes up on 'event days' like U.S. jobs and inflation data days. However, as a share of overall options turnover - which Cheng says is a better indication of potential market risk - many of the recent peaks have been on random 'non-event' days. chartHe and his colleagues estimate that the daily notional value of trading in '0DTE' options has grown to about $1 trillion.

☆ Silicon Valley Bank collapse throws up uncertainty for a European Central Bank hoping to hike rates
▼ + stars: | 2023-03-15 | by ( Annette Weisbach | ) www.cnbc.com time to read: +1 min

Christine Lagarde, president of the European Central Bank (ECB). Bloomberg | Bloomberg | Getty Imageswatch nowCore inflation — the key focus right now for policymakers — accelerated to 5.6% from 5.3%. That is reinforcing expectations that the European Central Bank will have to push borrowing costs ever higher. The ECB's key rate currently stands at 2.5%. Elsewhere, ECB watchers are also monitoring a lack of unity at the Frankfurt institution when it comes to what level its benchmark rate will peak at.

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