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☆ US weekly jobless claims at three-month high; import prices tumble
▼ + stars: | 2023-11-16 | by ( Lucia Mutikani | ) www.reuters.com time to read: +5 min

Job growth slowed in October and the unemployment rate climbed to 3.9%, the highest level since January 2022. Import prices dropped 0.8% last month after rising 0.4% in September. Economists had forecast import prices, which exclude tariffs, falling 0.3%. In the 12 months through October, import prices declined 2.0% after decreasing 1.5% in September. Excluding fuels and food, import prices dropped 0.2% after dipping 0.1% in September.

Persons: Andrew Kelly, Nancy Vanden Houten, Unadjusted, Goldman Sachs, Lou Crandall, Wrightson, Lucia Mutikani, Andrea Ricci Organizations: REUTERS, Labor Department, Oxford Economics, Reuters, Goldman, Treasury, Fed, Reuters Graphics, Labor Department's Bureau of Labor Statistics, Consumer, Thomson Locations: Manhattan , New York City , New York, U.S, WASHINGTON, New York, Massachusetts, Oregon, Georgia, United States, China

☆ The market thinks the Fed is going to start cutting rates aggressively. Investors could be in for a letdown
▼ + stars: | 2023-11-15 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

While Fed officials haven't indicated how many months in a row it will take of easing inflation data to reach that conclusion, 12-month core CPI has fallen each month since April. The Fed prefers core inflation measures as a better gauge of long-run inflation trends. Traders appear to have more certainty than Fed officials at this point. If correct, that would take the benchmark rate down to a target range of 4.25%-4.5% and would be twice as aggressive as the pace Fed officials penciled in back in September. But pricing of Fed actions can be volatile, and there are two more inflation reports ahead before that meeting.

Persons: Spencer Platt, Lou Crandall, Wrightson ICAP, We're, Crandall, Jerome Powell, haven't, They're, Eric Rosengren Organizations: New York Stock Exchange, Getty, Federal Reserve, Labor Department, Boston Fed Locations: New York City, Atlanta

☆ Fed's reverse repo facility drawdown looms large in balance sheet debate
▼ + stars: | 2023-10-31 | by ( Michael S. Derby | ) www.reuters.com time to read: +6 min

Inflows have dropped sharply in recent months to around $1 trillion in the face of the Fed's aggressive policy tightening underway since last year. Fed officials, for their part, have said repeatedly they’ve got a lot of room to cut their holdings of Treasuries and mortgage-backed securities, a process that complements Fed rate increases. So far, reverse repos have “come down very smoothly,” Lorie Logan, president of the Dallas Fed said earlier this month. In his view, if reverse repos stopped contracting that could become a meaningful sign liquidity levels were getting tight enough for the Fed to change gears. "We still have a very large balance sheet" so the balance sheet cuts can likely continue over the next year and half to two years, she said, adding when it comes to getting to the finish line, "it's going to take a while."

Persons: they’ve, ” Lorie Logan, Logan, “ I’ve, Wells Fargo, Roberto Perli, Lou Crandall, Wrightson ICAP, Crandall reckons, Loretta Mester, Michael S, Dan Burns, Andrea Ricci Organizations: Fed, Dallas Fed, New York Fed, Reuters Graphics Reuters, Cleveland Fed, Thomson Locations: Treasuries, Wells

The Reserve Bank of Australia seems to have executed a one-meeting 'skip', but perhaps more by accident than design. Leaving open the possibility in July of another 25-basis-point hike two months later could prevent financial conditions from loosening too much. The Fed wants policy to be restrictive, and financial markets to move accordingly. Philadelphia Fed President Patrick Harker and Fed Governors Christopher Waller and Philip Jefferson in recent weeks have introduced 'skip' and 'skipping' into Fed-watchers' lexicons. Until then, a pause was generally assumed to lay the ground for rate cuts, not a resumption of rate hikes.

Persons: Alan Greenspan, John Silvia, Silvia, Jerome Powell, Lorie Logan, Powell, Patrick Harker, Christopher Waller, Philip Jefferson, Price, Lou Crandall, Wrightson ICAP, Jamie McGeever, Paul Simao Organizations: Federal, Reserve Bank of Australia, Dynamic, Fed, Dallas, Philadelphia Fed, Consumer, Index, Reuters, Thomson Locations: ORLANDO, Florida

☆ Slower US job growth expected in April; unemployment rate seen rising to 3.6%
▼ + stars: | 2023-05-05 | by ( Lucia Mutikani | ) www.reuters.com time to read: +6 min

The unemployment rate is forecast to have risen to a still historically low 3.6%. "The labor market is slowly bending, but not breaking," said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina. "There is continued resilience in the labor market right now, but the trend is one that is continuing to see a decelerating pace of momentum." The service-providing sector likely accounted for most of the anticipated job gains in April. WAGE GAINS MODERATEAverage hourly earnings are expected to have risen by 0.3% in April, matching March's gain.

☆ US labor market cooling; leading indicator flashes recession
▼ + stars: | 2023-04-20 | by ( Lucia Mutikani | ) www.reuters.com time to read: +6 min

Though measured, the loss of labor market momentum added to slumping retail sales and manufacturing activity in heightening the risks of a recession as soon as the second half of the year. Jobless claimsNevertheless, the labor market is fraying around the edges. It also said contacts reported the labor market becoming less tight, noting "a small number of firms reported mass layoffs," which were "centered at a subset of the largest companies." Philly FedDespite cracks in the labor market, economists did not expect widespread job losses. The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls portion of April's employment report.

☆ Analysis: U.S. bank loan plan provides Fed rate hike path amid SVB fallout
▼ + stars: | 2023-03-14 | by ( Gertrude Chavez-Dreyfuss | ) www.reuters.com time to read: +5 min

Banks can use eligible government securities on their books like Treasuries and agency mortgage backed-debt to guarantee the loans. By comparison, a one-year loan from a Federal Home Loan Bank, a government state enterprise that provides low-cost lending to regional banks, is around 5.4%, according to market participants. In essence, the bank lending program will allow the Fed to keep raising rates." U.S. banks had raised their holdings of government securities during periods of ultra-low interest rates to defend falling interest net margins. Major banks led by Goldman Sachs (GS.N) and Barclays Bank (BARC.L) have called for a pause from the Fed next week.

☆ US weekly jobless claims post largest rise in 5 months; labor market still tight
▼ + stars: | 2023-03-09 | by ( Lucia Mutikani | ) www.reuters.com time to read: +6 min

"Even after factoring in the latest increase, jobless claims are exceptionally low by historical standards, underscoring just how tight labor market conditions still are," said Michael Pearce, lead U.S. economist at Oxford Economics in New York. The four-week moving average for new claims, a better measure of labor market trends as it irons out weekly fluctuations, climbed 4,000 to 197,000 last week. Claims had stayed below 200,000 for seven straight weeks, indicating that high-profile job cuts in the technology sector had not had a material impact on the labor market. Goldman Sachs believed residual seasonality accounted for about half of last week's rise in claims. The labor market is, however, cooling on the margins.

☆ U.S. retail sales rebound strongly in January
▼ + stars: | 2023-02-15 | by ( ) www.reuters.com time to read: +3 min

The Commerce Department said on Wednesday that retail sales surged 3.0% last month. Some cautioned against reading too much into the jump in retail sales. The so-called seasonal adjustment factors likely flattered retail sales in January. Retail sales are mostly goods and are not adjusted for inflation. Excluding automobiles, gasoline, building materials and food services, retail sales increased 1.7% last month.

☆ U.S. weekly jobless claims increase, labor market still tight
▼ + stars: | 2023-02-09 | by ( ) www.reuters.com time to read: +2 min

WASHINGTON, Feb 9 (Reuters) - The number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at levels consistent with a tight labor market. Initial claims for state unemployment benefits rose 13,000 to a seasonally adjusted 196,000 for the week ended Feb. 4, the Labor Department said on Thursday. Economists polled by Reuters had forecast 190,000 claims for the latest week. Claims have remained low despite high-profile layoffs in the technology industry as well as the interest rate-sensitive finance and housing sectors. Economists speculate that severance packages were delaying the filing of unemployment benefits claims while the abundance of job openings made it easier for laid off workers to find new jobs.

The TGA is a liability on the Fed's balance sheet. This means that when the TGA goes down, reserves go up, effectively administering an injection of liquidity into the system. chartThis runs counter to the Fed's current stance of pursuing a tighter monetary policy, of which draining liquidity from the system via QT is a part. Mark Cabana, head of U.S. rates strategy at Bank of America, calculates that since the Fed's QT program got underway last May, the Fed's balance sheet has shrunk by $406 billion and the TGA has dropped $422 billion. "Fed QT to date has been largely absorbed by lower TGA," he and his team wrote in a recent note.

☆ U.S. job growth seen smallest in nearly two years in October, unemployment rate up
▼ + stars: | 2022-11-04 | by ( Lucia Mutikani | ) www.reuters.com time to read: +5 min

"The labor market is basically OK, but it does seem to be slowing," said Guy Berger, principal economist at LinkedInin San Francisco. "The Fed is going to try to thread the needle where they slow down the labor market enough to put downward pressure on wages and inflation, without causing a recession." Still, the labor market remains tight, with 1.9 job openings per unemployed person at the end of September. Stripping out any distortions from the weather and calendar quirk, wage growth is cooling. "We believe we've seen wage growth peak," said Michelle Green, principal economist at Prevedere in Columbus, Ohio.

☆ Analysis: Foreign banks amass reserves at the Fed, bracing for funding stress
▼ + stars: | 2022-10-17 | by ( Gertrude Chavez-Dreyfuss | ) www.reuters.com time to read: +5 min

So when the Fed embarked on QT, the expectation was that bank reserves held at the Fed would decline. But the decline in bank reserves has been more rapid than what some had anticipated. As of Oct. 5, bank reserves at the Fed fell under $3 trillion to $2.972 trillion, down roughly $1.3 trillion from a peak of $4.3 trillion in December 2021. As domestic bank reserves diminish, those held by FBOs at the Fed have gotten more scrutiny. "If there are structural reasons that make foreign banks more eager to hold reserves while large domestic banks' reserves declined, then there may be a risk of another inadvertent case of gridlock," said Lou Crandall, chief economist, at money market research firm Wrightson.

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