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The Fed could be facing a jobs headache in its inflation fight
  + stars: | 2021-06-11 | by ( Jeff Cox | ) www.cnbc.com + 0.00   time to read: +7 min
Those higher salaries in turn will trigger higher prices and could lead to the kinds of longer-term inflationary above-normal pressures that the Fed is trying to avoid. "Whatever is happening here, the Fed needs large numbers of these people to return to the labor force in the fall." In their most recent forecast, Fed officials put core inflation at 2.2% for all of 2021; Shepherdson said the current numbers suggest something closer to 3.5%. While LaVorgna sees inflation as staying relatively under control, he thinks the Fed could face problems from deflationary pressures. The central bank doesn't like inflation that's too low, as it creates a low-expectation cycle that constricts monetary policy during downturns.
Persons: Mike Blake, Ian Shepherdson, Shepherdson, Coursera, David Wilkinson, Wilkinson, Joseph LaVorgna, LaVorgna, Michael Pearce, Leah Millis Organizations: KB, Reuters, U.S . Labor Department, Pantheon, Fed, CPI, NCR, NCR Retail, Americas, National Economic Council, Treasury, University of Michigan, Capital Economics, Federal Reserve Board Locations: Valley Center , California, Atlanta, Natixis, Washington , U.S
read more"The Fed is getting some traction on its message that the inflation pressures are transitory," said Colin Asher, senior economist at Mizuho in London. Fed officials have repeatedly tamped down fears of inflation running persistently higher than its 2% target, while pointing out they have tools to keep it under control. The statement following the Fed policymakers' regular meeting next week and comments from Fed Chair Jerome Powell will be closely watched for the central bank's latest view on inflation. A widely watched barometer of inflation expectations, the breakeven inflation rate (BEI) for 10-year Treasury Inflation Protected Securities , measuring the difference between 10-year TIPS real yields and the 10-year note yield, was at 2.35%, near a two-month low of 2.326% hit on Wednesday. That indicates that markets do not see inflation averaging much over the Fed's 2% target over the next decade.
Persons: Colin Asher, Jerome Powell, Peter Rutter, Joseph LaVorgna, Mark Grant, Organizations: Federal, Treasury, Thursday's Labor Department, Mizuho, Fed, Royal London Asset Management, Securities, Riley, Labor Department, Thomson Locations: U.S, London, Americas, New York, Fort Lauderdale , Florida
MSCI’s benchmark, the S&P 500 and a key European index surged to record highs after the U.S. Labor Department said the consumer price index in the 12 months ended in May accelerated 5.0%, the biggest year-on-year increase since August 2008. In a sign of market complacency, the 10-year U.S. Treasury note’s yield fell 1.2 basis points to 1.4772% after earlier rising above 1.5% following the data’s release. On Wall Street, the Dow Jones Industrial Average rose 0.35%, the S&P 500 gained 0.45% and the Nasdaq Composite added 0.49%. A surprisingly strong U.S. inflation print in April spooked investors, sparking a cautious run into Thursday’s of May data. Short positions in Treasuries were the highest since 2018, according to JP Morgan positioning data last week.
Persons: Subadra Rajappa, ” Rajappa, Joseph LaVorgna, ” LaVorgna, , , MSCI’s Organizations: U.S . Labor Department, Treasury, Societe Generale, Americas, Dow Jones, Nasdaq, European Central Bank, Morgan Locations: New York, Natixis, U.S, Treasuries
Stocks rally, dollar stable after jump in U.S. CPI data
  + stars: | 2021-06-10 | by ( Herbert Lash | Simon Jessop | ) www.reuters.com + 0.00   time to read: +3 min
FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville/File Photo/File PhotoMSCI’s all-country world index surged to a record intra-day high after the U.S. Labor Department earlier said the consumer price index in the 12 months through May accelerated 5.0%, the biggest year-on-year increase since August 2008. The benchmark 10-year U.S. Treasury yield rose 3.0 basis points to 1.5194% after the data’s release, while the dollar index was essentially flat, down 0.08%. A surprisingly strong U.S. inflation print in April spooked some investors, leading to a cautious run into the release on Thursday of the May data. Short positions in Treasuries were the highest since 2018, according to JP Morgan positioning data last week.
Persons: Toby Melville, Subadra Rajappa, ” Rajappa, Joseph LaVorgna, ” LaVorgna, , Organizations: London Stock Exchange Group, City of, REUTERS, U.S . Labor Department, Treasury, Societe Generale, Americas, Dow Jones, Nasdaq, Atlantic, European Central Bank, Morgan Locations: City, City of London, Britain, New York, Natixis, COVID, U.S, Treasuries
Stocks rally, yields drop as U.S. CPI data calms investors
  + stars: | 2021-06-10 | by ( Herbert Lash | ) www.reuters.com + 0.00   time to read: +4 min
The report was largely in line with expectations, said Subadra Rajappa, head Of U.S. rates strategy at Societe Generale in New York. “The (equity) market is going to ignore the data. MSCI’s all-country world index rose 0.45% to 718.81, nudging past its previous record set Tuesday. In the United States, data showed people filing new claims for unemployment benefits fell last week to the lowest level in nearly 15 months. The dollar index fell 0.071%, with the euro down 0.07% to $1.217.
Persons: Toby Melville, Subadra Rajappa, ” Rajappa, Joseph LaVorgna, ” LaVorgna, , MSCI’s, Thomas Hayes, ” Hayes, , Brent Organizations: YORK, Global, London Stock Exchange Group, City of, REUTERS, U.S . Labor Department, Societe Generale, Treasury, Americas, European Central Bank, Dow Jones, Nasdaq, Great, Great Hill Capital, ECB, U.S, West Texas Locations: City, City of London, Britain, New York, Natixis, Great Hill, United States
"The Fed is getting some traction on its message that the inflation pressures are transitory," said Colin Asher, senior economist at Mizuho in London. Fed officials have repeatedly tamped down fears of inflation running persistently higher than its 2% target, while pointing out they have tools to keep it under control. The statement following the Fed policymakers' regular meeting next week and comments from Fed Chair Jerome Powell will be closely watched for the central bank's latest view on inflation. A widely watched barometer of inflation expectations, the breakeven inflation rate (BEI) for 10-year Treasury Inflation Protected Securities , measuring the difference between 10-year TIPS real yields and the 10-year note yield, was at 2.35%, near a two-month low of 2.326% hit on Wednesday. That indicates that markets do not see inflation averaging much over the Fed's 2% target over the next decade.
Persons: Colin Asher, Jerome Powell, Peter Rutter, Joseph LaVorgna, Mark Grant, Organizations: Federal, Treasury, Thursday’s Labor Department, Mizuho, Fed, Royal London Asset Management, Securities, Riley, Labor Department, Thomson Locations: U.S, London, Americas, New York, Fort Lauderdale , Florida
“Higher interest rates in and of themselves are not necessarily good for consumers. “To get rates higher, you need to have a robust economy.”The pandemic’s impact on consumer behavior distorted spending on durable goods by pulling it forward, LaVorgna said. Higher interest rates could ripple through the housing market — which is already facing higher prices driven by supply constraints — and lead to higher borrowing costs across the board. If the Fed had to sharply hike interest rates to rein in inflation, borrowers could see the cost of servicing their revolving debt jump, too. In the past, “monetary policy was seen as the primary force of economic growth,” but today, “there are limits in a low rate world of what monetary policy can do,” he said.
Persons: Joe Biden’s, Janet Yellen, ” Yellen, “ We’ve, Jerome Powell, , Ben Koltun, that's, Joseph LaVorgna, , LaVorgna, Ted Rossman, we've, ” Koltun, Biden, Yellen, “ They’re, Larry Summers, Summers, “ It’s Organizations: Bloomberg, Federal, Beacon Policy Advisors, Democratic, Federal Reserve, American Jobs Plan, American Families, Treasury, National Economic, Treasury Department Locations: Natixis, U.S, Washington
U.S. mortgage applications tick down as refinance activity declines -MBA
  + stars: | 2021-05-26 | by ( Evan Sully | ) www.reuters.com sentiment -0.98   time to read: +1 min
May 26 (Reuters) - Mortgage applications decreased last week as fewer homeowners sought to refinance their loans, offsetting a modest rise in applications for loans to buy homes. The Mortgage Bankers Association (MBA) said on Wednesday its seasonally adjusted Purchase Index decreased 4.2% in the week ended May 21 from a week earlier, reflecting a 7.2% decline in applications for refinancing. The purchase index increased 1.7% from a week earlier. Last week, the National Association of Realtors reported that home resales dropped for a third straight month in April. The sector is so strong, there simply is not enough available supply,” said Joseph Lavorgna, chief U.S. economist at Natixis CIB.
Persons: ” Joel Kan, , Joseph Lavorgna Organizations: Mortgage Bankers Association, Commerce Department, National Association of Realtors, Natixis CIB Locations:
According to economists, this is a clear sign that there are still giant holes in America’s economic recovery and that the coronavirus remains in the driver’s seat. The severity and duration of the pandemic has led to countless small business closures, leaving workers without a job to return to as the recovery takes hold. Starting from a February 2020 baseline of roughly 152.5 million jobs, the U.S. would have just over 155.1 million jobs as of last month. For much of the missing service-sector jobs to return, Americans will have to be willing to eat out, get their hair cut, visit movie theaters and attend sporting events again. More money for education and training, experts said, could help speed the return of marginalized populations back into labor market.
Persons: , , Jeff Strohl, ” Strohl, Joseph LaVorgna, Steve Rick, ” LaVorgna, “ There’s, Joe Biden’s, ” Rick, Karen Fichuk Organizations: Georgetown University Center, Education, Commerce Department, Office, Economic Policy Institute, CUNA Mutual Locations: U.S, Natixis, North America
U.S. April payrolls gain much smaller than expected
  + stars: | 2021-05-07 | by ( Reuters Staff | ) www.reuters.com + 0.00   time to read: +5 min
MARKET REACTION:STOCKS: S&P e-mini futures slightly extended gains and were up 0.38%, pointing to a higher open on Wall Street. Nasdaq futures surged even higher, showing a gain of 1.34%, while Dow Jones futures turned slightly lower. The economy is booming, and the labor market recovery is still ongoing, although it might be losing a little bit of steam. “This year’s growth is still great; the labor market is still going to recover. Yields going down and higher yields have had a negative effect on the Nasdaq.
Persons: Matt Dillion, Chad Damron, Eileen T, Dow Jones, JOSEPH LAVORGNA, NATIXIS, ” PETER CARDILLO, “ It’s, aren’t, SAMEER SAMANA, WELLS, ” “, ” GUY LEBAS, JANNEY, Organizations: YORK, REUTERS, Labor Department, Reuters, Nasdaq, Dow, IOS, , Treasury, ST LOUIS “ Locations: Chad, Middlebury , Indiana, U.S, AMERICAS, WELLS FARGO, PHILADELPHIA, Treasuries
Instant View: U.S. April payrolls gain much smaller than expected
  + stars: | 2021-05-07 | by ( Reuters Staff | ) www.reuters.com + 0.00   time to read: +8 min
The five-year forward IOS, which is the terminal funds rate, that drives the 10-year yield. The economy is booming, and the labor market recovery is still ongoing, although it might be losing a little bit of steam. “This year’s growth is still great; the labor market is still going to recover. Yields going down and higher yields have had a negative effect on the Nasdaq. With the 10-year (Treasury yield) going to 1.51%, that’s a hefty drop.
Persons: Matt Dillion, Chad Damron, Eileen T, Dow Jones, QUINCY KROSBY, , Dow, ALTHEA SPINOZZI, BORIS SCHLOSSBERG, LARRY ADAM, RAYMOND JAMES, Biden, JOSEPH LAVORGNA, NATIXIS, ” PETER CARDILLO, “ It’s, aren’t, SAMEER SAMANA, WELLS, ” “, ” GUY LEBAS, JANNEY Organizations: YORK, REUTERS, Labor Department, Reuters, Nasdaq, PRUDENTIAL, NEW, Treasury, OF, BK, Fed, IOS, , ST LOUIS “ Locations: Chad, Middlebury , Indiana, U.S, NEWARK, NEW JERSEY, COPENHAGEN, stagflation, BALTIMORE , MARYLAND, AMERICAS, WELLS FARGO, PHILADELPHIA, Treasuries
World stocks, commodities boom on U.S. weak jobs data
  + stars: | 2021-05-07 | by ( Herbert Lash | Ritvik Carvalho | ) www.reuters.com + 0.00   time to read: +5 min
Nonfarm payrolls increased by only 266,000 jobs last month.Data for March was revised down to show 770,000 jobs addedinstead of 916,000 as previously reported. Both indexes set new highs, as did Canada’s Toronto Stock Exchange 300 Composite Index, which rose 0.94% to 19472.74. For the week, the Dow rose 2.65%, the S&P500 1.23% and the Nasdaq slipped 1.51%. Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan rose about 0.4%, while Japan’s Nikkei gained about 0.2%. Brent crude futures rose 19 cents to settle at $68.28 a barrel, while U.S. crude futures gained 19 cents to settle at $64.90 a barrel.
Persons: tamped, Joe Biden, Gold, byReuters, , , Joseph LaVorgna, DAX, Issei Kato, Thomas Hayes, Boris Schlossberg Organizations: Treasury, Americas, Toronto Stock, CAC, Dow, Dow Jones, Nasdaq, U.S ., REUTERS, , Capital, Japan’s Nikkei, BK Asset Management, Brent Locations: U.S, Natixis, New York, Tokyo, Japan, Asia, Pacific, India, United States
Stocks rally, commodities jump on U.S. jobs report
  + stars: | 2021-05-07 | by ( Herbert Lash | Ritvik Carvalho | ) www.reuters.com + 0.00   time to read: +3 min
FILE PHOTO: A street sign, Wall Street, is seen outside New York Stock Exchange (NYSE) in New York City, New York, U.S., January 3, 2019. Nonfarm payrolls increased by only 266,000 jobs in April and data for March was revised down to show 770,000 jobs were added instead of 916,000 as previously reported. The economy is booming, and the labor market recovery is still ongoing.”MSCI’s benchmark for global equity markets rose 1.02% to 711.29. Slideshow ( 2 images )MSCI’s emerging market currency index sailed to a new record high, lifted by the weaker dollar after the U.S. jobs data. Spot gold prices rose $16.63 to $1,831.81 an ounce.
Persons: tamped, Shannon Stapleton, Biden, , Joseph LaVorgna, Boris Schlossberg Organizations: New York Stock Exchange, REUTERS, White, Treasury, Americas, Dow, Dow Jones, Nasdaq, Japan’s Nikkei, BK Asset Management, , Brent Locations: New, New York City , New York, U.S, Natixis, New York, Asia, Pacific, Japan, India, United States
Stocks at new peaks, commodities jump on U.S. jobs data
  + stars: | 2021-05-07 | by ( Herbert Lash | Ritvik Carvalho | ) www.reuters.com + 0.00   time to read: +4 min
FILE PHOTO: A street sign, Wall Street, is seen outside New York Stock Exchange (NYSE) in New York City, New York, U.S., January 3, 2019. Nonfarm payrolls increased by only 266,000 jobs last month.Data for March was revised down to show 770,000 jobs addedinstead of 916,000 as previously reported. The economy is booming, and the labor market recovery is still ongoing.”MSCI’s benchmark for global equity markets rose 0.86% to 710.17. The benchmark index is dominated by Asian currencies, including China’s yuan, which strengthened more than 0.5% in offshore trading to hit its best level in 2-1/2 months. Brent crude futures rose 19 cents to settle at $68.28 a barrel, while U.S. crude futures gained 19 cents to settle at $64.90 a barrel.
Persons: tamped, Shannon Stapleton, Joe Biden, byReuters, , , Joseph LaVorgna, Thomas Hayes, Boris Schlossberg Organizations: New York Stock Exchange, REUTERS, Treasury, Americas, Dow, Dow Jones, Nasdaq, , Capital, Japan’s Nikkei, BK Asset Management, Brent Locations: New, New York City , New York, U.S, Natixis, New York, Asia, Pacific, Japan, India, United States
"I don't see growth as being particularly durable," said Joseph LaVorgna, chief economist for the Americas at Natixis. "The economy is going to slow a lot more next year than people think and probably will be well under 3%." LaVorgna, the chief economist of former President Donald Trump's National Economic Council, sees a number of obstacles, many of them related to policy. Fed policy riskThat policy support has been critical in both getting the economy going again and keeping financial markets functioning. Mark Zandi, chief economist at Moody's Analytics, is more optimistic about the economy's fate.
Persons: Michael M, Joseph LaVorgna, Donald Trump's, LaVorgna, Everyone's, Nela Richardson, There's, Richardson, Jerome Powell, Powell, we're, Steve Blitz, Mark Zandi, Zandi, Louis Fed, Fernando Martin Organizations: Santiago, Getty, Americas, Economic Council, Biden, Federal Reserve, CBS, TS Lombard, Fed, New York Fed, New York, Moody's Locations: Coney, Flatbush, Brooklyn, New York City, headwinds, Natixis, Powell
An economic advisor at the National Economic Council on Friday signaled there's no rush to release a second coronavirus stimulus package. Joseph LaVorgna, chief economist at the National Economic Council, signaled the White House sees no rush to release a coronavirus stimulus package as Friday's jobs report said more than 10 million Americans remain unemployed. Finance, said these numbers don't indicate that there's an urgency for a second stimulus package. Powell has consistently urged Congress to pass a stimulus package to help the economy recover from the devastation brought on by the coronavirus. The revised offer is a considerably modest figure compared to the multitrillion-dollar package House Democrats originally pushed.
Persons: there's, Joseph LaVorgna, LaVorgna, LaVorgna's, Jay Powell, Powell, Ben Winck, Joseph Zeballos, Chuck Schumer, Mitch McConnell, Nancy Pelosi, Lindsey Graham, Chuck Grassley, Joe Biden, Biden, we've Organizations: National Economic Council, US Bureau of Labor Statistics, Yahoo, Finance, Labor, Labor Department, Business, Republicans, Congressional Democrats, Democrats
First-time claims for unemployment benefits totaled 840,000 last week, higher than expected in another sign that the spike in job growth over the summer has cooled heading into Election Day. However, continuing claims again fell sharply, dropping by just over 1 million to 10.98 million, according to the Labor Department release. Continuing claims trail the headline weekly claims number by a week. Despite the persistently high level of jobless claims, a White House official said the economy continues on a clear recovery path. There are still 25.5 million workers claiming some form of unemployment benefits, according to totals through Sept. 19.
Persons: Ian Shepherdson, Joseph LaVorgna, Donald Trump, CNBC's, Ian Shepherdson Organizations: Labor Department, World Health Organization, Pantheon, White, National Economic Council, Pantheon Macroeconomics, CNBC's Locations: U.S, Florida, New Jersey
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