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Mortgage rates fell slightly last week after the Federal Reserve chairman suggested a potential end to a historic string of interest rate hikes. The drop wasn't substantial, but it was enough to boost demand from current homeowners hoping to refinance their mortgages to lower rates. Mortgage rates for all surveyed loan types decreased over the week. Mortgage rates rose sharply to start this week, according to a separate survey from Mortgage News Daily. Any large divergence from expectations, in either direction, could move bond yields, and consequently mortgage rates, decisively.
Markets had a quiet Tuesday as investors braced for key inflation reports coming out later today and Thursday. This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. April's jobs report showed the labor market's still going strong, which might contribute to price pressures. Subscribe here to get this report sent directly to your inbox each morning before markets open.
Bitcoin prices have been under pressure in 2022 after the collapse of algorithmic stablecoin terraUSD and subsequent bankruptcy filings from lender Celsius and hedge fund Three Arrows Capital. Bitcoin rose about 2% to $28,174.29, according to Coin Metrics, after starting the week with a sharp drop. Investors grew optimistic after the CPI report showed the inflation rate eased on an annual basis to 4.9% in April, which was slightly less than what economists polled by Dow Jones expected. "When it comes to inflation data, bitcoin embraces its identity as a riskier asset," said Callie Cox, an analyst at investment company eToro. "Inflation is coming down, just as the Fed intended, and that's easing fears about the economy's future," she added.
NEW YORK, May 10 (Reuters) - Federal prosecutors in Washington are looking into short seller activity around the recent volatility in U.S. bank shares sparked by the failure of three regional lenders since March, a source familiar with the matter said. Short sellers arrange to borrow shares they consider overvalued and sell them in the hopes that if the price drops they can repurchase them for less and pocket the difference. Critics say short sellers hurt companies, but short sellers and advocates say they act as an important check on public firms. Since at least 2021, the Justice Department and the SEC have been investigating potential manipulation by short sellers and hedge funds around the publication of negative research reports. The source did not say whether the latest interest in bank stocks was related to that pre-existing probe.
Morning Bid: Inflation cloud obscures Fed peak
  + stars: | 2023-05-10 | by ( ) www.reuters.com   time to read: +4 min
With markets edgy about the U.S. debt ceiling standoff and ongoing ripples from the March regional banking blow out, the running assumption is the Fed's campaign is over and disinflation underway. New York Fed chief John Williams said yesterday it's too soon to say the central bank is done and dusted. If consensus forecasts are correct, the April inflation readout later on Wednesday may well force the Fed to keep that equivocal line up for a bit longer. Futures markets show only a 15% chance of another Fed hike next month, with quarter point rate cut almost fully priced by September. Visibility is low in the fixed income market, however, due to the debt ceiling impasse.
CNBC Daily Open: Bracing for April’s CPI reading
  + stars: | 2023-05-10 | by ( Yeo Boon Ping | ) www.cnbc.com   time to read: +2 min
This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Investors are hoping April's CPI reading will show dipping prices. April's jobs report showed the labor market's still going strong, which might contribute to price pressures. Subscribe here to get this report sent directly to your inbox each morning before markets open.
Investors will look for clues on whether inflation is continuing to ease following the Labor Department's consumer price index (CPI) report on Wednesday. Shares of PayPal Holdings (PYPL.O) dropped and pressured the benchmark S&P 500 after the company cut its margin forecast. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 4, 2023. Under Armour Inc (UAA.N) fell 5.66% as the sports apparel maker forecast its annual sales and profit below street expectations. The S&P 500 posted 14 new 52-week highs and 14 new lows; the Nasdaq Composite recorded 77 new highs and 171 new lows.
Shares of PayPal Holdings (PYPL.O) dropped 12% and led declines on the benchmark S&P 500 index (.SPX) after the company cut its margin forecast. They were also among the top drags on the Nasdaq Composite index (.IXIC). Shares of other Apple suppliers including Qualcomm (QCOM.O), Broadcom (AVGO.O), Qorvo (QRVO.O) and Corning (GLW.N) fell between 1.2% to 2%. The action-packed week will see the release of the much-awaited inflation data on Wednesday. The S&P index recorded 13 new 52-week highs and 12 new lows, while the Nasdaq recorded 52 new highs and 130 new lows.
REUTERS/Brendan McDermidTOKYO, May 9 (Reuters) - A gauge of global equities fell on Tuesday after weak Chinese trade data sparked concerns about China's domestic demand recovery, while the impasse over the U.S. debt ceiling sparked a sharp sell-off in short-dated Treasury bills. Investors fear a government default if Congress fails to resolve the debt ceiling deadlock as early as June 1. Longer-dated Treasury yields were little changed as investors waited for key U.S. consumer price inflation data on Wednesday. The dollar edged higher against major currencies, with the dollar index up 0.256%. Gold prices edged higher as some investors sought cover from economic uncertainty, including the debt ceiling deadlock.
PacWest leads losses in regional bank stocks
  + stars: | 2023-05-09 | by ( ) www.reuters.com   time to read: +2 min
May 9 (Reuters) - Shares of PacWest Bancorp (PACW.O) looked set to lead declines in U.S. regional lenders at market open on Tuesday as investors feared the ongoing banking crisis could deepen. The KBW Regional Banking Index (.KRX) hit a 30-month low last week after the collapse of First Republic Bank and PacWest's decision to explore strategic options. PacWest and Western Alliance, which have been at the heart of the sell-off in regional banks, saw the steepest decline in deposits in the first quarter after First Republic, according to S&P Global Market Intelligence data. Western Alliance (WAL.N) dropped 1.5%, while First Horizon Corp (FHN.N) and Zion Bancorp (ZION.O) dipped 0.1% and 0.3%, respectively, with Arfstrom noting that the pullback in banks shares overall have made their valuations attractive. Wall Street executives and bank analysts last week called on regulators to quickly provide more protection for bank deposits and consider other backstops, arguing only an intervention could stop the crisis.
PacWest, Western Alliance lead slide in regional bank stocks
  + stars: | 2023-05-09 | by ( ) www.reuters.com   time to read: +2 min
May 9 (Reuters) - Shares of regional lenders PacWest Bancorp (PACW.O) and Western Alliance (WAL.N) resumed their slide in premarket trading on Tuesday as investors feared the ongoing banking crisis could deepen. PacWest dropped 13.6%, a day after the Los Angeles-based lender's decision to cut its quarterly dividend failed to stem worries about its financial stability. The KBW Regional Banking Index (.KRX) had last week touched 30-month lows after the collapse of First Republic Bank and PacWest's decision to exploring strategic options. PacWest and Western Alliance, which have been at the heart of the banking selloff, saw the steepest decline in deposits in the first quarter after First Republic, according to S&P Global Market Intelligence data. Reporting by Medha Singh in Bengaluru, additional reporting by Bansari Mayur Kamdar; Editing by Arun KoyyurOur Standards: The Thomson Reuters Trust Principles.
JPMorgan initiates Alkami as overweight JPMorgan said the regional banking software company has strong fundamentals. " Bernstein reiterates Microsoft as outperform Bernstein said AI is going "everywhere and in everything" that Microsoft does. Goldman Sachs reiterates PayPal as buy Goldman said it sees further earnings upside after the company's earnings report on Monday. " Raymond James reiterates Palantir as strong buy Raymond James said it's standing by its strong buy rating on shares of the AI beneficiary. Credit Suisse downgrades PayPal to neutral from outperform Credit Suisse said it's too "challenging" to recommend shares right now.
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CNBC Daily Open: A deceptive calmness
  + stars: | 2023-05-09 | by ( Yeo Boon Ping | ) www.cnbc.com   time to read: +2 min
This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Indeed, the SPDR S&P Regional Banking ETF (KRE) fell by 2%. April's consumer price index report, expected Wednesday, and the producer price index on Thursday will either reinforce or dispel some of those fears. Subscribe here to get this report sent directly to your inbox each morning before markets open.
CNBC Daily Open: In the eye of the storm
  + stars: | 2023-05-09 | by ( Yeo Boon Ping | ) www.cnbc.com   time to read: +2 min
This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Indeed, the SPDR S&P Regional Banking ETF (KRE) fell by 2%. We might just be in the eye of a storm. Subscribe here to get this report sent directly to your inbox each morning before markets open.
Why bank stocks are so unstable
  + stars: | 2023-05-09 | by ( Nicole Goodkind | ) edition.cnn.com   time to read: +10 min
New York CNN —The financial sector has been churning in rough water since the shocking collapse of Silicon Valley Bank in March. Bank insiders see this and have been buying up shares of regional lenders, according to a report by Timothy Coffey, an analyst at Janney Montgomery Scott. The Oracle of Omaha said he remains cautious about holding bank stocks and that he has reduced his own exposure to the sector. The S&P 500 financial sector, however, is down more than 12% over the same period. Economists were hoping that this year would bring better news, but instead 2023 brought the collapse of three US regional banks and a subsequent lending squeeze.
New York CNN —The US economy is going from broken to bizarre. Covid crashed the American economy three years ago with no playbook for the wild recovery that would follow. And yet, the US economy today is growing, the job market is strong, and the consumer is still spending. The economy has added an astonishing 1.2 million jobs this year and the jobless rate matches the lowest since 1969. Goldman Sachs pegs recession odds at 35% and Fed Chair Jerome Powell last week said the economy could still skirt a recession.
The continued slide for regional bank stocks after the failure of First Republic last week has created some buying opportunities in the sector, according to Wall Street analysts. "We believe this recent stock reaction is overdone as there is currently no evidence of accelerating deposit outflows. We see accelerating deposit costs, not accelerating deposit outflows, as the most significant headwind for the midcap banks over the next several quarters," Gosalia wrote. Huntington and Webster also rise to the top of the heap for RBC Capital Markets analyst Jon Arfstrom. Both Huntington and Webster are down about 30% for the year, which is better than the SPDR S & P Regional Banking ETF (KRE).
Shares of PayPal Holdings (PYPL.O) dropped 10.5% and led declines on the benchmark S&P 500 index (.SPX) after the company cut its margin forecast. They were also among the top drags on the Nasdaq Composite index (.IXIC). Shares of other Apple suppliers including Qualcomm (QCOM.O), Broadcom (AVGO.O), Qorvo (QRVO.O) and Corning (GLW.N) fell between 0.9% to 2%. That weighed on shares of high-growth companies, including Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O), which fell about 0.3% each. The S&P index recorded six new 52-week highs and 10 new lows, while the Nasdaq recorded 20 new highs and 54 new lows.
If a bank failure were to leave one of them without access to cash, widespread market instability would follow. “Why take that risk?” Summer Mersinger, a member of the Commodity Futures Trading Commission, told DealBook. Clearinghouses exist to mitigate risk, taking collateral and settling transactions between buyers and sellers in all kinds of financial markets. This means a bank’s failure could easily lead to losses for a clearinghouse that “could potentially reverberate across the financial system,” the Chicago Fed concluded in a 2020 report. Even without a complete failure at a commercial bank, delays in access to cash could trigger liquidity issues across markets.
Several measures from Friday's jobs report show the labor market is stronger than it's been in decades. But Terrazas pointed to potential concerns in the labor market and for interest rates. "If it's the former, it's just a matter of time before gravity catches up with the labor market," Terrazas said. Overall though, the different robust labor market data suggests the US could maybe avoid a recession as has been the case so far in 2023. Despite potential risks in the job market, Pollak believes there's a possibility that the US continues to avoid a recession.
The dollar remained relatively weaker against most of its major peers, even as the dollar index rose 0.059% and the euro fell 0.15% to $1.1002. Friday's robust U.S. payrolls report prompted investors to dial back their expectations for the timing and size of the Fed's first interest rate cut. The two-year Treasury yield, which typically moves in step with interest rate expectations, rose a touch above 4.0%. The dollar rose 0.18% against the yen. Bullion regained ground after a sharp retreat in the previous session, ahead of the inflation data that could shed light on the outlook for U.S. interest rates.
May 8 (Reuters) - PacWest Bancorp (PACW.O) shares pared early gains on Monday, dragging down other U.S. regional banking stocks, as the Los Angeles-based lender's decision to slash its quarterly dividend failed to stem worries about its financial stability. Other U.S. regional banks also retreated. REUTERS/Mike Blake/File Photo 1 2The KBW Regional Banking index (.KRX) fell 2.82% after gaining nearly 4.7%. But hedge funds, which often engage in short selling, pushed back on Monday, saying in a letter to Gensler that a ban would be counterproductive. Yellen said it is in the SEC's purview to regulate short selling although there is a high bar for any controls if evidence of market manipulation was found.
For most of the day, stocks struggled for direction amid disappointing earnings from Tyson Foods and Catalent and a short-lived rebound in regional banks. The struggle for a clearer direction comes after a rally on Friday, when U.S. jobs data pointed to a resilient labor market. Producer prices, weekly jobless claims and consumer sentiment data are all lined up for the week. Shares of regional banks tumbled for much of last week on worries tied to the collapse of First Republic Bank. Warren Buffett's Berkshire Hathaway Inc's Class B shares rose after posting a $35.5 billion first-quarter profit, boosted by gains from stocks such as Apple.
May 8 (Reuters) - PacWest Bancorp (PACW.O) shares pared early gains on Monday, dragging down other U.S. regional banking stocks, as the Los Angeles-based lender's decision to slash its quarterly dividend failed to stem worries about its financial stability. "The dividend cut is not a good sign," said Jamie Cox, managing partner at Harris Financial Group. Other U.S. regional banks also retreated. The KBW Regional Banking index (.KRX) fell 1.5% after gaining nearly 4.7%. "I have a general fear that smaller banks are going to disappear, and we're going to end up with just a few large banks."
The struggle for a clearer direction comes after a rally on Friday, when U.S. jobs data pointed to a resilient labor market. Producer prices, weekly jobless claims and consumer sentiment data are all lined up for the week. A rally in regional banks' shares proved short-lived, with PacWest Bancorp (PACW.O) rising 5.6% after gaining as much as about 30% earlier in the session after the lender sharply cut its quarterly dividend to boost capital. Shares of regional banks tumbled for much of last week on worries tied to the collapse of First Republic Bank. Warren Buffett's Berkshire Hathaway Inc's Class B shares rose 0.9% after posting a $35.5 billion first-quarter profit, boosted by gains from stocks such as Apple.
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