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☆ Take Five: The only way is up
▼ + stars: | 2023-06-23 | by ( ) www.reuters.com time to read: +6 min

June 23 (Reuters) - It's been a turbulent week or two for markets, with one central bank after another making it very clear the only way for rates right now is up as inflation tightens its grip on the global economy. Bad news could be taken as a positive, if traders see it as a way of pushing authorities to offer more support to the economy - as long as it eventually arrives. Make your way to the foothills of Portugal's Sintra mountains from Monday through Wednesday. The agenda is, of course, inflation, inflation, inflation. Many expect initial attempts to talk the currency higher - "jawboning", in central bank jargon - before considering whether direct intervention is needed.

Persons: It's, Yoruk, Lewis Krauskopf, Naomi Rovnick, Amanda Cooper, it's, Big Tech's, CHRISTINE, Christine Lagarde, Yannis Stournaras, Jan Harvey Organizations: Investors, Federal, Credit Suisse, Big Tech, Federal Reserve, European Central Bank, Traders, ECB, Reuters Graphics Reuters, Analysts, Thomson Locations: Portugal, Rae Wee, Singapore, Amsterdam, New York, London, U.S, Beijing, China, Portugal's Sintra, SWEDEN, Swedish

☆ Fed, ECB may slash bank reserves by 90% in new era of high rates - paper
▼ + stars: | 2023-06-22 | by ( ) www.reuters.com time to read: +3 min

FRANKFURT, June 22 (Reuters) - The Federal Reserve and the European Central Bank may mop up as much as 90% of the money they pumped into banks over the last decade now that high inflation and interest rates make that extra liquidity unnecessary, a paper by a Fed economist showed on Thursday. The world's two largest central banks have been raising interest rates at a brisk pace to fight inflation and unwinding some of their massive bond purchases, which flooded banks with cash when price growth was sluggish and borrowing costs already at zero. Neither scenario is entirely plausible in the near term as both the Fed and the ECB have a mix of government bonds and other types of debt on their balance sheet. The paper narrowly focuses on the supply and demand of reserves and the relative convenience of assets received by the central banks in return. ($1 = 0.9093 euros)Reporting by Francesco Canepa Editing by Christina FincherOur Standards: The Thomson Reuters Trust Principles.

Persons: Annette Vissing, Jorgensen, Francesco Canepa, Christina Fincher Organizations: Federal Reserve, European Central Bank, ECB, Federal Reserve Board, Fed, Thomson Locations: FRANKFURT, Portugal

☆ Investors ramp up recession bets as the Fed vows to keep battling inflation
▼ + stars: | 2023-06-22 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +2 min

The bond market is ramping up its bet that the US will tip into a recession. The inversion between the 2- and 10-year Treasury yields widened to a full percentage point on Wednesday. That comes as the Fed vows to stay hawkish on inflation and keep rates elevated through 2023. The inverted yield curve is a sign bond market investors are pricing in a serious chance of recession, making it a historically reliable indicator of a downturn. Central bankers have raised interest rates over 1,700% in the past year to get inflation back to its 2% goal.

Persons: —, Jerome Powell, Goldman Sachs Organizations: Service, Federal Reserve, New York Fed

☆ Stocks and bonds reflect fears of Powell embracing his inner hawk
▼ + stars: | 2023-06-21 | by ( Lawrence White | ) www.reuters.com time to read: +5 min

Housebuilders (.FTNMX402020) declined 3% at one point as the prospect of more rate increases raised fresh concerns about mortgage costs. The U.S. dollar was firmer ahead of Powell's congressional testimony, with the dollar index up 0.1% at 102.62. Minutes of the central bank's last meeting showed only one of nine board members suggested reconsidering its policy of keeping bond yields low, and even then suggested it was best to wait a while. Rising interest rates and higher bond yields have been a burden for gold, which was pinned at $1,934 an ounce , just above last week's three-month low of $1,924.99. The Brent benchmark edged down 4 cents to $75.86 a barrel while U.S. crude lost 3 cents to $71.16.

Persons: Toby, Powell, Jerome Powell, Tapas Strickland, Jerry del Missier, doggedly, Lawrence White, Wayne Cole, Jacqueline Wong, Lincoln, Alex Richardson, David Goodman Organizations: London Stock Exchange Group, REUTERS, . Federal, NAB, Nasdaq, Copper, BRITAIN Investors ramped, Bank of, U.S, Bank of Japan, Thomson Locations: City, London, Britain, Beijing, Asia, Pacific, Japan, Bank of England

☆ 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

☆ Fed Chair Sees ‘Long Way to Go’ on Inflation Fight
▼ + stars: | 2023-06-21 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Jerome H. Powell, the chair of the Federal Reserve, is set to tell House lawmakers that the United States remains a “long way” away from low and stable inflation even 15 months into the central bank’s campaign to cool the economy and wrestle down rapid price increases. In light of that, the Fed could raise interest rates even higher than their current level of just above 5 percent. “Inflation has moderated somewhat since the middle of last year,” Mr. Powell will say, according to the text of his prepared remarks. “Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go.”Fed officials left interest rates unchanged last week following 10 straight increases. But central bankers have been adamant that the decision to hit pause did not amount to a declaration of victory over inflation.

Persons: Jerome H, Powell, ” Mr, “ Organizations: Federal Reserve, Financial, ” Fed Locations: United States

The yield on the 10-year Treasury rose by 2 basis points at 3.748%. The yield on the 2-year Treasury traded 1 basis point higher around 4.711%. U.S. Treasury yields were little changed Wednesday as investors looked ahead to Federal Reserve Chairman Jerome Powell's testimony before Congress and assessed the economic outlook. Two more increases of 25 basis points each are expected this year, according to the central bankers. Elsewhere, U.K. inflation figures came in higher than expected at 8.7% for May.

Persons: Jerome Powell's, Powell Organizations: Treasury, U.S, Federal, Financial, Investors, The, of England's

☆ Is the Inflation Battle Won? Not Yet.
▼ + stars: | 2023-06-21 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +2 min

The reason: While less expensive gas and slower grocery price adjustments have helped overall inflation to fall from its four-decade peak last summer, food and fuel costs tend to jump around a lot. Last week, Fed officials sharply marked up their forecast of how high core inflation would be at the end of 2023. They now see it at 3.9 percent, higher than the 3.6 percent they predicted in March and nearly twice their 2 percent inflation target. “Inflation is somewhat more stubborn than we had hoped.”A fresh Consumer Price Index inflation report last week showed that inflation continued to moderate sharply on an overall basis in May. That measure helps to feed into the Fed’s preferred measure, the Personal Consumption Expenditures index, which it uses to define its 2 percent target.

Persons: Biden, ”, Kristin J, Forbes Organizations: Massachusetts Institute of Technology, Bank of England

☆ China's modest rate cut sends stocks lower
▼ + stars: | 2023-06-20 | by ( Joice Alves | ) www.reuters.com time to read: +4 min

LONDON, June 20 (Reuters) - European stocks and U.S. futures fell on Tuesday after China cut interest rates by less than expected and the market awaited more detail on Beijing's plans to shore up a stuttering economic recovery. The People's Bank of China lowered the medium-term lending facility rate on Thursday last week. "The meeting helped improve sentiment, but the market also understands that there's strategic competition between the U.S. and China," said Redmond Wong, Greater China market strategist at Saxo Markets. A central banker on Tuesday also hinted there was room for policy adjustment from the current path of aggressive rate hikes. Gold edged up 0.1% to $1,951.74 as the dollar index eased at 102.45 but lacked clear momentum as traders awaited U.S. Federal Reserve Chair Jerome Powell's testimony later this week for more direction on the interest rate path.

Persons: Susannah Streeter, Hargreaves Lansdown, Xi, Rodrigo Catril, Issei Kato, Antony Blinken's, Redmond Wong, Jerome Powell's, Brent, Joice Alves, Selena Li, Anisha, Susan Fenton, Jason Neely Organizations: Hargreaves, People's Bank of, National Australia Bank, REUTERS, Citi, U.S, Saxo Markets, Reserve Bank, Australia's, Bank of England, Federal, Thomson Locations: China, Asia, U.S, Beijing, People's Bank of China, Tokyo, Japan, United States, Greater China, German, London, Hong Kong, Bengaluru

China cut its benchmark loan prime rates (LPR) for the first time in 10 months on Tuesday, with a smaller-than-expected 10-basis point reduction in the five-year LPR. China's benchmark CSI (.CSI300) slipped 0.17%, with the real estate index (.CSI931775) falling 1.9%, its biggest daily decline in a month. "I don't think they (the LPR cuts) are going to move the needle at all," said Redmond Wong, Greater China market strategist at Saxo Markets. He said a 15 basis-point cut would have sent a "stronger message" that could boost sentiment in China's property sector. The People's Bank of China lowered the medium-term lending facility rate on Thursday last week.

Persons: Redmond Wong, Xi, Rodrigo Catril, Antony Blinken's, Saxo's Wong, Brent, Selena Li, Joice Alves, Anisha Sircar, Susan Fenton Organizations: CSI, Saxo Markets, People's Bank of, National Australia Bank Senior, Citi, U.S, Reserve Bank, Australia's, Bank of England, Thomson Locations: HONG KONG, China, Asia, Pacific, Japan, Greater China, Beijing, People's Bank of China, United States, Hong Kong, London

☆ Australia's unemployment rate needs to rise to curb inflation - top c.banker
▼ + stars: | 2023-06-20 | by ( ) www.reuters.com time to read: +1 min

SYDNEY, June 20 (Reuters) - Australia's unemployment rate needs to rise to help contain inflation and avoid higher interest rates and a deep recession, a top central banker warned on Tuesday, after data showed little loosening in a still drum-tight labour market. Reserve Bank of Australia (RBA) Deputy Governor Michelle Bullock said the jobless rate would need to rise to about 4.5% from the current rate of 3.6% to bring the economy back into balance, a rate still well below pre-pandemic levels. Indeed, Bullock also warned that if inflation were to become entrenched in people's expectations, that would mean higher rates and a larger rise in unemployment. "A deep and long-lasting recession would be likely, which would mean a substantial rise in the unemployment rate." Reporting by Stella Qiu; Editing by Jacqueline Wong & Simon Cameron-MooreOur Standards: The Thomson Reuters Trust Principles.

Persons: Michelle Bullock, Bullock, Stella Qiu, Jacqueline Wong, Simon Cameron, Moore Organizations: SYDNEY, Reserve Bank of Australia, Ai Group, Thomson Locations: Newcastle

☆ Yes, inflation is coming down. That doesn’t mean goods and services will be cheaper
▼ + stars: | 2023-06-20 | by ( Elisabeth Buchwald | ) edition.cnn.com time to read: +2 min

Inflation vs. deflationInflation is the rate at which prices for goods and services across an entire economy are rising over a given period of time. When inflation rises, it means you’ll have to spend more money to buy the same goods and services as you used to. For instance, goods and services sold in the United States cost 9.1% more last June compared to June 2021. That means global central bankers don’t actually want goods and services to get cheaper. If you think prices will go down in the future, you’re probably going to delay making a lot of purchases today.

Persons: don’t, you’re Organizations: New, New York CNN, Bank of England, European Central Bank, US Federal Locations: New York, China, United States, Japan

☆ The S&P 500 has entered a bull market, but will it last? Here's what 5 Wall Street experts are saying about the stock market's big rally.
▼ + stars: | 2023-06-17 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +6 min

The S&P 500 has pushed its way into a new bull market, but experts are torn over whether the rally can last. Though he previously predicted a 15% increase for the S&P 500, he's turned more bearish on the market as recession odds increase. Goldman SachsThe hype for AI is real and could lead the S&P 500 to climb higher this year, Goldman Sachs said. That could take the S&P 500 as much as 14% higher in the coming years, strategists said. The S&P 500 could end the year at 4,500, strategists predicted, implying around a 5% upside from current levels and a gain of about 17% for the full year.

Persons: —, David Rosenberg, Rosenberg, That's, Steve Marcus, Jeremy Siegel, Siegel, he's, Bloomberg Mike Wilson, Morgan Stanley, Morgan, Mike Wilson, Wilson, Cindy Ord, Tom Lee, Fundstrat, Goldman Sachs Organizations: Service, New York Fed, Rosenberg Research, Wharton School, Bloomberg, Corporations, Getty, CNBC

[1/3] The exterior of the Marriner S. Eccles Federal Reserve Board Building is seen in Washington, D.C., U.S., June 14, 2022. "Core inflation is not coming down like I thought it would," Federal Reserve Gov. The U.S. economy was "still ripping along for the most part," he said, with the underlying pace of price increases "moving sideways." The Fed this week ended its run of 10 consecutive rate hikes when policymakers decided to keep the benchmark overnight interest rate in a range of from 5% to 5.25%. Though Fed chair Jerome Powell at a press conference Wednesday said no decision had been made about the upcoming July Fed meeting, investors and other analysts broadly expect the Fed to resume rate increases.

Persons: Sarah Silbiger WASHINGTON, Christopher Waller, Waller, Thomas Barkin, Barkin, I’m, Jerome Powell, Austan Goolsbee, Goolsbee, Howard Schneider, Chizu Nomiyama, Alistair Bell Organizations: Eccles Federal Reserve, Washington , D.C, REUTERS, . Federal Reserve, Federal, Silicon Valley Bank, Richmond Federal, Fed, Chicago Fed, Thomson Locations: Washington ,, Norway, Silicon, U.S, Maryland

☆ Crypto is dead: long live crypto!
▼ + stars: | 2023-06-16 | by ( Felix Martin | ) www.reuters.com time to read: +8 min

The end of near-zero interest rates, quantitative easing and pandemic-era fiscal stimulus has sent prices crashing back to earth. Rising real interest rates have proved to be kryptonite for crypto, as for so many other speculative assets. The normalisation of interest rates may have done for crypto in its most recent incarnation as a get-rich-quick scheme. The proposition that the circulation of private currencies might be economically beneficial has also been around for a while. Nevertheless, history shows that for privately issued currencies to attain critical mass it has typically required more than just the availability of viable alternatives.

Persons: cryptocurrencies, Gary Gensler, noncompliance, Balaji Srinivasan, marc ”, Paul Krugman, Friedrich Hayek’s, Money ”, James Steuart, ”, Crypto, Long, Peter Thal Larsen, Oliver Taslic Organizations: Reuters, U.S . Securities, Exchange Commission, Coinbase, SEC, State, Brixton, counterparties, Central Bank of, Thomson Locations: Ithaca, Scottish, United States, Central Bank of Argentina

☆ Morning Bid: US Stocks fight the Fed as markets still not listening
▼ + stars: | 2023-06-16 | by ( Naomi Rovnick | ) www.reuters.com time to read: +3 min

LONDON, June 16 (Reuters) - If you looked at red-hot stock markets without following central banks, you could well assume interest rates are being cut. The European Central Bank hiked again on Thursday and the Bank of England is widely predicted to follow suit next week. But while central bankers remain as worried about inflation as they have been since late 2021, markets seem to be worrying about nothing at all. Rather than hearing this cue, markets are listening selectively, focusing on the growth narrative while continuing to push back against hawkish guidance. The market rally is also feeding on itself, pulling off the sidelines investors who were underweight equities previously.

Persons: Jay Powell, Naomi Rovnick, Toby Chopra Organizations: U.S . Federal Reserve, European Central Bank, Bank of England, Treasury, Equity, Bank of America, University of Michigan, Thomson, Reuters Locations: U.S

But coupled with the anticipated path of inflation, those projections actually indicate monetary policy will grow more restrictive through 2024 on a "real" or inflation-adjusted basis. It's a nuance undergirding why the Fed sees inflation continuing to fall through next year and unemployment rise despite expected lower interest rates. And in fact, that seems to be what many on the Fed intend: A real policy rate of interest that gradually tightens next year even as the "nominal" rate printed in its policy statement declines. Reuters Graphics Reuters GraphicsREAL VS NOMINALUnder the median projections provided this week, monetary policy actually grows slightly more restrictive next year. By the end of 2024 that spread actually widens to 2%, as the interest rate declines but the rate of inflation falls more sharply.

Persons: Jerome Powell nodded, We're, Howard Schneider, Dan Burns, Andrea Ricci Organizations: . Federal, U.S, Reuters Graphics Reuters, Silicon Valley Bank, Thomson Locations: Silicon

☆ European Central Bank Raises Rates to Highest Level Since 2001
▼ + stars: | 2023-06-15 | by ( Eshe Nelson | ) www.nytimes.com time to read: +1 min

The European Central Bank raised interest rates to the highest level in more than two decades on Thursday, as policymakers continued their campaign to stamp out inflation they said was forecast to remain too high for too long. The bank, which sets rates for the 20 countries that use the euro currency, lifted rates by a quarter of a percentage point, putting the deposit rate at 3.5 percent, the highest since 2001. It was the bank’s eighth consecutive increase. The decision comes a day after the Federal Reserve held interest rates steady for the first time in more than a year. After last month’s mirror image move, when both raised rates a quarter-point, the two central banks have begun to diverge again, in part because the European Central Bank hasn’t been raising interest rates for as long or as high as the Fed.

Organizations: European Central Bank, Federal Reserve, European Central Bank hasn’t

☆ The Fed took a break from hiking rates for the first time in 15 months. Here's what to know.
▼ + stars: | 2023-06-15 | by ( Max Adams | ) www.businessinsider.com time to read: +5 min

If you missed yesterday's Federal Reserve decision — and how the market reacted — you've come to the right place. In this March 21, 2018, file photo, Federal Reserve Chairman Jerome Powell speaks following the Federal Open Market Committee meeting in Washington. The Federal Reserve releases minutes from the March meeting of its policymakers on Wednesday, April 11. US stock futures edge lower early Thursday after the Federal Reserve paused rate hikes but hinted there were more to come. The housing market is so tight right now because 90% of homeowners are already locked into low mortgage rates.

Persons: Jerome Powell, Carolyn Kaster, it'll, there's, Powell, Dow Jones, Morgan Stanley's Mike Wilson, Wilson, it's, Martin Puddy, that's, Elon Musk's, Goldman Sachs, Musk, JPMorgan's Marko Kolanovic, Max Adams, Nathan Rennolds Organizations: Federal, Federal Reserve, Bank, Fed, Bank of America Locations: Washington, Silicon, insider.com, Beijing, China, Detroit, New York, London

☆ Bitcoin falls below $25,000 as Fed signals more hawkish moves ahead and regulatory screws tighten on the sector
▼ + stars: | 2023-06-15 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +2 min

Bitcoin fell below $25,000 on Thursday, as monetary policy adds to pressure from regulators. Central bankers held interest rates steady but signaled more rate hikes to come. Sign up for our newsletter to get the inside scoop on what traders are talking about — delivered daily to your inbox. The world's biggest cryptocurrency by market value traded lower to $24,897 on Thursday morning, down around 4% from $25,930 on Wednesday. Markets are currently pricing in a 65% chance that the Fed will raise rates another 25 basis-points in July.

Persons: Bitcoin, —, Ethereum, Jerome Powell's, Coinbase, Binance Organizations: SEC, Service, Federal Reserve, Fed, Securities and Exchange

☆ Fed holds off on rate hike, but says two more are coming later this year
▼ + stars: | 2023-06-14 | by ( Jeff Cox | ) www.cnbc.com time to read: +3 min

related investing news Easing inflation pressures give the Fed room to skip a rate hike. "We have raised our policy interest rate by five percentage points, and we've continued to reduce our security holdings at a brisk pace. The decision left the Fed's key borrowing rate in a target range of 5%-5.25%. The dots moved decidedly upward, pushing the median expectation to a funds rate of 5.6% by the end of 2023. "Given the strong labor market, the Fed has room to crush inflation and they don't want to miss their chance."

Persons: we've, Jerome Powell, Powell, Philip Jefferson, David Russell Organizations: Federal Reserve, Federal, Fed, CPI, PPI Locations: WASHINGTON

☆ What to Watch For at the Fed’s Meeting
▼ + stars: | 2023-06-14 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Prices have been increasing faster than the Fed would like for more than two years, but a report on Tuesday confirmed that the pace of overall inflation continues to cool. That doesn’t mean the Fed can declare victory: Once volatile food and fuel prices were stripped out, the data showed inflation remained stubbornly rapid. Investors are betting that Fed officials will respond to the mixed picture by skipping an increase this month, even as they signal that they might lift rates in July. Still, the outlook is very uncertain, and investors will be watching Wednesday’s Fed meeting closely for any hint at what could come next. Central bankers will release their rate decision and fresh economic forecasts at 2 p.m., followed by a news conference with Jerome H. Powell, the Fed chair, at 2:30 p.m. Here’s what to know about the decision.

Persons: Jerome H, Powell Organizations: Federal, Investors, Fed Locations: Central

☆ US stocks whipsaw as the Fed pauses tightening but eyes further hikes later
▼ + stars: | 2023-06-14 | by ( Filip De Mott | ) www.businessinsider.com time to read: +2 min

Stocks finished mixed after a volatile session that saw big swings after the Fed meeting. Policymakers kept rates steady but indicated that two more increases could come later this year. Fed Chairman Jerome Powell also said rate cuts would be more appropriate "a couple of years out." Central bankers kept rates steady at 5%-5.25% but indicated in their "dot plot" projections that two more increases could come later this year, a more hawkish signal than what Wall Street anticipated. Meanwhile, policymakers will assess incoming data, including credit conditions that may have a role in tightening macroeconomic conditions, he added.

Persons: Stocks, Jerome Powell, —, Elon Musk's, Goldman Sachs, Wells, Ken Griffin, Bitcoin, MicroStrategy's Michael Saylor Organizations: Service, Federal, JPMorgan, Citi Locations: Wells Fargo

☆ China’s rate cut highlights stimulus stubbornness
▼ + stars: | 2023-06-14 | by ( ) www.reuters.com time to read: +2 min

In stark contrast to its peers, Chinese consumer inflation has nearly evaporated, standing at only 0.2% last month. In that context, cutting short-term borrowing costs to improve liquidity in the interbank market is the very least Beijing can do. It does suggest policymakers see credit demand weakening further, and the move will help domestic companies roll over debt. But as the small size of the latest cut suggests, this is not going to rally private sector investment or consumption much on its own. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Persons: Pete Sweeney, Una Galani, Thomas Shum Organizations: Reuters, Commodities, Twitter, Thomson Locations: TOKYO, Beijing, India, Teck

☆ Fed Leaves Rates Steady but Forecasts More Moves to Come
▼ + stars: | 2023-06-14 | by ( Jeanna Smialek | ) www.nytimes.com time to read: +1 min

Fed officials try to keep inflation climbing at a pace of 2 percent a year, but its rise has been much more rapid than that since early 2021. But 15 months into their fight to wrestle inflation lower, Fed officials want to give themselves more time to assess how their policy is playing out in the economy. Central bankers voted unanimously on the decision to leave interest rates unchanged. Just because Fed officials are moving into a new and more patient stage of their war against rapid price increases does not mean that they are giving up on their push to cool inflation. Central bankers have already moved rates up notably, to about 5.1 percent, and those changes are still trickling through and weighing on the economy.

Persons: ” Jerome H, Powell Organizations: Fed Locations: Central

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