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☆ Oil prices climb on hopes for Fed slowing interest rate hikes
▼ + stars: | 2023-01-20 | by ( Arathy Somasekhar | ) www.reuters.com time to read: +2 min

Jan 20 (Reuters) - Oil prices rose on Friday on optimism that the U.S. Federal Reserve will ends its tightening cycle, buoying the economy and boosting fuel demand. Both closed 1% higher on Thursday, near their highest closing levels since Dec. 1. A number of other Fed officials have expressed support for a downshift in the pace of rate rises. A rebound in Chinese economy and the Russian oil industry's struggles under sanctions could tighten energy markets in 2023, International Energy Agency (IEA) head Fatih Birol said on Thursday. Reporting by Arathy Somasekhar; Editing by Kenneth MaxwellOur Standards: The Thomson Reuters Trust Principles.

☆ Oil rises, posts second week of gains on China demand outlook
▼ + stars: | 2023-01-20 | by ( ) www.cnbc.com time to read: +2 min

Oil rose by about $1 a barrel on Friday and posted second straight weekly gain, spurred largely by brightening economic prospects for China and resulting expectations of a boost to fuel demand in the world's second-biggest economy. "The oil market has been down on global recession fears, but it is still showing signs it can remain tight a little while longer," he said. Oil rose despite U.S. inventory figures this week showing crude stockpiles rose by 8.4 million barrels in the week to Jan. 13 to about 448 million barrels, the highest since June 2021. A price cap on Russian oil, which has been rippling through the global market, is helping to boost crude prices, said Jim Ritterbusch of consultancy Ritterbusch and Associates. "Sanctions and caps on Russian crude are gradually acquiring some price impact and will become more of a bullish factor when last month's influx of Russian crude cargoes is absorbed into the global market," Ritterbusch said.

☆ Fed's Williams says Fed needs more rate rises to cool inflation
▼ + stars: | 2023-01-19 | by ( Michael S. Derby | ) www.reuters.com time to read: +3 min

“Bringing inflation down is likely to require a period of below-trend growth and some softening of labor market conditions,” Williams warned. A number of other Federal Reserve officials have expressed support for a downshift in the pace of rate rises. Last year, the Fed moved its short-term interest rate target higher at a historically aggressive pace in a bid to fight the highest inflation seen in decades. It moved from a near zero federal funds rate in March to between 4.25% and 4.5% by year's end. At the December meeting, officials penciled in a 5.1% stopping point for rate hikes this year and increased their target rate by half a percentage point at that gathering.

The Fed raised its benchmark overnight interest rate rapidly last year, from near-zero in March to the current 4.25%-4.50% range, to restrain inflation that climbed to 40-year highs. In December, Fed policymakers as a group signaled the policy rate will need to rise to at least 5.1%; financial markets, meanwhile, are pricing for the Fed to stop just short of 5%. But she did appear to ratify market expectations for the Fed's upcoming rate hike to be a quarter-of-a-percentage-point, a downshift from December's half-point rate hike and from the four 75-basis-point rate hikes that preceded. "Recent data suggests slightly better prospects that we could see continued disinflation in the context of moderate growth," Brainard said. Even as the Fed parses the progress it has made on inflation, she said it would "stay the course."

☆ Fed's Harker says ready to downshift to 25-basis-point rate hikes
▼ + stars: | 2023-01-18 | by ( Michael S. Derby | ) www.reuters.com time to read: +2 min

NEW YORK, Jan 18 (Reuters) - Philadelphia Federal Reserve President Patrick Harker reiterated on Wednesday that he's ready for the U.S. central bank to move to a slower pace of interest rate rises amid some signs that hot inflation is cooling off. To get there, Harker, who will hold a voting role on the rate-setting Federal Open Market Committee this year, is ready to raise the central bank's benchmark overnight interest rate beyond the current 4.25%-4.50% range. It will take a while to achieve that goal, Harker said. Harker said the U.S. economy should grow 1% this year, adding that he doesn't believe it will fall into a recession. Harker also expects the U.S. unemployment rate, currently at 3.5%, will rise to 4.5% this year before falling back to 4% in following years.

☆ The global rally in stocks that's kicked off 2023 may prove to be 'head fake' as it's too soon to assume inflation is receding, says UBS
▼ + stars: | 2023-01-18 | by ( Carla Mozée | ) www.businessinsider.com time to read: +4 min

The stock-market rally at the start of 2023 faces risks from still-elevated inflation, UBS Global Wealth Management said. Central bankers are monitoring core prices, which rose in the euro area and the US in December. "The possibility that core inflation is sticker than expected remains a risk for markets." In the US, core prices increased by 0.3% as monthly shelter costs drove higher by 0.8%. "While the strong start to the year is welcome and we believe more risk-tolerant investors can start to anticipate an inflection point in 2023, we advise against complacency," Haefele wrote.

☆ Fed's Harker says he is ready to downshift to 25-basis-point rate hikes
▼ + stars: | 2023-01-18 | by ( Michael S. Derby | ) www.reuters.com time to read: +3 min

To get there, Harker, who will hold a voting role on the rate-setting Federal Open Market Committee this year, is ready to raise the central bank's benchmark overnight interest rate beyond the current 4.25%-4.50% range. Harker said he is expecting the Fed to get rates over 5% and added that uncertainty about the stopping point is why the central bank should slow the pace of its rate hikes. At the Fed's last meeting, officials penciled in a 5.1% stopping point for rate rises this year. Harker said the U.S. economy should grow 1% this year, adding that he doesn't believe it will fall into a recession. Harker also expects the U.S. unemployment rate, currently at 3.5%, will rise to 4.5% this year before falling back to 4% in following years.

☆ Markets think the Fed is about to deliver a smaller rate hike, but here's one big reason the central bank could stay aggressive on its next move
▼ + stars: | 2023-01-14 | by ( Carla Mozée | ) www.businessinsider.com time to read: +4 min

Investors are locking in expectations that the Fed will downshift its interest rate hike in February. The December core rate was 0.3% on a monthly basis, up from 0.2% in November. Shelter inflation that monitors costs for renters and homeowners climbed 0.8%. "Bond yields moving lower, the VIX moving lower and the dollar moving lower suggests that the iceberg of fear that we've seen for the last year almost is easing," Russell said. "The market looks out and they see a scenario of lower inflation … they see that we're getting to the end of this aggressive rate hiking."

☆ Dollar wobbles as U.S. inflation fuels hopes of slower Fed rate path
▼ + stars: | 2023-01-13 | by ( Ankur Banerjee | ) www.reuters.com time to read: +2 min

The dollar index , which measures the U.S. currency against six others, rose 0.059% to 102.220 but was languishing around its lowest level since June. Traders of futures tied to the Fed's policy rate bet heavily on a downshift to quarter-percentage-point rises starting at the Jan. 31 to Feb. 1 meeting and a pause just below 5%, with interest rate cuts priced in for later in the year. Carol Kong, a currency strategist at Commonwealth Bank of Australia, said the Fed would likely take comfort in the inflation report and the U.S. dollar would continue to ease. Meanwhile, the yen strengthened 0.12% to 129.10 per dollar, having touched a fresh seven-month high of 128.65 per dollar earlier in the session. The Australian dollar fell 0.11% to $0.696, while the kiwi fell 0.34% to $0.637.

☆ Morning Bid: Money in the bank
▼ + stars: | 2023-01-13 | by ( ) www.reuters.com time to read: +5 min

Kicking off the fourth-quarter corporate results season in earnest, JPMorgan, Citigroup, Bank of America, Bank of New York Mellon and Wells Fargo are among the countries biggest banks updating on Friday. It will take some twist to puncture the optimism on peak inflation and peak Federal Reserve interest rates, however. Futures markets still see rates topping out below 5% by midyear and pencil in a half point of rate cuts between then and yearend. The yen surged on speculation the Bank of Japan could revise its ultra-loose monetary policy again at next week's policy meeting. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Powell faces a similar task this year but with the inflation problem turned on its head. As such, the Fed, which has been under Powell's leadership since early 2018, has flagged a downshift this year to a gradual pace of interest rate increases to reduce the risk of a policy mistake. Part of that withdrawal of stimulus included starting its balance sheet drawdown. For some that made kicking off the balance sheet drawdown at the July meeting less attractive than the September meeting, when then-Chair Yellen would speak with the press at its conclusion. "I see no advantage at all to moving it to July," then Fed governor Lael Brainard said.

☆ Fed policymakers signal rate-hike slowdown coming, but no easing
▼ + stars: | 2023-01-12 | by ( Ann Saphir | ) www.reuters.com time to read: +4 min

"It is encouraging that we got some information today that went in the right direction," St. Louis Fed President James Bullard said at an event organized by the Wisconsin Bankers Association. REUTERS/Dado Ruvic/Illustration 1 2'STEER MORE DELIBERATELY'Speaking earlier on Thursday to a business group in Pennsylvania, Philadelphia Fed President Patrick Harker said he believes quarter-percentage-point rate hikes are indeed now appropriate. Richmond Fed President Tom Barkin said on Thursday that inflation over the last three months has gone in the "right direction" and allows the Fed to "steer more deliberately" in its battle against price pressures. The Fed ultimately pushed borrowing costs, and the U.S. unemployment rate, into double-digit territory during that period before stopping the upward spiraling of prices. Fed policymakers say they do not expect the unemployment rate, currently 3.5%, to rise much more than a percentage point in the course of the current inflation fight.

☆ Fed's Harker ready to downshift to 25 basis-point interest rate hikes
▼ + stars: | 2023-01-12 | by ( Michael S. Derby | ) www.reuters.com time to read: +3 min

“In my view, hikes of 25 basis points will be appropriate going forward.”Once the Fed gets to a stopping place for rate increases, Harker said it will likely have to hold there for a while. Harker, in his speech, was upbeat about the economy’s ability to navigate the Fed’s action. Harker also said he believes the surge in price pressures has started to run its course. “In the rearview mirror, I expect, are the eye-popping inflation readings of 2022,” the official said. Harker added the Fed should reach its inflation goal in 2025.

☆ Expectations for the Fed to downsize future rate hikes soar after CPI shows inflation cooled in December
▼ + stars: | 2023-01-12 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

Investors on Thursday were pricing in a more than 90% chance the Fed will reduce the size of its interest rate hike in February. The more bullish view on a potential downshift was sparked by cooler prices in the December inflation report. But there are 'lingering pressures' within core inflation for the Fed to consider. Investors also chopped down expectations for a March 22 rate hike of 50 basis points, to 5.4% from 18.6%. Core CPI that excludes energy and food prices rose 0.3%, meeting expectations but it was slightly higher than 0.2% in November.

☆ US stocks rise in choppy session as investors see smaller rate hikes after cooler December inflation
▼ + stars: | 2023-01-12 | by ( Carla Mozée | ) www.businessinsider.com time to read: +2 min

US stocks rose Thursday after a choppy session focused on the December inflation report. Monthly headline inflation fell 0.1% but the core index excluding volatile energy and food prices rose 0.3%. Investors priced in bullish expectations that the Fed will downshift its February rate hike. Sign up for our newsletter to get the inside scoop on what traders are talking about — delivered daily to your inbox. The core index excluding energy and food prices rose 0.3%, higher than 0.2% in November.

☆ Jamie Dimon says the Fed may need to hike interest rates much higher than markets expect in order to get inflation under control
▼ + stars: | 2023-01-10 | by ( Carla Mozée | ) www.businessinsider.com time to read: +2 min

The Federal Reserve may need to hike interest rates beyond the market's expectations, JPMorgan CEO Jamie Dimon told Fox Business. The Fed may have to lift the fed funds rates to 6%, while the consensus is for just above 5%. The Federal Reserve, led by Jerome Powell, raised interest rates seven times in 2022 from zero percent to a range of 4.25% to 4.5%. The Fed began to slow the pace of rate increases in December, to 50 basis points from 75 basis points. Investors widely expect the Fed to continue to downshift the size of rate increases this year.

"Eventually I want us to get to 25" basis point rate hikes, he said. Asked in a Wall Street Journal interview early on Monday about her preferred rate-hike size for the Jan. 31 to Feb.1 meeting, San Francisco Fed President Mary Daly said both 25 and 50 basis point rate hikes are "on the table" for her. She, like Bostic, expects the Fed policy rate - now at 4.25% to 4.5% - to need to rise to a 5% to 5.25% range to do the job on inflation. After nearly a year of aggressive rate hikes designed to slow the economy and bring soaring inflation to heel, Fed policymakers say they are encouraged by the recent slowing in jobs and wage growth that could signal cooler inflation ahead. But they are loathe to stop interest rate hikes or even downshift to smaller rate-hike increments too soon, for fear of entrenching high inflation and ultimately forcing the Fed to raise rates further.

☆ Barclays downgrades Ally Financial, says the bank is more vulnerable in 2023
▼ + stars: | 2023-01-03 | by ( Sarah Min | ) www.cnbc.com time to read: +1 min

The outlook for Ally Financial is more uncertain in 2023, according to Barclays. Analyst Jason Goldberg downgraded shares of Ally to equal weight from overweight, saying the bank is more vulnerable to a downshift in the economy. "This year is likely to witness the end of the Fed tightening cycle and loan loss normalization," Goldberg wrote in a Tuesday note. Ally shares had their worst year on record in 2022, dropping 48.7%. In addition to Ally, the analyst downgraded shares of Capital One Financial to equal weight from overweight, saying that the two stocks are the "most exposed banks we cover to the lower-end consumer."

☆ China’s EV Market Will Slow in 2023. That Still Leaves It Ahead.
▼ + stars: | 2022-12-28 | by ( Jacky Wong | ) www.wsj.com time to read: 1 min

China’s rip-roaring electric-vehicle industry will probably downshift a bit in 2023. But it will remain far and away the largest global market—a fact that gives it formidable advantages in the race to dominate the global EV supply chain. Sales of new-energy vehicles in China, which include plug-in hybrids, more than doubled from a year earlier in the first 11 months in 2022 to more than 6 million units, according to the China Association of Automobile Manufacturers. Around a quarter of cars sold in the country are now EVs. That makes China the undisputed EV leader: It accounted for more than half of all EVs sold globally in 2022.

☆ Price Pressures Ease in U.S. and Europe, Businesses Say
▼ + stars: | 2022-12-16 | by ( Austen Hufford | Paul Hannon | ) www.wsj.com time to read: 1 min

Price pressures eased at the end of the year as central banks fought high inflation, businesses in the U.S. and Europe say, though the global economy continued to teeter with the possibility of a recession. Household demand for goods is weakening across the globe, and factories are cutting production in response. That has taken pressure off supply chains, leading to a downshift in price increases and slowing global trade.

Dec 15 (Reuters) - Oil prices were largely unchanged in early Asian trade on Thursday as traders weighed optimism over China's demand outlook against the possibility of further interest rate hikes from global central banks. The market was bolstered by projections from the International Energy Agency seeing Chinese oil demand recovering next year after a 400,000-bpd contraction in 2022. The agency raised its 2023 oil demand growth estimate to 1.7 million bpd for a total of 101.6 million bpd. The U.S. Federal Reserve raised its benchmark overnight interest rate by 50 basis points on Wednesday, a downshift from the 75-basis-point hikes it had delivered at its previous four policy meetings. The central bank signalled that more interest rate hikes were to be expected.

☆ Dollar falters as investors challenge Fed's hawkishness
▼ + stars: | 2022-12-15 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

The kiwi fell 0.05% to $0.6456, though it was similarly not far off the six-month peak of $0.6513 it hit this week. The 50 bp increase marked a downshift after four consecutive 75 basis point rate hikes. Against a basket of currencies, the U.S. dollar index was last 0.02% higher at 103.68, after touching a six-month low in the previous session. Fed funds futures also show that markets are expecting U.S. rates to peak just under 5% by May next year. Elsewhere, the Aussie was last 0.05% lower at $0.6860, while the dollar slipped 0.06% against the Japanese yen to 135.40.

[1/2] Signage is seen outside the European Central Bank (ECB) building, in Frankfurt, Germany, July 21, 2022. Economists polled by Reuters expected the ECB to raise the rate it pays on bank deposits to 2% on Thursday before pushing it to 2.5% by March and 2.75% by June. The ECB was also due to lay out plans to stop replacing maturing bonds in its 5 trillion-euro portfolio, reversing years of debt purchases that have turned the central bank into the biggest creditor of many euro zone governments. The ECB will announce its policy decisions at 1315 GMT, followed by a news conference of President Christine Lagarde at 1345 GMT. "The counterpart of slower rate hikes will be hawkish guidance on the terminal rate ... accompanied by earlier or faster 'passive' QT."

☆ U.S. import prices drop further; inflation pressures easing
▼ + stars: | 2022-12-14 | by ( Lucia Mutikani | ) www.reuters.com time to read: +4 min

Economists polled by Reuters had forecast import prices, which exclude tariffs, would fall 0.5%. In the 12 months through November, import prices increased 2.7%, the smallest gain since January 2021, after rising 4.1% in October. Excluding fuel and food, import prices fell 0.6%. Core import prices are being depressed by the dollar's strength against the currencies of the United States' main trade partners. The report from the Labor Department also showed export prices fell 0.3% in November after declining 0.4% in October.

Brent crude futures settled up $2.02, or 2.4%, to $82.70 per barrel, while U.S. West Texas Intermediate (WTI) crude futures settled up $1.94 to $77.28. Both contracts rose on a surge in diesel futures ahead of cold weather expected towards the end of the year. Sending bearish signals, U.S. crude oil stockpiles rose by more than 10 million barrels last week, the most since March 2021, buoyed by releases from the Strategic Petroleum Reserve and as refiners reduced activity. Looking into 2023, OPEC said it expects oil demand to grow by 2.25 million barrels per day (bpd) over next year to 101.8 million bpd, with potential upside from China, the world's top importer. The IEA, seeing Chinese oil demand recovering next year after a 400,000-bpd contraction in 2022, raised its 2023 oil demand growth estimate to 1.7 million bpd for a total of 101.6 million bpd.

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