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☆ The Fed is losing the war against inflation
▼ + stars: | 2022-10-13 | by ( Allison Morrow | ) edition.cnn.com time to read: +6 min

“This inflation report today was an unmitigated disaster,” wrote Christopher S. Rupkey, chief economist at Fwdbonds, a financial markets research company. Is the Fed losing the fight against inflation? But the effects of rate hikes can take months to be felt in the real economy. But the Fed is “losing the war” when it comes to price hikes for the services sector. Ultimately, some say the problem of pandemic-era inflation is just too complex to be fixed with the Fed’s blunt tools.

☆ British pound jumps on reports UK government may reverse parts of its tax-cutting proposals
▼ + stars: | 2022-10-13 | by ( Sam Meredith | ) www.cnbc.com time to read: +1 min

In this photo illustration, the British pound is seen displayed. LONDON — Sterling jumped against the U.S. dollar on Thursday following multiple reports that the British government is in talks to scrap parts of its unfunded package of tax cuts. The British pound traded 1.5% higher at $1.1269 during afternoon deals in London, before paring gains on robust U.S. inflation data. Long-dated U.K. government bonds — known as "gilts" — rallied sharply, pushing yields down to just over 4.41%. Truss and Kwarteng have both insisted the government's proposals are necessary to get the economy growing.

☆ Morning Bid: Core beliefs
▼ + stars: | 2022-10-13 | by ( ) www.reuters.com time to read: +4 min

A look at the day ahead in U.S. and global markets from Mike Dolan. And that core inflation rate is forecast to have higher again in September to 6.5% from 6.3%. Ten-year Treasury yields have risen about 60bp to just under 4%, the S&P500 (.SPX) has lost more than 10% and the dollar (.DXY) has boomed almost 5%. Worryingly for Tokyo, the latest G7 finance ministers statement mentioned nothing about currency market ructions. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ 'Sharks circling in the water': Contentious cram-down rounds are coming and going to dilute startup shareholders. Founders and investors should be wary.
▼ + stars: | 2022-10-12 | by ( Darius Rafieyan | ) www.businessinsider.com time to read: +6 min

Funding rounds are set to become more contentious; "knives tend to come out," said one investor. Having been in the VC game for more than 25 years, he knows what inevitably follows periods of irrational exuberance: cram downs. A cram-down round refers to a situation in which a company raises money at terms favorable to new investors, at the expense of current shareholders. In good times, when valuations are going up and VCs have money to spare, exercising pro rata rights is usually a no-brainer. The investors that step up to fill that void — usually late-stage VC growth funds or strategic investors — often demand terms that severely dilute or "cram down" the shares of existing shareholders.

☆ No, Bad News Isn’t Good News for Stocks
▼ + stars: | 2022-10-11 | by ( Jon Sindreu | ) www.wsj.com time to read: 1 min

The S&P 500 has fallen into a tailspin in the past few trading days. Stock markets appear to have gone back to the dictum that “bad news for the economy is good news for asset prices.” While this may have worked in the post-2008 era, bad news today would probably just be bad. After rallying last week due to official data showing a massive, unexpected drop in work vacancies, the S&P 500 has fallen into a tailspin in the past few trading days, as other figures showed bumper employment growth in September.

☆ Sterling falls for a fifth day; turmoil dogs the bond market
▼ + stars: | 2022-10-11 | by ( Amanda Cooper | ) www.reuters.com time to read: +4 min

LONDON, Oct 11 (Reuters) - The pound fell for a fifth day on Tuesday as the turmoil engulfing UK government bond markets forced the Bank of England to step in yet again to attempt to stem a damaging sell-off in the country's debt. Sterling fell 0.3% to $1.1036, and was also down 0.3% versus the euro at 88.00 pence. If you have a look at the population of holders of long-dated UK assets - anything that is 15-20 years - it's mostly domestic funds," ADM Investor Services Chief Economist Marc Ostwald said. The pound promptly nosedived and the gilts market went into a tailspin, putting pension funds at risk of insolvency. But sterling's problems extend beyond the liquidity crunch in the gilts market.

☆ Stocks slip in Asia, brace for CPI and earnings
▼ + stars: | 2022-10-10 | by ( Wayne Cole | ) www.reuters.com time to read: +4 min

read more read moreHolidays in Japan and South Korea made for thin trading in Asia, while the Treasury market is also shut on Monday. "The September CPI report should show a moderation in goods prices that is a likely harbinger of a broader slowing in core inflation," he said. "But the Fed will not be responsive to a whisper of inflation moderation as long as labour markets shout tightness." One likely bone of contention will be the strength of the dollar which will pressure offshore earnings. Oil prices edged higher after Brent climbed 11% last week in the wake of a deal on supply reductions by OPEC+.

☆ 5 signs the world is headed for a recession
▼ + stars: | 2022-10-02 | by ( Allison Morrow | ) edition.cnn.com time to read: +12 min

New York CNN Business —Around the world, markets are flashing warning signs that the global economy is teetering on a cliff’s edge. There’s now a 98% chance of a global recession, according to research firm Ned Davis, which brings some sobering historical credibility to the table. In an interview, its CEO was asked whether he believes the slowdown was a sign of a looming global recession. The upshotWhile the consensus is that a global recession is likely sometime in 2023, it’s impossible to predict how severe it will be or how long it will last. Not every recession is as painful as the 2007-09 Great Recession, but every recession is, of course, painful.

☆ Morning Bid: Dysfunction and intervention
▼ + stars: | 2022-09-29 | by ( ) www.reuters.com time to read: +5 min

Amid all the chaos in British bond markets, the forced intervention by the Bank of England to buy gilts has given some investors a crumb of comfort about the limits of central bank tightening. Cold comfort maybe, but enough to drag bond yields back and lift stocks briefly around the world. While 30-year gilt yields steadied just below 4% on Thursday after their 100bp swoon the previous day, the pound was sliding again and UK midcap stocks dropped. read moreEasing inflation in Spain was better news read more . Market leader Inditex (ITX.MC), the owner of Zara, slipped 2.2%, while the wider STOXX retailers index <.SXRP> slid 4.3%.

☆ Breakingviews: BoE’s bond-buying U-turn is worth the risk
▼ + stars: | 2022-09-28 | by ( Neil Unmack | ) www.reuters.com time to read: +5 min

The fallout makes it even harder for Governor Andrew Bailey to convince markets he can tighten monetary policy. His decision on Wednesday to buy UK government debt and delay plans to sell down its 857 billion pound ($915 billion) bond portfolio carries big risks. Bailey’s goal is to cut holdings by 80 billion pounds over the next year. UBS analysts reckon issuance of gilts, after factoring in sales and redemptions from QT, will reach 355 billion pounds in the year ending March 2024. If Bailey can now tighten monetary policy without freaking out investors, his U-turn will have been worth the risk.

☆ Markets in a tailspin get a big dose of chill from the Bank of England
▼ + stars: | 2022-09-28 | by ( Allison Morrow | ) edition.cnn.com time to read: +7 min

The global financial system is “like a pressure cooker” right now, said Chris Turner, global head of markets at ING. Once, the idea of paying sticker price at a dealership was laughable — a trap that only suckers would fall into. The South Korean company’s sedans and SUVs are selling for about 6% over their sticker price, according to data from Edmunds.com. Used car prices — which shot up to dizzying heights early in the pandemic — have finally begun falling. “Speak to any (very) large used car dealer and you will hear the same - an absolute vortex of deflation is coming to used car prices,” tweeted Ophir Gottlieb, the CEO of Capital Market Laboratories, earlier this month.

☆ Larry Summers blasts UK tax cuts as 'utterly irresponsible' and warns of possible contagion
▼ + stars: | 2022-09-27 | by ( Elliot Smith | ) www.cnbc.com time to read: +6 min

The sudden sell-off in the pound and U.K. bond markets led economists to anticipate more aggressive interest rate hikes from the Bank of England . I was surprised when the new chancellor spoke over the weekend of the need for even more tax cuts," Summers said on Twitter. U.K. inflation unexpectedly fell to 9.9% in August, and analysts recalibrated their eye-watering expectations after the government stepped in to cap annual household energy bills. 'Emerging market currency crisis'Sterling has fallen by roughly 7-8% on a trade-weighted basis in less than two months, and strategists at Dutch bank ING noted Tuesday that traded volatility levels for the pound are "those you would expect during an emerging market currency crisis." The likening of the U.K. to an emerging market economy has become more prevalent among market commentators in recent days.

☆ Sterling higher as BoE, Treasury seek to calm markets
▼ + stars: | 2022-09-27 | by ( Samuel Indyk | ) www.reuters.com time to read: +3 min

UK pound coins plunge into water coloured with the European Union flag colours in this illustration picture, October 26, 2017. The BoE "will not hesitate" to raise interest rates if needed to meet its 2% inflation target, governor Andrew Bailey said on Monday. "The BoE saying it won't change course has helped the recovery in sterling as it conveys a message that there's no sense of panic at the central bank," Cole added. "UK markets will now be hyper-sensitive to any communication from UK policymakers," said ING head of markets Chris Turner in a note. Pill voted with the majority to raise interest rates by 50 basis points at last week's policy meeting.

☆ After high profile sacking, UK civil servants fear for jobs under Truss
▼ + stars: | 2022-09-27 | by ( Elizabeth Piper | ) www.reuters.com time to read: +7 min

"(It) creates a sense of fear inside the civil service at senior level which will prevent them for giving the honest advice to ministers that they need to hear," he told Reuters. Mark Serwotka, general secretary of the Public and Commercial Services Union, the largest trade union representing British civil servants, agreed. "I think the whole attitude towards civil servants from the political side is worsening," said one former civil servant on condition of anonymity. Former civil servants such as Kerslake fear for its future. "I call it the 'how high' phase, which is ministers saying jump and civil servants say how high," Kerslake said.

☆ Pound tanking, massive tax cuts and talk of emergency hikes. Here's what's going on in the UK
▼ + stars: | 2022-09-26 | by ( Elliot Smith | ) www.cnbc.com time to read: +6 min

Jim O'Neill, former Goldman Sachs Asset Management chairman and a former U.K. Treasury minister, said the pound's fall shouldn't be misinterpreted as dollar strength. The announcement Friday featured a volume of tax cuts not seen in Britain since 1972 and an unabashed return to the "trickle-down economics" promoted by the likes of Ronald Reagan and Margaret Thatcher. The radical policy moves set the U.K. at odds with most major global economies against a backdrop of sky-high inflation and a cost-of-living crisis. Ibrahim added that this would imply further suffering for U.K. financial markets due to the "unfavorable policy mix" over the near term. The British lender expects the government to clarify its plans to balance the books through "spending cuts and reform outcomes" ahead of the November budget statement, which Montagne suggested "should help to deflect immediate concerns relating to large unfunded tax cuts."

☆ Fed's Bostic says events in UK could raise economic stress in Europe, U.S.
▼ + stars: | 2022-09-26 | by ( ) www.reuters.com time to read: +2 min

"The reaction to the proposed plan is a real concern and a fear that the new actions will add uncertainty to the economy," Bostic said in a webcast interview with the Washington Post. "These are just proposals, and we haven't actually seen what's going to play out," Bostic said. Bostic, the first Fed official to address the events in Britain, gave no indication the Fed might respond in any way. "The more important thing is that we need to get inflation under control," Bostic said. "Until that happens, we're going to see I think a lot of volatility in the marketplace in all directions."

The exterior of the Marriner S. Eccles Federal Reserve Board Building is seen in Washington, D.C., U.S., June 14, 2022. Asked at a Washington Post event whether he felt U.S. investors had taken an overly optimistic view of Fed policy until a recent sharp sell-off begin, Atlanta Fed president Raphael Bostic said that was beside the point. "Until that happens we're going to see I think a lot of volatility in the marketplace in all directions." "At the moment, inflation remains too high," Collins said in her first policy remarks since becoming head of the bank. The Fed maintains a 2% inflation target, as measured by the personal consumptions expenditures price index.

Britain's Labour Party leader Keir Starmer speaks during the tribute to Britain's Queen Elizabeth at Britain's Labour Party's annual conference in Liverpool, Britain, September 25, 2022. Starmer, who has led Britain's main opposition party for the past two years, said he would reintroduce the top rate of income tax to 45% after the government abolished the rate in a mini-budget. "I would reverse the decision they made," Labour leader Starmer said. However, Starmer said a Labour government would not reverse the government's decision to cut the basic rate of income tax to 19% from 20%, saying that tax cut would benefit working people. Andy Burnham, the mayor of Greater Manchester, earlier said Labour should oppose all the tax moves outlined by the new government.

☆ Britain's sudden lurch to 'Reaganomics' gets a thumbs down from the markets
▼ + stars: | 2022-09-24 | by ( Matt Clinch | ) www.cnbc.com time to read: +1 min

Truss has now put the country on an economic road completely at odds with most, if not all, major global economies. Hannah Mckay | Reuterswatch nowU.K. bond markets went into a tailspin Friday as investors shunned the country's assets. And with bonds tanking, sterling was also sent into freefall after hitting 37-year lows against the dollar in recent weeks. Left-leaning The Guardian newspaper called it "a budget for the rich" on its front page Saturday, while The Times called it a "great tax gamble." The right-wing Daily Mail newspaper called it a "true Tory budget" while Kwarteng himself said it was a "very good day for the U.K.," declining to comment on the currency moves.

British Pound Sterling and U.S. Dollar notes are seen in this June 22, 2017 illustration photo. Income tax cuts, a drop in property taxes, tax-free shopping for overseas visitors and the scrapping of a planned corporation tax rise are all aimed by the government at giving households and businesses a boost. It was last down 1.36% against the dollar at 1.1106 , a new low since 1985. The FTSE 100 (.FTSE) dropped 1.3%, hitting its weakest level since July 15, but shares in UK homebuilders jumped after Kwarteng announced changes to property stamp duty. Register now for FREE unlimited access to Reuters.com RegisterReporting by Alun John Editing by Alexander Smith and Frances KerryOur Standards: The Thomson Reuters Trust Principles.

☆ New UK finance minister Kwarteng seeks end to 'cycle of stagnation'
▼ + stars: | 2022-09-23 | by ( David Milliken | ) www.reuters.com time to read: +4 min

Paul Johnson, director of the Institute for Fiscal Studies (IFS) think tank, said Truss and Kwarteng's tax cuts could be the largest since 1988, and risked putting Britain's public debt on an unsustainable path. The IFS, together with U.S. bank Citi, estimate household energy subsidies will cost about 120 billion pounds over two years, while six months of business energy subsidies will cost 40 billion pounds. read moreThese are a one-off, and the bigger concern for the IFS is around 30 billion pounds of permanent tax cuts - starting with 14 billion pounds in reduced payroll taxes, confirmed on Thursday, and 15 billion pounds of cuts to corporation tax. For Kwarteng, tax cuts and deregulation are a way to end what he calls "a cycle of stagnation" that led to tax rates being on course for their highest level since the 1940s. "We will liberalise planning rules in specified agreed sites, releasing land and accelerating development," Kwarteng is expected to say.

☆ Turkey cuts interest rates again as country struggles under 80% inflation
▼ + stars: | 2022-09-22 | by ( Natasha Turak | ) www.cnbc.com time to read: +2 min

Turkey's central bank surprised markets once again with its decision Thursday to cut its key interest rate, despite inflation in the country surging beyond 80%. The country's monetary policymakers opted for a 100 basis point cut, bringing the key one-week repo rate from 13% to 12%. In August, Turkish inflation rate was recorded at 80.2%, quickening for the 15th consecutive month and the highest level in 24 years. Turkey also cut rates by 100 basis points in August, and had gradually lowered interest rates by 500 basis points at the end of 2021, setting off a currency crisis. The months-long campaign to continuously lower rates as Turkey's trade and current account deficit balloons and its foreign exchange reserves run low has instead sent Turkey's currency, the lira, into a multi-year tailspin.

☆ New UK finance minister Kwarteng seeks end to "cycle of stagnation"
▼ + stars: | 2022-09-22 | by ( David Milliken | ) www.reuters.com time to read: +4 min

☆ How Italy could tip into a tailspin
▼ + stars: | 2022-09-19 | by ( Hugo Dixon | ) www.reuters.com time to read: +7 min

Giorgia Meloni, leader of the far-right Brothers of Italy party, speaks during a rally in Duomo square ahead of the Sept. 25 snap election, in Milan, Italy, September 11, 2022. Italy will probably muddle through under Meloni, the leader of the Brothers of Italy, which opinion polls suggest will be the largest party after this Sunday’s election. Nobody wants Italy to go into a tailspin and drag down countries such as France and Spain, which also have high levels of sovereign debt. She might think the EU would still keep financial support flowing to Italy as it wouldn’t have the guts for a confrontation. But if the ECB then refused to buy Italian debt, and if neither side blinked, there would be a blow-up.

☆ Ukraine's Independence Day darkened by deadly missile strike
▼ + stars: | 2022-08-23 | by ( Tara John | Yulia Kesaieva | ) edition.cnn.com time to read: +8 min

The day was darkened by a missile strike on an eastern Ukrainian train station which killed at least 22 people -- fulfilling warnings by Ukrainian officials. On the eve of Independence Day, crowds of people were seen in Khreshchatyk, inspecting the display. "I don't feel festive about (Independence Day), I rather feel sad," she added. International solidarityUS President Joe Biden marked Ukraine's Independence Day Wednesday by reiterating the US' commitment to Ukraine with a new $2.98 billion investment in security assistance. Daria is also worried about an attack on Independence Day.

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