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☆ Bank of Canada seen holding on rates amid cooling inflation, financial turmoil
▼ + stars: | 2023-04-12 | by ( Steve Scherer | ) www.reuters.com time to read: +3 min

[1/2] Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in Ottawa, Ontario, Canada June 22, 2020. Last month the Bank of Canada became the world's first major central bank to pause its tightening campaign, leaving its benchmark rate at 4.50%. However, bank failures in the United States and Europe have put central bankers on guard against a widespread credit crunch. All 33 economists polled by Reuters agree that the Bank of Canada (BoC) will hold its key overnight rate steady. "Hiking in this environment would put markets on high alert," said Jay Zhao-Murray, FX Market Analyst at Monex Canada, in a note.

☆ Gold gains as traders gear up for US inflation data
▼ + stars: | 2023-04-12 | by ( Kavya Guduru | ) www.reuters.com time to read: +2 min

SummarySummary Companies All eyes on CPI data due at 1230 GMTA soft inflation print could send gold above $2,032 - analystApril 12 (Reuters) - Gold prices gained on Wednesday as investors keenly await key U.S. inflation data for signs of how close interest rates are to peaking. Gold is considered an inflation hedge, but rising interest rates reduce the appeal of non-yielding bullion. Gold could continue to drift higher "as early birds place their bets on a soft inflation report," said Matt Simpson, senior market analyst at City Index. "A soft inflation print could send gold prices above $2,032 to mark a fresh YTD high, given the inverted yield curve, talks of soft growth and rise of geopolitical tensions across parts of Asia." A "weaker U.S. dollar and returning investment flows have been holding (gold) prices, ANZ said in a note.

☆ Gold gains as traders gear up for U.S. inflation data
▼ + stars: | 2023-04-12 | by ( ) www.cnbc.com time to read: +2 min

Gold prices gained on Wednesday as investors keenly await key U.S. inflation data for signs of how close interest rates are to peaking. Gold could continue to drift higher "as early birds place their bets on a soft inflation report," said Matt Simpson, senior market analyst at City Index. "A soft inflation print could send gold prices above $2,032 to mark a fresh YTD high, given the inverted yield curve, talks of soft growth and rise of geopolitical tensions across parts of Asia." Philadelphia Fed Bank President Patrick Harker on Tuesday said he feels the Fed may soon be done raising rates, while New York Fed President John Williams said the Fed's policy path will depend on incoming data. A "weaker U.S. dollar and returning investment flows have been holding (gold) prices," ANZ said in a note.

The ECB's systemic risk indicator for the United States, for example, has returned to its lowest level in a year. The near $400 billion that dashed for money funds after the Lehman Brothers bust in late 2008 - despite credit fears in some of those funds - had completely retreated by early 2010. The relative interest rate attraction of bills and repos after the steepest Fed rate rises in 40 years should make this year's flows far stickier - unless or until the Fed were to embark on some dramatic rate easing. Either way, there's now no shortage of savings in cash if or when the lights go green. by Mike Dolan, Twitter: @reutersMikeD; Added chart from Andy Bruce; Editing by Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

In its latest Global Financial Stability Report, the IMF said global financial stability risks had increased "rapidly" in the six months since its previous assessment when it was already touting hazards as being "significantly skewed" to the downside. The IMF said the bank failures "have been a powerful reminder" of the challenges wrought by tighter monetary policy - and the more stringent financial conditions it generated - and the buildup in vulnerabilities since the global financial crisis more than a decade ago. Problems at U.S. regional banks grew last year, as rapidly rising interest rates slashed the value of some banks' holdings in long-term assets such as home loans and government bonds. Going forward, regional banks could face greater scrutiny with respect to their holdings and funding structures, the IMF cautioned. Even still, authorities should be more prepared to deal with financial instability, the IMF recommended, including by strengthening their bank resolution regimes.

☆ IMF warns deeper financial turmoil would slam global growth
▼ + stars: | 2023-04-11 | by ( David Lawder | ) www.reuters.com time to read: +5 min

The IMF's U.S. outlook improved slightly, with growth in 2023 forecast at 1.6% versus 1.4% forecast in January as labor markets remain strong. "Our advice is for monetary policy to remain focused on bringing down inflation," IMF chief economist Pierre-Olivier Gourinchas told reporters. The report included two analyses showing financial turmoil causing moderate and severe impacts on global growth. This "moderate tightening" of financial conditions could slice 0.3 percentage point off of global growth for 2023, cutting it to 2.5%. This scenario could slash 2023 growth by as much as 1.8 percentage points, reducing it to 1.0% - a level that implies near-zero GDP growth per capita.

☆ Morning Bid: Glass half full on disinflation
▼ + stars: | 2023-04-11 | by ( ) www.reuters.com time to read: +4 min

Headline March consumer price inflation is expected to drop as low as 5.2% from 6% - showing the disinflation journey from more than 40-year highs of 9.2% last June to the Fed's 2% target more than half way there. The rider is that headline inflation rates are expected be below stickier annual 'core' rates, which are forecast to have ticked higher to 5.6% last month. The International Monetary Fund's updated World Economic Outlook is also due on Tuesday ahead of the Fund's Spring meeting in Washington. The disinflation picture was encouraged around the world on Tuesday as Chinese consumer price inflation hit an 18-month low last month and the annual decline in factory prices sped up. Hopes that central bank rates are cresting worldwide lifted risk appetite across the spectrum with major cryptocurrency bitcoin broke back above $30,000 level for the first time in 10 months on Tuesday.

☆ Wall Street ends mixed with inflation data, earnings on tap
▼ + stars: | 2023-04-10 | by ( Stephen Culp | ) www.reuters.com time to read: +5 min

The bellwether S&P 500 ended the session nominally higher. Of the 11 major sectors of the S&P 500, six ended the session higher, led by industrials (.SPLRCI). "When the Fed repeats time after time what their priorities are and what they’re going to do, they’re going to do it." As of Friday, analysts expected aggregate S&P 500 earnings down 5.2% year-on-year, a stark reversal from the 1.4% annual growth expected at the beginning of the quarter, according to Refinitiv. The S&P 500 posted 2 new 52-week highs and no new lows; the Nasdaq Composite recorded 50 new highs and 155 new lows.

☆ Wall St fluctuates as investors weigh jobs report, earnings on tap
▼ + stars: | 2023-04-10 | by ( Stephen Culp | ) www.reuters.com time to read: +4 min

"There’s clearly a disconnect between what the Fed is telling us they’re going to do and what the market believes the Fed is going to do," Pursche added. "When the Fed repeats time after time what their priorities are and what they’re going to do, they’re going to do it." As of Friday, analysts now expect aggregate S&P 500 earnings down 5.2% year-on-year, a stark reversal from the 1.4% annual growth expected at the beginning of the quarter, according to Refinitiv. Among the 11 major sectors of the S&P 500, communication services (.SPLRCL) and technology (.SPLRCT) suffered the largest percentage losses. The S&P 500 posted one new 52-week high and no new lows; the Nasdaq Composite recorded 41 new highs and 131 new lows.

But overall bank credit has been stalled at about $17.5 trillion since January. The response - less lending, tighter credit standards and higher interest on loans - was already taking shape. Hard data on bank lending and credit will come into play, augmenting topline statistics like unemployment and inflation that the Fed is focused on. Reuters GraphicsSENTIMENT WEAKENINGThe survey of large and small banks asks high-level questions - Are lending standards tighter or looser? A Dallas Fed bank conditions survey, conducted in late March after the two bank failures, indicated lending standards in that Fed regional bank's district have kept tightening, with loan demand falling.

☆ American offices are half-empty. That could be the next big risk for banks
▼ + stars: | 2023-04-10 | by ( Julia Horowitz | ) edition.cnn.com time to read: +9 min

“I’m more concerned than I’ve been in a long time,” said Matt Anderson, managing director at Trepp, which provides data on commercial real estate. About $270 billion in commercial real estate loans held by banks will come due in 2023, according to Trepp. Questions about the health of banks with sizable exposures to commercial real estate loans cause customers to pull deposits. That forces lenders to demand repayment — exacerbating the sector’s downturn and further damaging the banks’ financial position. The likeliest outcome is thought to be an uptick in defaults and reduced access to funding for the commercial real estate industry.

☆ Three major risks that have the banking industry on edge
▼ + stars: | 2023-04-10 | by ( Allison Morrow | ) edition.cnn.com time to read: +6 min

The toll of the WFH eraCommercial real estate — offices, apartment complexes, warehouses and malls — has come under substantial pressure, my colleague Julia Horowitz reports. Commercial property valuations could fall by roughly 20% to 25% this year, according to Rich Hill, head of real estate strategy at Cohen & Steers. About $270 billion in commercial real estate loans held by banks will come due in 2023. The proportion of commercial office mortgages where borrowers are behind with payments is rising, according to Trepp, which provides data on commercial real estate, and high-profile defaults are making headlines. That might seem simplistic, but it’s especially relevant for an industry as uniquely reliant on trust as banking is.

☆ An earnings recession plagues investors' minds as reporting season approaches
▼ + stars: | 2023-04-10 | by ( Bob Pisani | ) www.cnbc.com time to read: +3 min

There may not be a recession yet, but there is certainly an earnings recession. What Treasury yields are saying Treasury yields resumed falling last week in response to the weaker data. Earnings season Speaking of earnings, first quarter earnings season start this week, with earnings for the S & P 500 expected to decline 5.2%, according to Refinitiv. That's an earnings recession. You have to go back to Q1-Q3 of 2020 to see three consecutive quarters of earnings decline.

☆ Analysis: Heroes or villains: Short sellers' role in the U.S. bank crisis
▼ + stars: | 2023-04-09 | by ( Lawrence Delevingne | ) www.reuters.com time to read: +7 min

How much short sellers contributed to the downward spiral reprises the debate about whether so-called shorts are market watchdogs or opportunistic investors who profit from others’ misery. In the case of the banking crisis, a review of data and interviews with short sellers and their critics show, the answer may be both. Some high profile short sellers were later celebrated as making prophetic calls about the U.S. housing market. Even so, interviews and public postings show at least some short sellers had placed bets against regional banks well before the crisis hit. SHORT POSITIONSSuch early short sellers, however, were in the small minority.

☆ US job growth expected to moderate but remain at brisk pace in March
▼ + stars: | 2023-04-07 | by ( Lucia Mutikani | ) www.reuters.com time to read: +5 min

Economists said the revisions brought the claims series closer to other data that have suggested the labor market was losing speed. Surveys from the Institute for Supply Management this week offered a downbeat assessment of the labor market. The labor market is expected to significantly loosen up starting in the second quarter as companies respond more to a slowdown in demand caused by the higher borrowing costs. Small businesses, like restaurants and bars, have been the main drivers of job growth since the recovery from the pandemic. "This presents a lot of downside risks for the labor market," said Thomas Simons, an economist at Jefferies in Bloomfield, New Jersey.

☆ Morning Bid: Weary markets wary of recession
▼ + stars: | 2023-04-06 | by ( ) www.reuters.com time to read: +2 min

Asian stocks sagged, while the dollar was on the front foot as investors kept their risk-off hat ahead of the long weekend. Oil prices eased after the shock at the start of the week from OPEC+ to cut production. Futures hint at a muted open in Europe, with the pan-European STOXX 600 index aiming to break its losing streak this week. European equities had a stellar start to the year but the March madness due to the banking turmoil has weighed. Meanwhile, UBS executives sought to assure investors on Wednesday that Switzerland's largest bank can make its shotgun takeover of Swiss rival Credit Suisse work.

☆ Fed should stick to raising rates while labor market strong, Bullard says
▼ + stars: | 2023-04-06 | by ( Lindsay Dunsmuir | ) www.reuters.com time to read: +3 min

April 6 (Reuters) - The Federal Reserve should stick to raising interest rates to lower inflation while the labor market remains strong, given the high probability recent financial stresses will continue to abate and absent a marked tightening of credit conditions, St. Louis Fed President James Bullard said on Thursday. Economic data since the Fed's March 21-22 policy meeting has been mixed, with encouraging signs of a loosening in the labor market and a further abatement in high inflation tempered by both remaining too strong for comfort. The Labor Department's employment report for March is due to be released on Friday. Bullard said this week's better-than-expected report on labor market openings still showed a job market that remained very strong by historical standards. Investors are almost evenly divided as to whether the Fed will keep its policy rate unchanged at its May 2-3 meeting or proceed with a quarter-of-a-percentage-point increase.

LONDON, April 6 (Reuters) - Banking sector turmoil has not dented demand for equities, with MSCI's world stock index up 7% so far this year. But under the surface, bad omens for world stocks are building. Central bank surveys show U.S. and European banks are already tightening lending standards, historically a predictor of dismal stock market performance. Credit tightening predicts poor stock market returns2/ MANUFACTURING SLOWDOWNRecessions starting in the United States tend to flow to the rest of the world and consequently global stocks. Seven mega-cap tech stocks were responsible for 92% of the S&P 500's first-quarter rise, Citi notes.

☆ TD world's most shorted banking stock, shares down -ORTEX data
▼ + stars: | 2023-04-05 | by ( Maiya Keidan | ) www.reuters.com time to read: +2 min

Around 4.1% of TD's outstanding shares were out on loan to hedge funds, while the second-most shorted bank stock, JP Morgan , only had $2.3 billion worth of shorts, showed the data. Hedge funds profit when they borrow a stock from an institutional investor and sell it back when the price falls, pocketing the difference, a practice known as short-selling. Turmoil in the banking sector began last month with the collapse of regional banks Silicon Valley Bank and Signature Bank, sparking a crisis of confidence. TD shares are down 15.7% since the beginning of the regional bank crisis and down 3.4% this week. Around 2.9% of BMO's outstanding shares were out on loan to hedge funds, or about $1.8 billion.

☆ Dollar's crown to slip as peers catch up in rates race: Reuters poll
▼ + stars: | 2023-04-05 | by ( Hari Kishan | ) www.reuters.com time to read: +4 min

Median forecasts in the March 31-April 4 poll of 90 foreign exchange strategists showed the dollar ceding ground to all major currencies in a year. "Our take on the dollar is that we continue to look for further weakness over the next three to six months. With the dollar's expected retreat, the European single currency is finding its spot in the sun after briefly crossing below parity on lagging rate expectations in 2022. The safe-haven currency, which hit 32-year lows in 2022 again on rate differentials, was forecast to recoup that loss over the forecast horizon. Indeed, the 12-month median view for nearly all of the major currencies surveyed was identical with the March poll.

☆ INDIA RUPEE Indian rupee to strengthen as weak US data pushes dollar to 2-month low
▼ + stars: | 2023-04-05 | by ( Nimesh Vora | ) www.reuters.com time to read: +2 min

MUMBAI, April 5 (Reuters) - The Indian rupee is expected to rise against the U.S. currency on Wednesday as weak manufacturing and job openings data dented demand for the dollar. The non-deliverable forwards indicate the rupee will open at around 82.08-82.12 to the U.S. dollar, compared with 82.3325 on Monday. The dollar index overnight dropped to its lowest level since Feb. 2. Data overnight showed U.S. job openings dropped to their lowest level in nearly two years in February, indicating that the Fed rate hikes were cooling off the U.S. labour market. The job openings release comes on the back of data that showed that U.S. manufacturing activity slumped in March to the lowest level in nearly three years.

☆ TD world's most shorted banking stock, ORTEX data shows; shares fall
▼ + stars: | 2023-04-05 | by ( Maiya Keidan | ) www.reuters.com time to read: +2 min

☆ Australia pauses rate hikes to assess tightening impact, Q1 inflation in focus
▼ + stars: | 2023-04-04 | by ( Stella Qiu | ) www.reuters.com time to read: +4 min

Wrapping up its April policy meeting, the Reserve Bank of Australia (RBA) did warn that "some further tightening of monetary policy may well be needed" to ensure that inflation returns to target. Markets had been wagering on a pause, while analysts were split on whether the bank would hike again given the still high level of inflation. Three-year bond futures were up 9 ticks to 97.14, with futures now also leaning towards a pause in May, implying hikes are essentially over. "The Board recognises that monetary policy operates with a lag and that the full effect of this substantial increase in interest rates is yet to be felt." Bill Evans, chief economist at Westpac, said there isn't sufficient evidence for the bank to change its terminal rate forecast of 3.85%, after Tuesday's pause.

☆ As Wall Street turns bearish on the U.S., here's where the pros say to invest
▼ + stars: | 2023-04-04 | by ( Zavier Ong | ) www.cnbc.com time to read: +6 min

Within Europe, Goldman prefers companies in value sectors that pay dividends , as well as select defensive and growth stocks in the market. Emerging markets Several Wall Street analysts are putting their money on emerging markets, with most bullish on China, the world's second-largest economy. While the bank expects just 1% earnings growth for emerging market stocks, it said the sector's valuation looks attractive at a 23% discount to global peers. Philip Blancato, CEO at Ladenburg Thalmann Asset Management, is also bullish on emerging markets. He added that the case for adding to emerging market allocations is growing, particularly given the "near guarantee" of a softer dollar in the short- to medium-term.

☆ What crisis? U.S. bank-focused ETFs see strongest demand in months in March
▼ + stars: | 2023-03-31 | by ( Lisa Pauline Mattackal | ) www.reuters.com time to read: +2 min

Exchange-traded funds tracking U.S. regional banks saw their strongest net inflows in months, with the SPDR S&P Regional Banking ETF receiving $1.25 billion in the month to March 29, while the iShares U.S. Regional Banks ETF (IAT.P) took in $258 million, according to Refinitiv Lipper data. March was the first month of net buying for the IAT fund in a year, and one of the best months on record in terms of flows for KRE. US Bank ETFs in 2023A swift response from regulators and central banks encouraged investors looking to "buy at the bottom," Islam said. "As markets continue to settle down ... banks generally and major banks especially will outperform the S&P 500."

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