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☆ Morning Bid: Markets exhale after OPEC+ shock; RBA hits pause
▼ + stars: | 2023-04-04 | by ( Kevin Buckland | ) www.reuters.com time to read: +2 min

Crude oil continued to tick up, but not at Monday's pace, with Brent a little over $85. Money markets lay 2:1 odds for the Fed to hike by another quarter point over a pause at their next meeting in a month from now. By contrast, the European Central Bank is seen as almost certain to tighten by a quarter point at its meeting around the same time. The Reserve Bank of Australia, for its part, decided to press pause on its year-long rate hiking campaign - as most economists had predicted - amid signs that inflation may have peaked. China has been for the first time keeping at least one nuclear-armed ballistic missile submarine constantly at sea, according to a Pentagon report.

☆ Dollar slides on sluggish US data, Aussie steadies ahead of RBA
▼ + stars: | 2023-04-04 | by ( ) www.cnbc.com time to read: +3 min

Against the sliding dollar, the British pound and the Australian and New Zealand dollars rose to multi-week highs in early Asia trade on Tuesday. The kiwi rose 0.2% to $0.6310, its highest since mid-February, while the U.S. dollar index was marginally lower at 102.02, having fallen more than 0.5% on Monday. "The closest thing we get to good news in (the) report is that the slowing in the factory sector is pushing prices lower and supply chains are continuing to heal, benefiting from the slack. The RBA will pause policy tightening according to a poll of analysts, although a strong minority still forecast a hike. Data out last week showed Australian inflation slowed to an eight-month low in February, due in part to a sharp retreat in prices for holiday travel and accommodation.

☆ Morning Bid: Markets brush off OPEC as factories stall
▼ + stars: | 2023-04-04 | by ( ) www.reuters.com time to read: +5 min

A look at the day ahead in U.S. and global markets from Mike DolanRelatively calm world markets have brushed off OPEC's latest twist and focussed more squarely on stalled global manufacturing and edgy U.S.-China relations. Crude oil prices held much of Monday's pop higher on the surprise weekend production cut by the Organization of Petroleum Exporting Countries. But Brent crude remains below levels seen just before the Silicon Valley Bank bust last month and is still tracking year-on-year declines of 20%. Strikingly, both short and long-term inflation expectations embedded in the Treasury markets , have barely budged since the OPEC news. McCarthy, the third-most-senior U.S. leader after the president and vice president, is due to host a meeting in California on Wednesday with Tsai.

It has slipped to levels consistent with the onset of the last four recessions in 2020, 2008, 2001 and 1990, implying the manufacturing sector is experiencing a cyclical slump even if there is still momentum in services. But the manufacturing and freight downturn is already depressing domestic consumption of diesel and other distillate fuel oils, the most cyclically sensitive part of the petroleum market. Consumption of diesel and other distillate fuel oils has been falling since the second quarter of 2022, in line with the slowdown in manufacturing and freight activity. The volume of distillate fuel oil supplied to the domestic market was down -4.4% in the three months from November to January compared with the same period a year earlier. Related columns:- U.S. diesel consumption falls as economy slows (March 1, 2023)- U.S. manufacturers flounder amid cost-of-living shock (February 15, 2023)- U.S. manufacturing downturn will cut diesel consumption (January 5, 2023)John Kemp is a Reuters market analyst.

☆ US manufacturing sector weakest in nearly three years in March -ISM
▼ + stars: | 2023-04-03 | by ( ) www.reuters.com time to read: +3 min

The Institute for Supply Management (ISM) said on Monday that its manufacturing PMI fell to 46.3 last month, the lowest reading since May 2020, from 47.7 in February. It was the fifth straight month that the PMI remained below the 50 threshold, which indicates contraction in manufacturing. Reports last month also showed orders for capital goods excluding aircraft eking out a small gain in February as did manufacturing output. But it noted that manufacturing depending on bank credit also "tend to have larger firms that other things equal will have an easier time finding alternative sources of capital." The ISM survey's forward-looking new orders sub-index fell to 44.3 last month from 47.0 in February.

April 4 (Reuters) - A look at the day ahead in Asian markets from Jamie McGeever. Australia's central bank takes center stage on Tuesday with its latest interest rate decision, and beyond that, if the second trading day of the quarter is as eventful as the first, then investors' plates will be extra full. chartchartInterest rate futures markets are attaching a near-90% probability to policymakers keeping the benchmark cash rate unchanged at 3.60%, putting the year-long hiking cycle on hold at least for now. Elsewhere in Asia on Tuesday, South Korea releases inflation figures for March. Japan's monetary base has actually been shrinking every month since September, on a year-on-year basis.

This comes just days after cooling inflation raised hopes that the Fed could soon end its aggressive monetary tightening. Shares of other energy firms such as Exxon Mobil Corp (XOM.N) and Occidental Petroleum Corp (OXY.N) were also up 4.9% and 6.0%, respectively, helping drive a 5.2% jump in the energy sector. The tech-heavy Nasdaq recorded its strongest first-quarter jump of 17% since mid-2020. Among other stocks, shares of American Airlines Group Inc (AAL.O) and Delta Air Lines Inc (DAL.N) edged 0.6% and 1.3% lower on rising crude prices. The S&P index recorded seven new 52-week highs and no new low, while the Nasdaq recorded 40 new highs and 28 new lows.

☆ US consumer sentiment deteriorates in March, inflation expectations retreat
▼ + stars: | 2023-03-17 | by ( Lucia Mutikani | ) www.reuters.com time to read: +6 min

SummarySummary Companies Consumer sentiment slips in MarchInflation expectations easeManufacturing production edges up 0.1% in FebruaryWASHINGTON, March 17 (Reuters) - U.S. consumer sentiment fell for the first time in four months in March, but households expected inflation to subside over the next year and beyond, which could offer some relief to the Federal Reserve as it confronts financial market instability. The University of Michigan's preliminary March reading on the overall index of consumer sentiment came in at 63.4, down from 67 in the prior month. While the correlation between consumer sentiment and spending is weak, economists expect tighter financial conditions will undercut consumption and push the economy into recession. A separate report from the Conference Board showed its Leading Economic Index, a gauge of future economic activity, dropped for an 11th straight month in February. Durable manufacturing production nudged up 0.1%, while nondurable manufacturing output climbed 0.2%.

☆ U.S. consumer sentiment ebbs in March; inflation expectations ease
▼ + stars: | 2023-03-17 | by ( ) www.reuters.com time to read: +6 min

SummarySummary Companies Consumer sentiment slips in MarchInflation expectations easeManufacturing production edges up 0.1% in FebruaryWASHINGTON, March 17 (Reuters) - U.S. consumer sentiment fell for the first time in four months in March, but households expected inflation to subside over the next year and beyond, which could offer some relief to the Federal Reserve as it confronts financial market instability. The University of Michigan's preliminary March reading on the overall index of consumer sentiment came in at 63.4, down from 67 in the prior month. Durable manufacturing production nudged up 0.1%, while nondurable manufacturing output climbed 0.2%. Mining output fell 0.6%, with oil and gas well drilling dropping 3.1%. Industrial productionCapacity utilization for the manufacturing sector, a measure of how fully firms are using their resources, dipped 0.1 percentage point to 77.6% in February.

☆ US manufacturing output ekes out gains in February
▼ + stars: | 2023-03-17 | by ( ) www.reuters.com time to read: +3 min

Manufacturing output gained 0.1% last month, the Federal Reserve said on Friday. Durable manufacturing production nudged up 0.1%, while nondurable manufacturing output climbed 0.2%. The small gain in manufacturing, together with the rise in utilities, offset the drop in mining, leaving overall industrial production unchanged last month. Industrial output rose 0.3% in January. Capacity utilization for the manufacturing sector, a measure of how fully firms are using their resources, dipped 0.1 percentage point to 77.6% in February.

The unplanned increase in inventories and elevated ratio to sales has reached levels consistent with previous slowdowns in the manufacturing and freight cycle in 2018/19, 2015/16 and 2008/09. The ISM manufacturing orders index tumbled to a low of just 42.5 (6th percentile for all months since 1980) in January before recovering slightly to 47.0 (11th percentile) in February. Chartbook: U.S. inventories and freightReduced ordering has sharply cut the volume of freight handled through U.S. container ports and carried on railroads and by trucking firms. The freight slump is consistent with previous slowdowns in the manufacturing and freight cycle and implies the manufacturing sector is already in recession (“Freight transportation services index”, BTS, March 8, 2023). Manufacturers’ difficulties stand in contrast to the resilience displayed by the much larger services sector, where spending, prices, margins and employment are still increasingly rapidly.

☆ Fed’s Rate Moves Put Manufacturing Sector at Risk
▼ + stars: | 2023-03-06 | by ( David Harrison | Austen Hufford | ) www.wsj.com time to read: 1 min

The American manufacturing sector is starting to show signs of weakness after two years of strong growth, as higher interest rates and a slowdown in exports threaten production. New orders for manufactured goods contracted for the sixth straight month through February, according to surveys by the Institute for Supply Management. Manufacturing output is down 1.7% from its postpandemic peak in May 2022, according to a three-month moving average of Federal Reserve data. And the Commerce Department’s measure of civilian capital equipment orders, excluding aircraft—the building blocks of business—was down 3.4% in January from its recent high in November 2021, after adjusting for inflation.

☆ US factory orders fall as civilian aircraft demand dives
▼ + stars: | 2023-03-06 | by ( ) www.reuters.com time to read: +3 min

The report from the Commerce Department on Monday also showed shipments of manufactured goods rebounding after two-straight monthly declines, while inventories were unchanged. The drop in factory orders in January mostly reflected a 13.3% decline in transportation equipment, which followed a 15.8% jump in December. Transportation equipment orders were weighed down by a 54.5% tumble in orders for civilian aircraft. Motor vehicle orders increased 1.3%. Shipments of manufactured goods increased 0.7%, the biggest gain since August, after falling 0.6% in December.

☆ US factory orders fall in January on civilian aircraft demand
▼ + stars: | 2023-03-06 | by ( ) www.reuters.com time to read: +2 min

The Commerce Department said on Monday that factory orders dropped 1.6% after increasing 1.7% in December. Orders increased 4.3% on a year-on-year basis in January. The drop in factory orders in January mostly reflected a 13.3% decline in transportation equipment, which followed a 15.8% jump in December. Transportation equipment orders were weighed down by a 54.5% tumble in orders for civilian aircraft. Motor vehicle orders increased 1.3%.

☆ Wall Street closes sharply higher, notches weekly gains as Treasury yields ease
▼ + stars: | 2023-03-03 | by ( Stephen Culp | ) www.reuters.com time to read: +4 min

The week also saw the benchmark S&P 500 break through its 50- and 200-day moving averages, two closely watched technical levels. [1/2] Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 3, 2023. Fourth-quarter earnings season is on the final stretch, with all but seven of the companies in the S&P 500 having reported. This would imply the S&P 500 entered a three-quarter earnings recession in the closing months of 2022, per Refinitiv. The S&P 500 posted 23 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 79 new highs and 57 new lows.

☆ Wall Street rallies, on course for weekly gains as Treasury yields dip
▼ + stars: | 2023-03-03 | by ( Stephen Culp | ) www.reuters.com time to read: +4 min

[1/2] Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 3, 2023. The week also saw the benchmark S&P 500 break through its 50- and 200-day moving averages, two closely watched technical levels. Fourth-quarter earnings season is on the final stretch, with all but seven of the companies in the S&P 500 having reported. This would imply the S&P 500 entered a three-quarter earnings recession in the closing months of 2022, per Refinitiv. The S&P 500 posted 21 new 52-week highs and two new lows; the Nasdaq Composite recorded 73 new highs and 49 new lows.

☆ US services sector grows steadily; prices stubbornly high
▼ + stars: | 2023-03-03 | by ( Lucia Mutikani | ) www.reuters.com time to read: +6 min

Thirteen services industries, including construction, retail trade, accommodation and food services as well as professional, scientific and technical services, reported growth last month. Overall, the services sector is benefiting from a switch in consumer spending from goods, which are typically bought on credit. ISM services PMISUPPLY SIGNIFICANTLY IMPROVEDThe services sector is now at the center of the fight against inflation as services prices tend to be stickier and less responsive to interest rate increases. A measure of prices paid by services industries for inputs fell to 65.6, the lowest in January 2021, from 67.8 in January. Some economists view the ISM services prices paid gauge as a good predictor of personal consumption expenditures (PCE) inflation.

The greenback briefly cut its losses after data showed the U.S. services sector grew at a steady pace in February, with new orders and employment rising to more than one-year highs. "This suggests traders think yields have been pushed too far, too fast, and could augur a peak in implied terminal rates," he added. "Next week's job opening and non-farm payrolls reports could generate a lift in yields and the dollar. The dollar eased 0.4% to 136.26 yen , after climbing to 137.10 on Thursday, the highest since Dec. 20. For the week, the dollar is down 0.4% versus the yen, but any gain would preserve its win streak since mid-January.

[1/2] Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 3, 2023. The U.S. 10-year Treasury yield fell on Friday after touching a four-month high in the previous session but stayed above the 4% level. Nine of the 11 major S&P sectors were higher, with communication services (.SPLRCL) and technology (.SPLRCT) indexes leading gains. Apple Inc rose 1.9% after Morgan Stanley said the stock could rally more than 20% this year on potential hardware subscription. Dell Technologies Inc (DELL.N) slipped 0.9% after it forecast current-quarter revenue and profit below Wall Street estimates, hit by an ongoing demand slump in its PC business.

☆ Futures rise as yields retreat from highs
▼ + stars: | 2023-03-03 | by ( ) www.reuters.com time to read: +3 min

The U.S. 10-year Treasury yield fell on Friday after touching a four-month high in the previous session but stayed above the 4% level. Central bank officials including Bostic and Fed Dallas President Lorie Logan are scheduled to speak later in the day. ET, Dow e-minis were up 82 points, or 0.25%, S&P 500 e-minis were up 13 points, or 0.33%, and Nasdaq 100 e-minis were up 35 points, or 0.29%. Hewlett Packard Enterprise (HPE.N) rose 2.3% after the laptop maker gave an upbeat full-year earnings forecast. Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'SilvaOur Standards: The Thomson Reuters Trust Principles.

☆ US labor market stays resilient; Q4 labor costs revised higher
▼ + stars: | 2023-03-02 | by ( Lucia Mutikani | ) www.reuters.com time to read: +6 min

Those worries were further heightened by another report from the Labor Department on Thursday showing labor costs grew much faster than previously estimated in the fourth quarter. The labor market remains tight despite rising risks of a recession, contributing to keeping inflation elevated via solid wage gains. But even using alternative seasonal adjustments, economists say the labor market still is exhibiting tightness. A second report from the Labor Department showed unit labor costs - the price of labor per single unit of output - grew at a 3.2% annualized rate last quarter. Labor costs accelerated at a 6.9% rate in the third quarter, and notched hefty gains in the prior two quarters.

☆ Manufacturing’s Death Has Been Greatly Exaggerated
▼ + stars: | 2023-03-01 | by ( Justin Lahart | ) www.wsj.com time to read: 1 min

Manufacturers now have a couple of things going for them. American manufacturers were slightly less morose last month. The Institute for Supply Management on Wednesday said its index of factory activity ticked up to a seasonally adjusted 47.7 in February from the 32-month low of 47.4 hit in January. That still leaves it below 50, indicating that more of the manufacturers the ISM polled experienced reduced activity than growth. A similarly constructed manufacturing index from S&P Global rose to 47.3 last month from 46.9 in January.

The yield on two-year Treasury notes , which closely tracks short-term interest rate expectations, rose to 4.9%, its highest level since 2007. "You also got a tick up in the ISM prices paid, which means that prices generally are rising now for manufacturing. That's higher than where Fed policymakers in December signaled they would need to raise the policy rate. Money market traders see an about 80% chance of a 25-basis-point rate hike later this month, but the odds of a bigger 50 bps rate hike have grown recently. The main U.S. benchmarks ended February with losses as investors braced for the possibility that the Fed will hike rates more than initially thought on signs of resilience in the economy.

Nearly 80% of distillates are used in freight transport, manufacturing and construction, so fuel consumption is closely geared to the manufacturing and freight cycle. Growth in both manufacturing activity and distillate consumption peaked in the first half of 2021 as the economy rebounded after the first wave of the pandemic. Distillate consumption also fell below prior-year levels in six of the nine months between April and December 2022 as demand dropped. Slower consumption created some scope to stabilise depleted distillate inventories towards the end of 2022. Notwithstanding the impact of poor weather, growth seems to have been decelerating slightly since November, as oil prices and drilling rates have fallen.

☆ US manufacturing sector still shrinking; raw material prices rebound
▼ + stars: | 2023-03-01 | by ( Lucia Mutikani | ) www.reuters.com time to read: +6 min

Nevertheless, the rebound in prices at the factory gate suggests inflation could remain elevated for a while after monthly consumer and producer prices surged in January. The ISM's manufacturing PMI edged up to 47.7 last month from 47.4 in January. Paper products, textile mills, furniture and related products as well as nonmetallic mineral products, computer and electronic products were among the 14 reporting contraction. Comments from some manufacturers in the ISM survey were supportive of this thesis. Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, said "new order rates remain sluggish due to buyer and supplier disagreements regarding price levels and delivery lead times."

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