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☆ Watch the Federal Reserve's Waller speak live on the economy and interest rates
▼ + stars: | 2023-01-20 | by ( Jeff Cox | ) www.cnbc.com time to read: +1 min

Please refresh the page if you do not see a player above at that time.] Federal Reserve Governor Christopher Waller is scheduled to speak Friday at 1 p.m. before the Council on Foreign Relations in New York. Waller's remarks are the last before Fed officials enter a blackout period prior to their Jan. 31-Feb. 1 policy meeting. Markets widely expect the rate-setting Federal Open Market Committee to raise its benchmark interest rate another quarter percentage point, taking it to a target range of 4.5%-4.75%. Other Fed officials in recent days have said they think rates still need to go higher, but in smaller increments than the hikes that boosted the fed funds rate by 4.25 percentage points in 2022.

☆ JPMorgan says the market can't keep rising on bad news — and more bad news is coming
▼ + stars: | 2023-01-20 | by ( Yun Li | ) www.cnbc.com time to read: +2 min

Bad news has recently been good news for the stock market, but that won't be the case much longer, according to Dubravko Lakos-Bujas, chief U.S. equity strategist at JPMorgan. "Lately, equities have been shrugging off bad economic news and rising on weaker [economic] data and lower yields," Lakos-Bujas said in a note. The S & P 500 has risen about 2% so far in 2023 following its worst year since 2008. JPMorgan's year-end S & P 500 year-end sits at 4,200, about 8% higher than the index's current level around 3,900. The bank's forecast is slightly higher than the average target among Wall Street strategists, according to CNBC's market strategist survey that rounds up 15 top strategists' outlooks.

☆ Gold set for fifth straight weekly rise on Fed slowdown bets
▼ + stars: | 2023-01-20 | by ( Ashitha Shivaprasad | ) www.reuters.com time to read: +2 min

Spot gold was little changed at $1,930.04 per ounce, as of 0308 GMT and was up 0.5% for the week. With lower rates translating into lesser returns on interest-bearing assets like government bonds, investors may prefer zero-yield gold. The dollar index was headed for a second consecutive weekly drop, making bullion cheaper for overseas buyers. Both metals headed for a second straight week of declines. Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich and Eileen SorengOur 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.

☆ Interest rate hikes are 'yet to bite,' IMF head says
▼ + stars: | 2023-01-20 | by ( Anna Cooban | ) edition.cnn.com time to read: +2 min

Kristalina Georgieva, managing director of the IMF, said on Friday that conditions in the world economy were “less bad” than feared a few months ago, but further pain could be on the way. Addressing a panel at the World Economic Forum in Davos, Switzerland, Georgieva said interest rate hikes by the world’s major economies had “yet to bite,” and could increase unemployment — a situation that cash-strapped governments could find hard to respond to adequately. That could weigh on global growth, which the IMF forecast in October would slump to 2.7% this year, down from 3.2% in 2022. Even so, economists and business leaders have signaled in recent weeks that the world economy may be at a hopeful turning point. Lagarde said that economies are moving from “defense mode…to competition mode.”“So something must be getting better,” she added.

☆ Asian stocks edge up, dollar sags as markets mull Fed risks
▼ + stars: | 2023-01-20 | by ( Kevin Buckland | ) www.reuters.com time to read: +3 min

U.S. Treasury yields remained elevated in Tokyo after bouncing off four-month lows overnight. Asian markets showed some resilience despite a selloff on Wall Street overnight, with the S&P 500 (.SPX) losing 0.76%. Worries about more Fed tightening were heightened by robust U.S. employment data and fresh hawkish rhetoric from central bank officials. The market bets the policy rate will been just below 5% in June, implying just over 50 basis points of additional tightening. The benchmark 10-year Treasury yield was around 3.4% after bouncing off the lowest since mid-September at 3.321% overnight.

WASHINGTON, Jan 20 (Reuters) - The Federal Reserve is set to again slow the pace of its interest rate increases at a Jan. 31-Feb. 1 policy meeting while also signaling that its battle against inflation is far from over. Throughout last year, the Fed's rapid series of rate hikes were announced in a statement that also promised "ongoing increases" until rates were "sufficiently restrictive to return inflation to 2%." Fed officials were surprised in 2021 by the persistence of inflation that at one point was more than triple their 2% target. The unemployment rate is currently 3.5%, a level seen only rarely since World War Two. "Thus, I anticipate the need for further rate increases."

☆ Top Fed Official Sees Inflation Decline as Notable Improvement
▼ + stars: | 2023-01-19 | by ( Nick Timiraos | ) www.wsj.com time to read: 1 min

A top Federal Reserve official said the recent decline in inflation was an important development that could raise questions over the extent to which the Fed needs to cool off the labor market to bring down inflation. Fed Vice Chair Lael Brainard‘s remarks Thursday could add to questions over how much further the central bank will need to raise interest rates to be convinced it has done enough to combat inflation that surged to a 40-year high last year.

☆ Weak economic data is starting to threaten the market's hopes for a soft landing
▼ + stars: | 2023-01-19 | by ( Bob Pisani | ) www.cnbc.com time to read: +1 min

Weak economic data is threatening the soft landing thesis. Is the soft landing narrative really changing, or was Wednesday's retail sales and industrial production reports — both well below expectations — an outlier event? Bears are seizing on this to assert that the Federal Reserve has already done so much that they have made a soft landing less likely. The problem: organic sales growth of 5% was entirely achieved by a 10% boost in prices during the quarter. Procter & Gamble (ex-currency) Organic sales: up 5% Price: up 10% Volume: down 6% The recipe for margin pressure is the consumer pushing back against price increases.

☆ Fed Governor Lael Brainard sees high rates ahead even with progress on inflation
▼ + stars: | 2023-01-19 | by ( Jeff Cox | ) www.cnbc.com time to read: +3 min

Federal Reserve Governor Lael Brainard said Thursday that interest rates need to remain high, even though there are signs inflation is starting to ease. Brainard pointed to a number of areas where she sees inflation starting to come down. Housing costs remain high, but Brainard and other Fed officials expect those to ease later in the year as apartment leases catch up with declines in commercial real estate. Instead, traders see the rate topping out about a quarter percentage point below that, and the Fed starting to reduce rates later this year. "Inflation is high, and it will take time and resolve to get it back down to 2%.

☆ Morning bid: No safety net?
▼ + stars: | 2023-01-19 | by ( ) www.reuters.com time to read: +4 min

"I just think we need to keep going," Cleveland Fed President Loretta Mester said. And many forecasters are now wary the Fed will err on the side of tighter policy to ensure inflation is slayed. Markets wobbled on the prospect on Wednesday, with the S&P500 (.SPX) staging its biggest decline of the year so far. At 3.32%, 10-year U.S. Treasury yields fell to their lowest since September. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Morning Bid: Turbulence
▼ + stars: | 2023-01-19 | by ( ) www.reuters.com time to read: +2 min

Traders took Wednesday's weak U.S. production, retail sales and producer price data badly, selling risk assets and buying safer ones. Bond markets shrugged off hawkish rhetoric from non-voting Fed officials Bullard and Mester to rally. Fed voters Lael Brainard and John Williams might get more of markets' attention at events later in the day. Elsewhere, the dust is settling quickly on the Bank of Japan's decision not to bend to speculators' attack on its yield curve control policy. The yen has bounced back to where it was before the meeting and the Nikkei (.N225) slipped, though calm in Japan's bond market might suggest short sellers are having a breather before re-loading for meetings in March and April.

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 Vice Chair Brainard: Inflation is easing, but our work isn't done
▼ + stars: | 2023-01-19 | by ( Alicia Wallace | ) edition.cnn.com time to read: +3 min

That’s the message Thursday from Fed Vice Chair Lael Brainard, speaking at the University of Chicago Booth School of Business. “Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2% on a sustained basis,” Brainard said. After four consecutive blockbuster hikes that were three-quarters of a point in size, the Fed downshifted during its last meeting, approving a half-point increase. Still, Brainard said she believes it’s possible the Fed could achieve a soft landing — a reduction in inflation without a significant amount of job loss. “That said, I’d say for the United States, recent data suggests slightly better prospects that we could see continued disinflation in the context of moderate growth.”The next two-day meeting for the Fed’s rate-setting committee starts January 31.

[1/3] Federal Reserve Vice Chair Lael Brainard speaks at the University of Chicago Booth School of Business, in Chicago, Illinois, U.S., January 19, 2023. In addition, she said the full impact of last year's aggressive Fed interest rate increases has yet to be felt. "It remains possible that a continued moderation in aggregate demand could facilitate continued easing in the labor market and reduction in inflation without a significant loss of employment," Brainard said. Even as the Fed parses the progress it has made on inflation, she said it would "stay the course." "Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2 percent on a sustained basis," Brainard said.

☆ Despite inflation declines, rates need to be sufficiently restrictive, says Fed's Brainard
▼ + stars: | 2023-01-19 | by ( ) www.cnbc.com time to read: 1 min

Share Share Article via Facebook Share Article via Twitter Share Article via LinkedIn Share Article via EmailDespite inflation declines, rates need to be sufficiently restrictive, says Fed's BrainardCNBC's Steve Liesman joins 'The Exchange' to discuss comments made by Fed Vice Chair Lael Brainard, the relationship between pricing and rate of increase, and profit margins relative to retail mark-ups.

☆ Stock futures are flat as investors look ahead to economic data, Federal Reserve speeches
▼ + stars: | 2023-01-18 | by ( Carmen Reinicke | ) www.cnbc.com time to read: +2 min

Stock futures were flat Wednesday night as investors awaited economic data and speeches from Federal Reserve leadersFutures tied to the Dow Jones Industrial Average fell 9 points, or 0.03%. S&P 500 futures and Nasdaq 100 futures ticked up 0.03% and 0.05%, respectively. Bank stocks such as JPMorgan, Bank of America and Wells Fargo slid, weighing on the broader market. "The data continue to confirm sharp declines in inflation," said Jamie Cox, managing partner of Harris Financial Group. On Thursday, investors will weigh more economic data that could give further clues as how much the Fed may raise interest rates in its upcoming meeting.

☆ In 2022 inflation data trumped Fed comments for moving markets, report says
▼ + stars: | 2023-01-18 | by ( Michael S. Derby | ) www.reuters.com time to read: +4 min

In terms of market moves, “the sheer volatility around each CPI release is remarkable” and reflects the magnitude of inflation surprises last year and how those unexpected readings changed the outlook for Fed policy, they wrote. Last year was the year the Fed got caught flatfooted by the highest levels of inflation seen in 40 years. Rates will almost certainly go up further this year even as inflation pressures are showing some initial signs of cooling. Among policymakers, the report found that remarks by Fed Chair Jerome Powell, Vice-Chair Lael Brainard and New York Fed leader John Williams had notable market impacts. The report did not rank the market impact of the 11 remaining regional Fed leaders, who speak with much greater frequency than Board members and even the New York Fed leader.

☆ Fed directs big banks to disclose how they are preparing for climate change risks
▼ + stars: | 2023-01-17 | by ( Jeff Cox | ) www.cnbc.com time to read: +3 min

"The Fed has narrow, but important, responsibilities regarding climate-related financial risks – to ensure that banks understand and manage their material risks, including the financial risks from climate change," Fed Vice Chair for Supervision Michael S. Barr said. "The exercise we are launching today will advance the ability of supervisors and banks to analyze and manage emerging climate-related financial risks." A financial stability report in late 2020 first discussed the possibility of the Fed examining how prepared the institutions it oversees are for economic impacts from climate change. In addition, banks are being asked to "consider the impact of additional physical risk shocks for their real estate portfolios in another region of the country." The final report will focus on aggregate information provided by the banks about how they are incorporating climate risks into their financial plans.

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.

☆ Corporate profit reports in the week ahead could show whether there's an 'earnings recession'
▼ + stars: | 2023-01-13 | by ( Patti Domm | In | ) www.cnbc.com time to read: +6 min

Investors in the week ahead will focus on how much inflation and the slowing economy have chiseled away at corporate profits, as companies including Goldman Sachs , Netflix and Procter & Gamble report earnings. "This is going to be the start of the clock ticking on an earnings recession," said Amanda Agati, chief investment officer of PNC Asset Management Group. Economic recession talk heats up "There's never been a recession without an earnings recession since World War II," Agati said. Art Hogan, chief market strategist at B. Riley Financial, said this coming earnings week could be an important step towards assessing the health of corporate balance sheets. Week ahead calendar Monday Martin Luther King Jr. Day Markets closed Tuesday Earnings: Goldman Sachs , Morgan Stanley , Citizens Financial, United Airlines, Interactive Brokers 8:30 a.m.

The longer that job market strength persists, the more Fed officials may feel compelled to break it with ever-higher interest rates. "I don't think we can understate the importance of labor market outcomes," Duy wrote. Reuters Graphics'SURGE PRICING'The job market has befuddled central bankers during the COVID-19 pandemic as much as inflation. Early expectations that a flood of workers back into the labor market would ease wage and hiring conditions proved optimistic. Officials then expected inflation to rise for any number of reasons, from the Fed's own massive bond purchases to a steadily falling unemployment rate.

☆ Happy Fed Year: What’s on deck for the central bank in 2023
▼ + stars: | 2022-12-30 | by ( Alicia Wallace | ) edition.cnn.com time to read: +6 min

Minneapolis CNN —America’s central bank found itself in a glaring spotlight for much of this past year, as Federal Reserve Chairman Jerome Powell wielded blunt tools of interest rate hikes and quantitative tightening to curb surging inflation. That means the Fed, with its “laser focus on the job market,” could be “continually hawkish” at the start of 2023, said Ross Mayfield, investment strategy analyst at Baird. “This latent strength in the job market could be the reason that the Fed over-tightens,” he told CNN. Jerome Powell, chairman of the US Federal Reserve, from right, Lael Brainard, vice chair of the board of governors for the Federal Reserve System, and John Williams, president and chief executive officer of the Federal Reserve Bank of New York, during a break at the Jackson Hole economic symposium in Moran, Wyoming, on Aug. 26, 2022. That’s 0.2 percentage points higher than the 4.4% rate they were expecting in September and significantly higher than the current 3.7% rate.

☆ Inflation is falling. But the days when prices rose just 2% may never return
▼ + stars: | 2022-12-13 | by ( Julia Horowitz | ) edition.cnn.com time to read: +9 min

Energy prices are pulling back because of fears of a global recession, and the price to ship a container across the ocean has plummeted. In the United States, consumer prices rose at an annual rate of 7.1% in November, the smallest increase since December 2021. Prices rose by 10.7% in the United Kingdom last month, down from 11.1% in October, according to data published Wednesday. But even if this bout of inflation has peaked, economists are warning the world may not return to simpler days when prices barely rose at all. At least for now, supply of critical minerals can’t keep up, which could force prices higher at times.

The war on inflation is far from won, with the Fed's preferred measure of price increases still running at roughly three times the central bank's 2% target. That's the biggest ramp-up in U.S. rates over a nine-month period since Volcker battled even higher inflation in the early 1980s. Powell, who this year marked a decade since his appointment as a Fed governor and whose second term as Fed chief extends to 2026, has overseen some divided decisions. In a best-case scenario, inflation continues to fall and Fed officials, whether hawk or dove, align around a stopping point for the policy rate that doesn't lead to a sharp rise in unemployment. Reporting by Howard Schneider; Additional reporting by Ann Saphir; Editing by Paul SimaoOur Standards: The Thomson Reuters Trust Principles.

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