RIGZONE
"Oil Slumps Below $80 Amid Surging US Stockpiles"
by Bloomberg|Julia Fanzeres and Jordan Fitzgerald
Wednesday, May 01, 2024
Oil extended its recent skid as US crude inventories swelled to the highest since June the Federal Reserve signaled fresh concerns about inflation.
West Texas Intermediate settled at $79 a barrel, the lowest closing price since mid-March.
Prices also broke beneath the 200-day moving average, which had served as a support level for more than a month.
A report from the Energy Information Administration showed US crude stockpiles increased 7.27 million barrels last week, the biggest jump since early February and more than the 4.91 million-barrel gain projected by an industry group on Tuesday.
That adds to headwinds that also include the prospect of a cease-fire that would reduce tensions in the Middle East.
Crude last month surged to the highest since October following Iran’s unprecedented attack on Israel.
“The surprise build from the EIA caught most traders off guard,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities.
When combined with elevated interest rates from the Fed and accelerated liquidation after crude broke through moving averages, “the long side of crude is losing its luster.”
While OPEC+ supply curbs are also supporting prices, uncertainty over US monetary policy and softness in fuel markets including diesel are adding to headwinds.
US inflation remains too hot, so rates will remain elevated, Federal Reserve Chair Jerome Powell said Wednesday.
Though Powell said the Fed’s next move won’t likely be a hike, the uncertainty surrounding when inflation — and subsequently rates — will come down adds more bearish pressure to markets.
Wednesday also marks the Labor Day holiday in many countries, meaning trading volumes were thinner than usual.
Prices:
WTI for June fell 3.6% to settle at $79 a barrel in New York.
Brent for July settlement dropped 3.3% to $83.44 a barrel.
https://www.rigzone.com/news/wire/oil_s ... 2-article/
THE DAILY NEWS
Re: THE DAILY NEWS
CNBC
"Treasury yields fall as Fed says it will ease back on balance sheet tightening"
Yun Li @YUNLI626 Samantha Subin @SAMANTHA_SUBIN
PUBLISHED WED, MAY 1 2024
Treasury yields fell on Wednesday, as investors digested the Federal Reserve’s move to ease the pace of balance sheet reduction, and the central bank’s chairman Jerome Powell ruled out the possibility of a rate hike next month.
The yield on the 10-year Treasury dropped 5 basis points at 4.632%.
The 2-year Treasury yield was down nearly 9 basis points at 4.96%.
Yields and prices move in opposite directions.
One basis point equals to 0.01%.
The central bank said that beginning in June it will slow the pace at which it allows maturing bond proceeds to roll off its balance sheet without reinvesting them, a process known as quantitative tightening.
QT was one way the Fed tightened monetary conditions after inflation surged.
“They are not cutting interest rates, but they are cutting QT."
"What?"
"The bond market oughta love this,” Chris Rupkey, chief economist at FWDBONDS, said in a note.
“Cutting QT means less new cash that the U.S. Treasury has to raise in the markets ..."
"This sounds to us like a backdoor easing of monetary policy.”
The Fed had been allowing up to $95 billion a month in proceeds from maturing Treasurys and mortgage-backed securities to roll off each month.
Under the new plan, the Fed will reduce the monthly cap on Treasurys to $25 billion from $60 billion.
Treasury yields dropped to their session lows as Powell said the next policy move at its June meeting won’t be an interest rate hike.
“I think it’s unlikely that the next policy rate move will be a hike."
"I’d say it’s unlikely,” said Powell during the press conference following the decision.
“I think we’d need to see persuasive evidence that our policy stance is not sufficiently restrictive to bring inflation sustainably down to 2% over time,” Powell said, when asked about what it would take to have a rate increase.
“That’s not what we think we’re seeing.”
The central bank kept its benchmark short-term borrowing rate in a targeted range between 5.25%-5.50%, as widely expected.
Powell also noted the lack of progress in getting inflation back down to the central bank’s 2% target.
“Inflation is still too high,” said Powell.
“Further progress in bringing it down is not assured and the path forward is uncertain.”
https://www.cnbc.com/2024/05/01/us-trea ... dance.html
"Treasury yields fall as Fed says it will ease back on balance sheet tightening"
Yun Li @YUNLI626 Samantha Subin @SAMANTHA_SUBIN
PUBLISHED WED, MAY 1 2024
Treasury yields fell on Wednesday, as investors digested the Federal Reserve’s move to ease the pace of balance sheet reduction, and the central bank’s chairman Jerome Powell ruled out the possibility of a rate hike next month.
The yield on the 10-year Treasury dropped 5 basis points at 4.632%.
The 2-year Treasury yield was down nearly 9 basis points at 4.96%.
Yields and prices move in opposite directions.
One basis point equals to 0.01%.
The central bank said that beginning in June it will slow the pace at which it allows maturing bond proceeds to roll off its balance sheet without reinvesting them, a process known as quantitative tightening.
QT was one way the Fed tightened monetary conditions after inflation surged.
“They are not cutting interest rates, but they are cutting QT."
"What?"
"The bond market oughta love this,” Chris Rupkey, chief economist at FWDBONDS, said in a note.
“Cutting QT means less new cash that the U.S. Treasury has to raise in the markets ..."
"This sounds to us like a backdoor easing of monetary policy.”
The Fed had been allowing up to $95 billion a month in proceeds from maturing Treasurys and mortgage-backed securities to roll off each month.
Under the new plan, the Fed will reduce the monthly cap on Treasurys to $25 billion from $60 billion.
Treasury yields dropped to their session lows as Powell said the next policy move at its June meeting won’t be an interest rate hike.
“I think it’s unlikely that the next policy rate move will be a hike."
"I’d say it’s unlikely,” said Powell during the press conference following the decision.
“I think we’d need to see persuasive evidence that our policy stance is not sufficiently restrictive to bring inflation sustainably down to 2% over time,” Powell said, when asked about what it would take to have a rate increase.
“That’s not what we think we’re seeing.”
The central bank kept its benchmark short-term borrowing rate in a targeted range between 5.25%-5.50%, as widely expected.
Powell also noted the lack of progress in getting inflation back down to the central bank’s 2% target.
“Inflation is still too high,” said Powell.
“Further progress in bringing it down is not assured and the path forward is uncertain.”
https://www.cnbc.com/2024/05/01/us-trea ... dance.html
Re: THE DAILY NEWS
CNBC
"Fed keeps rates steady as it notes ‘lack of further progress’ on inflation"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, MAY 1 2024
KEY POINTS
* The Federal Reserve held its ground on interest rates, again deciding not to cut as it continues a battle with inflation that has grown more difficult lately.
* The federal funds rate has been between 5.25%-5.50% since July 2023, when the Fed last hiked and took the range to its highest level in more than two decades.
* “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the Fed’s statement said.
WASHINGTON – The Federal Reserve on Wednesday held its ground on interest rates, again deciding not to cut as it continues a battle with inflation that has grown more difficult lately.
In a widely expected move, the U.S. central bank kept its benchmark short-term borrowing rate in a targeted range between 5.25%-5.50%.
The federal funds rate has been at that level since July 2023, when the Fed last hiked and took the range to its highest level in more than two decades.
The rate-setting Federal Open Market Committee did vote to ease the pace at which it is reducing bond holdings on the central bank’s mammoth balance sheet, in what could be viewed as an incremental loosening of monetary policy.
With its decision to hold the line on rates, the committee in its post-meeting statement noted a “lack of further progress” in getting inflation back down to its 2% target.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the statement said, reiterating language it had used after the January and March meetings.
The statement also altered its characterization of its progress toward its dual mandate of stable prices and full employment.
The new language hedges a bit, saying the risks of achieving both “have moved toward better balance over the past year.”
Previous statements said the risks “are moving into better balance.”
Beyond that, the statement was little changed, with economic growth characterized as moving at “a solid pace,” amid “strong” job gains and “low” unemployment.
Chair Jerome Powell during the news conference following the decision expanded on the idea that prices are still rising too quickly.
“Inflation is still too high,” he said.
“Further progress in bringing it down is not assured and the path forward is uncertain.”
However, investors were pleased by Powell’s comment that Fed’s next move was “unlikely” to be a rate hike.
The Dow Jones Industrial Average jumped after the remarks, and rose as much as 500 points.
He also stressed the need for the committee to make its decisions “meeting by meeting.”
On the balance sheet, the committee said that beginning in June it will slow the pace at which it is allowing maturing bond proceeds to roll off without reinvesting them.
‘Quantitative tightening’
In a program begun in June 2022 and nicknamed “quantitative tightening,” the Fed had been allowing up to $95 billion a month in proceeds from maturing Treasurys and mortgage-backed securities to roll off each month.
The process has resulted in the central bank balance sheet to come down to about $7.4 trillion, or $1.5 trillion less than its peak around mid-2022.
Under the new plan, the Fed will reduce the monthly cap on Treasurys to $25 billion from $60 billion.
That would put the annual reduction in holdings at $300 billion, compared with $720 billion from when the program began in June 2022.
The potential mortgage roll-off would be unchanged at $25 billion a month, a level that has only been hit on rare occasions.
QT was one way the Fed used to tighten conditions after inflation surged, as it backed away from its role of assuring the flow of liquidity through the financial system by buying and holding large amounts of Treasury and agency debt.
The reduction of the balance sheet roll-off, then, can be seen as a slight easing measure.
The funds rate sets what banks charge each other for overnight lending but feeds into many other consumer debt products.
The Fed uses interest rates to control the flow of money, with the intent that higher rates will dampen demand and thus help reduce prices.
However, consumers have continued to spend, running up credit indebtedness and decreasing savings levels as stubbornly high prices eat away at household finances.
Powell has repeatedly cited the pernicious effects of inflation, particularly for those at the lower-income levels.
Prices off peak levels
Though price increases are well off their peak in mid-2022, most data so far in 2024 has shown that inflation is holding well above the Fed’s 2% annual target.
The central bank’s main gauge shows inflation running at a 2.7% annual rate – 2.8% when excluding food and energy in the critical core measure that the Fed especially focuses on as a signal for longer-term trends.
At the same time, gross domestic product grew at a less-than-expected 1.6% annualized pace in the first quarter, raising concerns over the potential for stagflation with high inflation and slow growth.
Most recently, the Labor Department’s employment cost index this week posted its biggest quarterly increase in a year, sending another jolt to financial markets.
Consequently, traders have had to reprice their expectations for rates in a dramatic fashion.
Where the year started with markets pricing in at least six interest rate cuts that were supposed to have started in March, the outlook now is for just one, and likely not coming until near the end of the year.
Fed officials have shown near unanimity in their calls for patience on easing monetary policy as they look for confirmation that inflation is heading comfortably back to target.
One or two officials even have mentioned the possibility of a rate increase should the data not cooperate.
Atlanta Fed President Raphael Bostic was the first to specifically say he only expects one rate cut this year, likely in the fourth quarter.
In March, FOMC members penciled in three rate cuts this year, assuming quarter percentage point intervals, and won’t get a chance to update that call until the June 11-12 meeting.
https://www.cnbc.com/2024/05/01/fed-rat ... 2024-.html
"Fed keeps rates steady as it notes ‘lack of further progress’ on inflation"
Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM
PUBLISHED WED, MAY 1 2024
KEY POINTS
* The Federal Reserve held its ground on interest rates, again deciding not to cut as it continues a battle with inflation that has grown more difficult lately.
* The federal funds rate has been between 5.25%-5.50% since July 2023, when the Fed last hiked and took the range to its highest level in more than two decades.
* “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the Fed’s statement said.
WASHINGTON – The Federal Reserve on Wednesday held its ground on interest rates, again deciding not to cut as it continues a battle with inflation that has grown more difficult lately.
In a widely expected move, the U.S. central bank kept its benchmark short-term borrowing rate in a targeted range between 5.25%-5.50%.
The federal funds rate has been at that level since July 2023, when the Fed last hiked and took the range to its highest level in more than two decades.
The rate-setting Federal Open Market Committee did vote to ease the pace at which it is reducing bond holdings on the central bank’s mammoth balance sheet, in what could be viewed as an incremental loosening of monetary policy.
With its decision to hold the line on rates, the committee in its post-meeting statement noted a “lack of further progress” in getting inflation back down to its 2% target.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the statement said, reiterating language it had used after the January and March meetings.
The statement also altered its characterization of its progress toward its dual mandate of stable prices and full employment.
The new language hedges a bit, saying the risks of achieving both “have moved toward better balance over the past year.”
Previous statements said the risks “are moving into better balance.”
Beyond that, the statement was little changed, with economic growth characterized as moving at “a solid pace,” amid “strong” job gains and “low” unemployment.
Chair Jerome Powell during the news conference following the decision expanded on the idea that prices are still rising too quickly.
“Inflation is still too high,” he said.
“Further progress in bringing it down is not assured and the path forward is uncertain.”
However, investors were pleased by Powell’s comment that Fed’s next move was “unlikely” to be a rate hike.
The Dow Jones Industrial Average jumped after the remarks, and rose as much as 500 points.
He also stressed the need for the committee to make its decisions “meeting by meeting.”
On the balance sheet, the committee said that beginning in June it will slow the pace at which it is allowing maturing bond proceeds to roll off without reinvesting them.
‘Quantitative tightening’
In a program begun in June 2022 and nicknamed “quantitative tightening,” the Fed had been allowing up to $95 billion a month in proceeds from maturing Treasurys and mortgage-backed securities to roll off each month.
The process has resulted in the central bank balance sheet to come down to about $7.4 trillion, or $1.5 trillion less than its peak around mid-2022.
Under the new plan, the Fed will reduce the monthly cap on Treasurys to $25 billion from $60 billion.
That would put the annual reduction in holdings at $300 billion, compared with $720 billion from when the program began in June 2022.
The potential mortgage roll-off would be unchanged at $25 billion a month, a level that has only been hit on rare occasions.
QT was one way the Fed used to tighten conditions after inflation surged, as it backed away from its role of assuring the flow of liquidity through the financial system by buying and holding large amounts of Treasury and agency debt.
The reduction of the balance sheet roll-off, then, can be seen as a slight easing measure.
The funds rate sets what banks charge each other for overnight lending but feeds into many other consumer debt products.
The Fed uses interest rates to control the flow of money, with the intent that higher rates will dampen demand and thus help reduce prices.
However, consumers have continued to spend, running up credit indebtedness and decreasing savings levels as stubbornly high prices eat away at household finances.
Powell has repeatedly cited the pernicious effects of inflation, particularly for those at the lower-income levels.
Prices off peak levels
Though price increases are well off their peak in mid-2022, most data so far in 2024 has shown that inflation is holding well above the Fed’s 2% annual target.
The central bank’s main gauge shows inflation running at a 2.7% annual rate – 2.8% when excluding food and energy in the critical core measure that the Fed especially focuses on as a signal for longer-term trends.
At the same time, gross domestic product grew at a less-than-expected 1.6% annualized pace in the first quarter, raising concerns over the potential for stagflation with high inflation and slow growth.
Most recently, the Labor Department’s employment cost index this week posted its biggest quarterly increase in a year, sending another jolt to financial markets.
Consequently, traders have had to reprice their expectations for rates in a dramatic fashion.
Where the year started with markets pricing in at least six interest rate cuts that were supposed to have started in March, the outlook now is for just one, and likely not coming until near the end of the year.
Fed officials have shown near unanimity in their calls for patience on easing monetary policy as they look for confirmation that inflation is heading comfortably back to target.
One or two officials even have mentioned the possibility of a rate increase should the data not cooperate.
Atlanta Fed President Raphael Bostic was the first to specifically say he only expects one rate cut this year, likely in the fourth quarter.
In March, FOMC members penciled in three rate cuts this year, assuming quarter percentage point intervals, and won’t get a chance to update that call until the June 11-12 meeting.
https://www.cnbc.com/2024/05/01/fed-rat ... 2024-.html
Re: THE DAILY NEWS
REUTERS
"Chipmaker Wolfspeed forecasts quarterly revenue below estimates as EV sales growth slows"
By Reuters
May 1, 2024
May 1 (Reuters) - Chipmaker Wolfspeed forecast current-quarter revenue below estimates on Wednesday as automakers grapple with high inventory levels due to slower-than-expected EV sales growth.
Shares of the company, which counts General Motors and Mercedes-Benz among its customers, fell about 4% in extended trading.
Wolfspeed makes chips out of silicon carbide, a more energy-efficient material than standard silicon for tasks such as transmitting power from an electric car's batteries to its motors.
EV demand has been growing at a slower-than-expected pace, attributed to high interest rates that lead to chip inventory build-ups at the automakers' factories.
The company said it expects fourth-quarter revenue between $185 million and $215 million, compared with analysts' estimate of $225.8 million, according to LSEG data.
"While the industrial and energy end markets pose short-term headwinds to our results, we firmly believe in the strength of our long-term prospects as the electrification of all things continues across a broad set of applications," CEO Gregg Lowe said in a statement.
Tesla reported a drop in quarterly deliveries in the first quarter of 2024, as it expects "notably slower" growth this year since automakers have pivoted to produce and sell more gasoline-electric hybrid vehicles.
Wolfspeed reported March-quarter revenue of $200.7 million, compared with estimates of $201.1 million, while net loss widened to $1.18 per share from 80 cents per share a year earlier.
Reporting by Akash Sriram in Bengaluru; Editing by Alan Barona
https://www.reuters.com/technology/chip ... 024-05-01/
"Chipmaker Wolfspeed forecasts quarterly revenue below estimates as EV sales growth slows"
By Reuters
May 1, 2024
May 1 (Reuters) - Chipmaker Wolfspeed forecast current-quarter revenue below estimates on Wednesday as automakers grapple with high inventory levels due to slower-than-expected EV sales growth.
Shares of the company, which counts General Motors and Mercedes-Benz among its customers, fell about 4% in extended trading.
Wolfspeed makes chips out of silicon carbide, a more energy-efficient material than standard silicon for tasks such as transmitting power from an electric car's batteries to its motors.
EV demand has been growing at a slower-than-expected pace, attributed to high interest rates that lead to chip inventory build-ups at the automakers' factories.
The company said it expects fourth-quarter revenue between $185 million and $215 million, compared with analysts' estimate of $225.8 million, according to LSEG data.
"While the industrial and energy end markets pose short-term headwinds to our results, we firmly believe in the strength of our long-term prospects as the electrification of all things continues across a broad set of applications," CEO Gregg Lowe said in a statement.
Tesla reported a drop in quarterly deliveries in the first quarter of 2024, as it expects "notably slower" growth this year since automakers have pivoted to produce and sell more gasoline-electric hybrid vehicles.
Wolfspeed reported March-quarter revenue of $200.7 million, compared with estimates of $201.1 million, while net loss widened to $1.18 per share from 80 cents per share a year earlier.
Reporting by Akash Sriram in Bengaluru; Editing by Alan Barona
https://www.reuters.com/technology/chip ... 024-05-01/
Re: THE DAILY NEWS
REUTERS
"S&P 500, Nasdaq end lower after Fed rate decision, Powell press conference"
By Stephen Culp
May 1, 2024
Summary
* Fed leaves policy rate unchanged as expected
* Fed Chair Powell: further inflation progress not assured
* Job openings hit three-year low
* Indexes: Dow up 0.23%, S&P off 0.34%, Nasdaq down 0.33%
NEW YORK, May 1 (Reuters) - U.S. stocks closed mixed on Wednesday after the Federal Reserve left its key interest rate unchanged, as expected, and indicated that while its next move will likely be a rate cut, continued progress on inflation is not assured.
The S&P 500 and the Nasdaq ended lower while the Dow Jones Industrial Average notched a modest gain.
The Federal Open Markets Committee concluded its two-day monetary policy meeting with a unanimous decision to let the Fed funds target rate stand at 5.25%-5.50%.
The accompanying statement left the timing of any rate cut in doubt, and Fed officials underscored their concern that the first months of 2024 have done little to build the confidence they seek in falling inflation.
At the subsequent press conference, Fed Chair Jerome Powell suggested that while the central bank remains focused on bringing inflation back to its 2% target, he noted progress toward that goal and dismissed the notion of an imminent rate hike.
"Powell didn't rock the boat very much," said Ryan Detrick, chief market strategist at Carson Group in Omaha.
"He acknowledged that inflation is still a problem but remained optimistic that it will improve over the coming quarters."
"What sparked today's rally was when he said the next move will not be a hike," Detrick added.
"He pushed back against that, hard."
"... That allowed the bulls to take charge."
Powell said the labor market was normalizing, citing data released on Wednesday showing job openings dropping to a three-year low.
First-quarter reporting season has breezed passed the halfway point, with 310 of the companies in the S&P 500 index having reported.
Of those, 77% posted consensus-beating earnings, according to LSEG.
Analysts now expect aggregate first-quarter S&P 500 earnings growth of 6.6% year-on-year, a significant improvement over the 5.1% estimate as of April 1, LSEG data showed.
Among individual companies, Advanced Micro Devices shed 9.0% after its disappointing artificial intelligence chip sales forecast, while Super Micro Computer slid 14.0% following the company's quarterly revenue miss.
The weak results pulled the Philadelphia Semiconductor Index 3.5% lower.
Amazon.com rose 2.2% on better-than-expected quarterly results as interest in AI helped drive cloud-computing growth.
Johnson & Johnson advanced 4.6% after it said it will proceed with a proposed $6.48 billion lawsuit settlement over allegations that its baby powder and other talc products cause ovarian cancer.
Starbucks tumbled 15.9% after the coffee chain cut its sales forecast as it posted the first drop in same-store sales in nearly three years.
CVS Health plunged 16.8% after the healthcare company's earnings fell short of consensus and it slashed its annual profit forecast.
The Dow Jones Industrial Average rose 87.37 points, or 0.23%, to 37,903.29, the S&P 500 lost 17.3 points, or 0.34%, to 5,018.39 and the Nasdaq Composite dropped 52.34 points, or 0.33%, to 15,605.48.
Of the 11 major sectors in the S&P 500, energy shares recorded the largest percentage loss, while utilities led the gainers.
Advancing issues outnumbered decliners on the NYSE by a 1.38-to-1 ratio; on Nasdaq, a 1.50-to-1 ratio favored advancers.
The S&P 500 posted 12 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 55 new highs and 105 new lows.
Volume on U.S. exchanges was 12.26 billion shares, compared with the 11.08 billion average for the full session over the last 20 trading days.
Reporting by Stephen Culp; Additional reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Richard Chang
https://www.reuters.com/markets/us/futu ... 024-05-01/
"S&P 500, Nasdaq end lower after Fed rate decision, Powell press conference"
By Stephen Culp
May 1, 2024
Summary
* Fed leaves policy rate unchanged as expected
* Fed Chair Powell: further inflation progress not assured
* Job openings hit three-year low
* Indexes: Dow up 0.23%, S&P off 0.34%, Nasdaq down 0.33%
NEW YORK, May 1 (Reuters) - U.S. stocks closed mixed on Wednesday after the Federal Reserve left its key interest rate unchanged, as expected, and indicated that while its next move will likely be a rate cut, continued progress on inflation is not assured.
The S&P 500 and the Nasdaq ended lower while the Dow Jones Industrial Average notched a modest gain.
The Federal Open Markets Committee concluded its two-day monetary policy meeting with a unanimous decision to let the Fed funds target rate stand at 5.25%-5.50%.
The accompanying statement left the timing of any rate cut in doubt, and Fed officials underscored their concern that the first months of 2024 have done little to build the confidence they seek in falling inflation.
At the subsequent press conference, Fed Chair Jerome Powell suggested that while the central bank remains focused on bringing inflation back to its 2% target, he noted progress toward that goal and dismissed the notion of an imminent rate hike.
"Powell didn't rock the boat very much," said Ryan Detrick, chief market strategist at Carson Group in Omaha.
"He acknowledged that inflation is still a problem but remained optimistic that it will improve over the coming quarters."
"What sparked today's rally was when he said the next move will not be a hike," Detrick added.
"He pushed back against that, hard."
"... That allowed the bulls to take charge."
Powell said the labor market was normalizing, citing data released on Wednesday showing job openings dropping to a three-year low.
First-quarter reporting season has breezed passed the halfway point, with 310 of the companies in the S&P 500 index having reported.
Of those, 77% posted consensus-beating earnings, according to LSEG.
Analysts now expect aggregate first-quarter S&P 500 earnings growth of 6.6% year-on-year, a significant improvement over the 5.1% estimate as of April 1, LSEG data showed.
Among individual companies, Advanced Micro Devices shed 9.0% after its disappointing artificial intelligence chip sales forecast, while Super Micro Computer slid 14.0% following the company's quarterly revenue miss.
The weak results pulled the Philadelphia Semiconductor Index 3.5% lower.
Amazon.com rose 2.2% on better-than-expected quarterly results as interest in AI helped drive cloud-computing growth.
Johnson & Johnson advanced 4.6% after it said it will proceed with a proposed $6.48 billion lawsuit settlement over allegations that its baby powder and other talc products cause ovarian cancer.
Starbucks tumbled 15.9% after the coffee chain cut its sales forecast as it posted the first drop in same-store sales in nearly three years.
CVS Health plunged 16.8% after the healthcare company's earnings fell short of consensus and it slashed its annual profit forecast.
The Dow Jones Industrial Average rose 87.37 points, or 0.23%, to 37,903.29, the S&P 500 lost 17.3 points, or 0.34%, to 5,018.39 and the Nasdaq Composite dropped 52.34 points, or 0.33%, to 15,605.48.
Of the 11 major sectors in the S&P 500, energy shares recorded the largest percentage loss, while utilities led the gainers.
Advancing issues outnumbered decliners on the NYSE by a 1.38-to-1 ratio; on Nasdaq, a 1.50-to-1 ratio favored advancers.
The S&P 500 posted 12 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 55 new highs and 105 new lows.
Volume on U.S. exchanges was 12.26 billion shares, compared with the 11.08 billion average for the full session over the last 20 trading days.
Reporting by Stephen Culp; Additional reporting by Shristi Achar A and Shashwat Chauhan in Bengaluru; Editing by Richard Chang
https://www.reuters.com/markets/us/futu ... 024-05-01/
Re: THE DAILY NEWS
REUTERS
"Fed leaves rates unchanged, flags 'lack of further progress' on inflation"
By Howard Schneider and Ann Saphir
May 1, 2024
Summary
* Policy rate remains in 5.25%-5.50% range
* Fed policymakers concerned by recent inflation data
* Markets take 'dovish' view of Fed chief's remarks
WASHINGTON, May 1 (Reuters) - The U.S. Federal Reserve held interest rates steady on Wednesday and signaled it is still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings that could make those rate cuts a while in coming.
Indeed, Fed Chair Jerome Powell said that after starting 2024 with three months of faster-than-expected price increases, it "will take longer than previously expected" for policymakers to become comfortable that inflation will resume the decline towards 2% that had cheered them through much of last year.
That steady progress has stalled for now, and while Powell said rate increases remained unlikely, he set the stage for a potentially extended hold of the benchmark policy rate in the 5.25%-5.50% range that has been in place since July.
U.S. central bankers still believe the current policy rate is putting enough pressure on economic activity to bring inflation under control, Powell said, and they would be content to wait as long as needed for that to become apparent - even if inflation is simply "moving sideways" in the meantime.
The Fed's preferred inflation measure - the personal consumption expenditures price index - increased at a 2.7% annual rate in March, an acceleration from the prior month.
"Inflation is still too high," Powell said in a press conference after the end of the Federal Open Market Committee's two-day policy meeting.
"Further progress in bringing it down is not assured and the path forward is uncertain."
Powell said his forecast remained for inflation to fall over the course of the year, but that "my confidence in that is lower than it was."
Whether there are rate cuts this year or not remains in doubt.
"If we did have a path where inflation proves more persistent than expected, and where the labor market remains strong but inflation is moving sideways and we're not gaining greater confidence, well, that would be a case in which it could be appropriate to hold off on rate cuts," Powell said.
"There are paths to not cutting and there are paths to cutting."
"It's really going to depend on the data."
Despite the uncertainty of the current economic moment, Powell's characterization of rate hikes as "unlikely" cheered investors concerned about a newly hawkish Fed chief.
U.S. stock and bond prices turned higher as Powell preached patience that may delay rate cuts, but also means a high bar for any more hikes.
The Fed raised its benchmark policy rate by 5.25 percentage points in 2022 and 2023 to curb a surge in inflation.
Powell's remarks on Wednesday were "notably less hawkish than many feared," said analysts at Evercore ISI.
"The basic message was that cuts have been delayed, not derailed."
Investors in contracts tied to the Fed's policy rate increased bets that rate cuts could begin in September rather than later in the year as reflected in earlier market pricing.
BALANCE SHEET
The Fed's latest policy statement kept key elements of its economic assessment and policy guidance intact, noting that "inflation has eased" over the past year, and framing its discussion of interest rates around the conditions under which borrowing costs can be lowered.
"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards 2%," the Fed repeated in its unanimously-approved statement.
That continues to leave the timing of any rate cut in doubt, and Fed officials made emphatic their concern that the first months of 2024 have done little to help the cause.
"In recent months, there has been a lack of further progress towards the Committee's 2% inflation objective," the Fed said in its statement.
The U.S. central bank also announced it will scale back the pace at which it is shrinking its balance sheet starting on June 1, allowing only $25 billion in Treasury bonds to run off each month versus the current $60 billion.
Mortgage-backed securities will continue to run off by up to $35 billion monthly.
The step is meant to ensure the financial system does not run short of reserves, as happened in 2019 during the Fed's last round of "quantitative tightening."
While the move could loosen financial conditions at the margin at a time when the U.S. central bank is trying to keep pressure on the economy, policymakers insist their balance sheet and interest rate tools serve different ends.
The Fed maintained its overall assessment of economic growth, saying that the economy "continued to expand at a solid pace."
"Job gains have remained strong and the unemployment rate has remained low."
Powell reconciled that with the relatively weak, 1.6% growth of gross domestic product in the first quarter by saying that the 3.1% increase in private domestic demand was a better gauge of where the economy stands, with output buttressed by a recent jump in immigration.
Asked about the risk the U.S. was entering a period of "stagflation" with stagnant growth and rising prices, Powell said current conditions are nothing like those seen in the late 1970s when prices were rising more than 10% annually at one point alongside high unemployment.
"Right now we have ... pretty solid growth ..."
"We have inflation running under 3%," Powell said.
"I don't see the 'stag' and I don't see the 'flation.'"
Reporting by Howard Schneider; Additional reporting by Lindsay Dunsmuir, Michael S. Derby and Ann Saphir; Editing by Andrea Ricci and Paul Simao
https://www.reuters.com/markets/rates-b ... 024-05-01/
"Fed leaves rates unchanged, flags 'lack of further progress' on inflation"
By Howard Schneider and Ann Saphir
May 1, 2024
Summary
* Policy rate remains in 5.25%-5.50% range
* Fed policymakers concerned by recent inflation data
* Markets take 'dovish' view of Fed chief's remarks
WASHINGTON, May 1 (Reuters) - The U.S. Federal Reserve held interest rates steady on Wednesday and signaled it is still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings that could make those rate cuts a while in coming.
Indeed, Fed Chair Jerome Powell said that after starting 2024 with three months of faster-than-expected price increases, it "will take longer than previously expected" for policymakers to become comfortable that inflation will resume the decline towards 2% that had cheered them through much of last year.
That steady progress has stalled for now, and while Powell said rate increases remained unlikely, he set the stage for a potentially extended hold of the benchmark policy rate in the 5.25%-5.50% range that has been in place since July.
U.S. central bankers still believe the current policy rate is putting enough pressure on economic activity to bring inflation under control, Powell said, and they would be content to wait as long as needed for that to become apparent - even if inflation is simply "moving sideways" in the meantime.
The Fed's preferred inflation measure - the personal consumption expenditures price index - increased at a 2.7% annual rate in March, an acceleration from the prior month.
"Inflation is still too high," Powell said in a press conference after the end of the Federal Open Market Committee's two-day policy meeting.
"Further progress in bringing it down is not assured and the path forward is uncertain."
Powell said his forecast remained for inflation to fall over the course of the year, but that "my confidence in that is lower than it was."
Whether there are rate cuts this year or not remains in doubt.
"If we did have a path where inflation proves more persistent than expected, and where the labor market remains strong but inflation is moving sideways and we're not gaining greater confidence, well, that would be a case in which it could be appropriate to hold off on rate cuts," Powell said.
"There are paths to not cutting and there are paths to cutting."
"It's really going to depend on the data."
Despite the uncertainty of the current economic moment, Powell's characterization of rate hikes as "unlikely" cheered investors concerned about a newly hawkish Fed chief.
U.S. stock and bond prices turned higher as Powell preached patience that may delay rate cuts, but also means a high bar for any more hikes.
The Fed raised its benchmark policy rate by 5.25 percentage points in 2022 and 2023 to curb a surge in inflation.
Powell's remarks on Wednesday were "notably less hawkish than many feared," said analysts at Evercore ISI.
"The basic message was that cuts have been delayed, not derailed."
Investors in contracts tied to the Fed's policy rate increased bets that rate cuts could begin in September rather than later in the year as reflected in earlier market pricing.
BALANCE SHEET
The Fed's latest policy statement kept key elements of its economic assessment and policy guidance intact, noting that "inflation has eased" over the past year, and framing its discussion of interest rates around the conditions under which borrowing costs can be lowered.
"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards 2%," the Fed repeated in its unanimously-approved statement.
That continues to leave the timing of any rate cut in doubt, and Fed officials made emphatic their concern that the first months of 2024 have done little to help the cause.
"In recent months, there has been a lack of further progress towards the Committee's 2% inflation objective," the Fed said in its statement.
The U.S. central bank also announced it will scale back the pace at which it is shrinking its balance sheet starting on June 1, allowing only $25 billion in Treasury bonds to run off each month versus the current $60 billion.
Mortgage-backed securities will continue to run off by up to $35 billion monthly.
The step is meant to ensure the financial system does not run short of reserves, as happened in 2019 during the Fed's last round of "quantitative tightening."
While the move could loosen financial conditions at the margin at a time when the U.S. central bank is trying to keep pressure on the economy, policymakers insist their balance sheet and interest rate tools serve different ends.
The Fed maintained its overall assessment of economic growth, saying that the economy "continued to expand at a solid pace."
"Job gains have remained strong and the unemployment rate has remained low."
Powell reconciled that with the relatively weak, 1.6% growth of gross domestic product in the first quarter by saying that the 3.1% increase in private domestic demand was a better gauge of where the economy stands, with output buttressed by a recent jump in immigration.
Asked about the risk the U.S. was entering a period of "stagflation" with stagnant growth and rising prices, Powell said current conditions are nothing like those seen in the late 1970s when prices were rising more than 10% annually at one point alongside high unemployment.
"Right now we have ... pretty solid growth ..."
"We have inflation running under 3%," Powell said.
"I don't see the 'stag' and I don't see the 'flation.'"
Reporting by Howard Schneider; Additional reporting by Lindsay Dunsmuir, Michael S. Derby and Ann Saphir; Editing by Andrea Ricci and Paul Simao
https://www.reuters.com/markets/rates-b ... 024-05-01/
Re: THE DAILY NEWS
REUTERS
"US job openings slide to three-year low as demand for labor gradually eases"
By Lucia Mutikani
May 1, 2024
Summary
* Job openings fall 325,000 to 8.488 million in March
* Quits drop 198,000 to 3.329 million
* Layoffs decrease 155,000 to 1.526 million
* Manufacturing PMI falls to 49.2 in April; prices paid up
WASHINGTON, May 1(Reuters) - U.S. job openings fell to a three-year low in March, while the number of people quitting their jobs declined, signs of easing labor market conditions that over time could aid the Federal Reserve's fight against inflation.
The Job Openings and Labor Turnover Survey, or JOLTS report from the Labor Department on Wednesday was, however, tempered somewhat by other data showing a measure of prices paid by manufacturers for raw materials jumped to the highest level in nearly two years in April as commodity prices increased.
Falling goods prices were the major driver of the moderation in inflation last year.
With price pressures picking up in the first quarter, the surge in input costs is unwelcome news.
Fed officials on Wednesday kept the U.S. central bank's benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since July.
Policymakers signaled they were still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings.
The Fed has raised its policy rate by 525 basis points since March 2022.
Financial markets have pushed back the expected timing of a rate cut this year to September from June.
"Continued cooling in the labor market is part of the Fed's plan to help return inflation to 2%, with job openings serving as one of the Fed's barometers," said Mark Streiber, an economic analyst at FHN Financial.
"While it is too early to say that the easy goods disinflation we experienced in 2023 is over, upward pressure on goods is an unwelcome development for the Fed."
Job openings, a measure of labor demand, were down 325,000 to 8.488 million on the last day of March, the lowest level since February 2021, the Labor Department's Bureau of Labor Statistics said.
Data for February was revised slightly higher to show 8.813 million unfilled positions instead of the previously reported 8.756 million.
Economists polled by Reuters had forecast 8.686 million job openings.
Vacancies peaked at a record 12.182 million in March 2022.
There were 1.32 job openings for every unemployed person, down from 1.36 in February.
This ratio averaged 1.19 in 2019, indicating the labor market is gradually cooling.
March's decline in job openings was led by construction, with 182,000 fewer unfilled positions.
Vacancies decreased by 158,000 in finance and insurance.
But job openings rose by 68,000 in state and local government education.
The decrease in job postings was concentrated in the West and Midwest.
There were also fewer open positions in the South, which has experienced robust employment growth.
Job postings increased in the Northeast.
Demand for labor dropped considerably among small businesses with one to nine employees and establishments with 50 to 249 workers.
Small businesses have accounted for much of the increase in hiring following the pandemic.
Declining vacancies led some economists to anticipate a sharp slowdown in overall job growth in the second quarter.
The job openings rate fell to 5.1%, the lowest since January 2021, from 5.3% in February.
Employment is, however, expected to remain positive this year, keeping the economic expansion on track.
Stocks on Wall Street pared losses following the Fed's rate decision.
The dollar was steady against a basket of currencies.
U.S. Treasury prices rose.
MANUFACTURING FALTERS
Hiring dropped 281,000 to 5.500 million in March and the hires rate fell to 3.5% from 3.7% in February.
Layoffs decreased 155,000, the most in nearly a year, to 1.526 million.
That was the lowest level since December 2022, pointing to a solid labor market.
Low layoffs have accounted for solid job growth.
"Companies have shifted their focus from addressing staffing shortages by aggressively recruiting new workers to more proactively retaining the workers they have," said Julia Pollak, chief economist at ZipRecruiter.
The number of people quitting their jobs dropped 198,000 to 3.329 million in March, the lowest level since January 2021.
The decline in resignations was concentrated in trade, transportation and utilities, as well as other services.
The quits rate, viewed as a measure of labor market confidence, slipped to 2.1%, which was the lowest since August 2020 and followed 2.2% in February.
It soothed fears of a resurgence in wage growth after labor costs surged in the first quarter.
Nonetheless the outlook for inflation remains challenging.
A survey from the Institute for Supply Management (ISM) on Wednesday showed its measure of prices paid by manufacturers for inputs shot up to 60.9 in April, the highest reading since June 2022, from 55.8 in March.
That partly reflected higher oil prices.
The overall ISM manufacturing PMI dropped to 49.2 last month from 50.3 in March, which was the highest and first reading above 50 since September 2022.
A PMI reading above 50 indicates growth in the manufacturing sector, which accounts for 10.4% of the economy.
"Oil prices have since returned to levels from the end of March, though they are likely to remain supported by resilient global demand as the outlook for China and the U.S. improves," said Matthew Martin, U.S. economist at Oxford Economics.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-p ... 024-05-01/
"US job openings slide to three-year low as demand for labor gradually eases"
By Lucia Mutikani
May 1, 2024
Summary
* Job openings fall 325,000 to 8.488 million in March
* Quits drop 198,000 to 3.329 million
* Layoffs decrease 155,000 to 1.526 million
* Manufacturing PMI falls to 49.2 in April; prices paid up
WASHINGTON, May 1(Reuters) - U.S. job openings fell to a three-year low in March, while the number of people quitting their jobs declined, signs of easing labor market conditions that over time could aid the Federal Reserve's fight against inflation.
The Job Openings and Labor Turnover Survey, or JOLTS report from the Labor Department on Wednesday was, however, tempered somewhat by other data showing a measure of prices paid by manufacturers for raw materials jumped to the highest level in nearly two years in April as commodity prices increased.
Falling goods prices were the major driver of the moderation in inflation last year.
With price pressures picking up in the first quarter, the surge in input costs is unwelcome news.
Fed officials on Wednesday kept the U.S. central bank's benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since July.
Policymakers signaled they were still leaning towards eventual reductions in borrowing costs, but put a red flag on recent disappointing inflation readings.
The Fed has raised its policy rate by 525 basis points since March 2022.
Financial markets have pushed back the expected timing of a rate cut this year to September from June.
"Continued cooling in the labor market is part of the Fed's plan to help return inflation to 2%, with job openings serving as one of the Fed's barometers," said Mark Streiber, an economic analyst at FHN Financial.
"While it is too early to say that the easy goods disinflation we experienced in 2023 is over, upward pressure on goods is an unwelcome development for the Fed."
Job openings, a measure of labor demand, were down 325,000 to 8.488 million on the last day of March, the lowest level since February 2021, the Labor Department's Bureau of Labor Statistics said.
Data for February was revised slightly higher to show 8.813 million unfilled positions instead of the previously reported 8.756 million.
Economists polled by Reuters had forecast 8.686 million job openings.
Vacancies peaked at a record 12.182 million in March 2022.
There were 1.32 job openings for every unemployed person, down from 1.36 in February.
This ratio averaged 1.19 in 2019, indicating the labor market is gradually cooling.
March's decline in job openings was led by construction, with 182,000 fewer unfilled positions.
Vacancies decreased by 158,000 in finance and insurance.
But job openings rose by 68,000 in state and local government education.
The decrease in job postings was concentrated in the West and Midwest.
There were also fewer open positions in the South, which has experienced robust employment growth.
Job postings increased in the Northeast.
Demand for labor dropped considerably among small businesses with one to nine employees and establishments with 50 to 249 workers.
Small businesses have accounted for much of the increase in hiring following the pandemic.
Declining vacancies led some economists to anticipate a sharp slowdown in overall job growth in the second quarter.
The job openings rate fell to 5.1%, the lowest since January 2021, from 5.3% in February.
Employment is, however, expected to remain positive this year, keeping the economic expansion on track.
Stocks on Wall Street pared losses following the Fed's rate decision.
The dollar was steady against a basket of currencies.
U.S. Treasury prices rose.
MANUFACTURING FALTERS
Hiring dropped 281,000 to 5.500 million in March and the hires rate fell to 3.5% from 3.7% in February.
Layoffs decreased 155,000, the most in nearly a year, to 1.526 million.
That was the lowest level since December 2022, pointing to a solid labor market.
Low layoffs have accounted for solid job growth.
"Companies have shifted their focus from addressing staffing shortages by aggressively recruiting new workers to more proactively retaining the workers they have," said Julia Pollak, chief economist at ZipRecruiter.
The number of people quitting their jobs dropped 198,000 to 3.329 million in March, the lowest level since January 2021.
The decline in resignations was concentrated in trade, transportation and utilities, as well as other services.
The quits rate, viewed as a measure of labor market confidence, slipped to 2.1%, which was the lowest since August 2020 and followed 2.2% in February.
It soothed fears of a resurgence in wage growth after labor costs surged in the first quarter.
Nonetheless the outlook for inflation remains challenging.
A survey from the Institute for Supply Management (ISM) on Wednesday showed its measure of prices paid by manufacturers for inputs shot up to 60.9 in April, the highest reading since June 2022, from 55.8 in March.
That partly reflected higher oil prices.
The overall ISM manufacturing PMI dropped to 49.2 last month from 50.3 in March, which was the highest and first reading above 50 since September 2022.
A PMI reading above 50 indicates growth in the manufacturing sector, which accounts for 10.4% of the economy.
"Oil prices have since returned to levels from the end of March, though they are likely to remain supported by resilient global demand as the outlook for China and the U.S. improves," said Matthew Martin, U.S. economist at Oxford Economics.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-p ... 024-05-01/
Re: THE DAILY NEWS
REUTERS
"US Treasury keeps auction sizes unchanged through July, launches buyback"
By Gertrude Chavez-Dreyfuss
May 1, 2024
Summary
* U.S. Treasury 1st buyback since 2002 set for May 29
* U.S. auction sizes in line with forecasts
*U.S. quarterly refunding at $125 bln in May to July quarter
* U.S. auction sizes could rise again by mid-2025 - analyst
NEW YORK, May 1 (Reuters) - The Treasury Department said on Wednesday it intends to keep auction sizes steady for U.S. notes and bonds over the next several quarters, in line with expectations, as it announced total refunding of $125 billion for the May to July quarter.
The quarterly refunding is aimed at raising new cash of $17.2 billion from private investors.
It also launched its buyback program, with the first scheduled on May 29.
The Treasury's last regular buyback program began in the early 2000s and ended in April 2002.
In a statement, the Treasury said it would sell $58 billion in U.S. three-year notes, $42 billion in 10-year notes, and $25 billion in 30-year bonds next week.
The decision to keep auction sizes unchanged for the most part was based on current projected borrowing needs.
Since August, the Treasury has noted that it has significantly raised issuance sizes for nominal coupon and floating rate note securities.
"The auction sizes were unchanged as expected, but the key here is that this a pause in increases not a reversal," said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York.
"The Treasury very clearly said they don't anticipate increasing auction sizes at least for the next several quarters."
"But they're still talking about an increase, not a decrease."
"Our view is that by mid-2025, Treasury may have to start increasing auction sizes again."
The Treasury said it plans to address seasonal or unexpected changes in borrowing needs over the next quarter through changes in regular bill auction sizes and cash management bills.
In terms of Treasury Inflation-Protected Securities (TIPS), the Treasury said it intends to keep "incremental increases" to their auction sizes to maintain a stable share of TIPS as a percentage of total marketable debt outstanding.
In the May to July quarter, the Treasury plans to keep the 10-year TIPS reopening auction size at $16 billion for May, increase the June 5-year TIPS reopening size by $1 billion to $21 billion, and raise the 10-year TIPS new issue size by $1 billion to $19 billion for July.
As for Treasury bills, the Treasury said it expects to increase the four-, six- and eight-week bill auction sizes in the coming days to ensure sufficient liquidity to meet one-week cash needs around the end of May.
Ahead of the non-withheld and corporate tax filing date on June 15, the Treasury expects to undertake modest reductions to short-dated bill auction sizes during early to mid-June.
For July, it anticipates returning short-dated bill auction sizes to levels at or near the highs from February and March.
'LIQUIDITY SUPPORT' BUYBACKS
Under the buyback program, the Treasury said it plans to hold weekly "liquidity support" buybacks of up to $2 billion per operation in nominal coupon securities, and up to $500 million per operation in TIPS.
Buybacks are similar to other government outlays, said Josh Frost, the Treasury's assistant secretary for Financial Markets, in a press briefing after the refunding announcement.
"Unlike other outlays, these ... actually extinguish marketable debt."
At an International Swaps and Derivatives Association conference in September, Frost had said debt buybacks can help improve liquidity in the bond market by providing a regular opportunity for market participants to sell back to Treasury off-the-run securities, which are older and less liquid, across the yield curve.
No cash management buybacks have been planned for the May to July 2024 quarter.
Those buybacks could begin later in 2024 depending on fiscal flows and market conditions.
The Treasury said it intends to announce a tentative buyback schedule at each quarterly refunding.
On a proposal from the Treasury Borrowing Advisory Committee (TBAC) to find ways to reduce borrowing costs and expand the investor base, Frost said this was a periodic request by the Treasury to the group.
TBAC's proposal "is best viewed through the lens of exploratory in nature, without recommendations coming out of it."
"There may be future work in the future, but at this point it was largely exploratory," he said.
The Treasury also announced plans to change the regular six-week cash management bills into a benchmark bill, as part of regular weekly bill issuance schedule going forward, based on the recommendation of primary dealers and TBAC.
Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by David Lawder in Washington; Editing by Andrew Heavens, Alexandra Hudson and Richard Chang
https://www.reuters.com/markets/us/us-t ... 024-05-01/
"US Treasury keeps auction sizes unchanged through July, launches buyback"
By Gertrude Chavez-Dreyfuss
May 1, 2024
Summary
* U.S. Treasury 1st buyback since 2002 set for May 29
* U.S. auction sizes in line with forecasts
*U.S. quarterly refunding at $125 bln in May to July quarter
* U.S. auction sizes could rise again by mid-2025 - analyst
NEW YORK, May 1 (Reuters) - The Treasury Department said on Wednesday it intends to keep auction sizes steady for U.S. notes and bonds over the next several quarters, in line with expectations, as it announced total refunding of $125 billion for the May to July quarter.
The quarterly refunding is aimed at raising new cash of $17.2 billion from private investors.
It also launched its buyback program, with the first scheduled on May 29.
The Treasury's last regular buyback program began in the early 2000s and ended in April 2002.
In a statement, the Treasury said it would sell $58 billion in U.S. three-year notes, $42 billion in 10-year notes, and $25 billion in 30-year bonds next week.
The decision to keep auction sizes unchanged for the most part was based on current projected borrowing needs.
Since August, the Treasury has noted that it has significantly raised issuance sizes for nominal coupon and floating rate note securities.
"The auction sizes were unchanged as expected, but the key here is that this a pause in increases not a reversal," said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York.
"The Treasury very clearly said they don't anticipate increasing auction sizes at least for the next several quarters."
"But they're still talking about an increase, not a decrease."
"Our view is that by mid-2025, Treasury may have to start increasing auction sizes again."
The Treasury said it plans to address seasonal or unexpected changes in borrowing needs over the next quarter through changes in regular bill auction sizes and cash management bills.
In terms of Treasury Inflation-Protected Securities (TIPS), the Treasury said it intends to keep "incremental increases" to their auction sizes to maintain a stable share of TIPS as a percentage of total marketable debt outstanding.
In the May to July quarter, the Treasury plans to keep the 10-year TIPS reopening auction size at $16 billion for May, increase the June 5-year TIPS reopening size by $1 billion to $21 billion, and raise the 10-year TIPS new issue size by $1 billion to $19 billion for July.
As for Treasury bills, the Treasury said it expects to increase the four-, six- and eight-week bill auction sizes in the coming days to ensure sufficient liquidity to meet one-week cash needs around the end of May.
Ahead of the non-withheld and corporate tax filing date on June 15, the Treasury expects to undertake modest reductions to short-dated bill auction sizes during early to mid-June.
For July, it anticipates returning short-dated bill auction sizes to levels at or near the highs from February and March.
'LIQUIDITY SUPPORT' BUYBACKS
Under the buyback program, the Treasury said it plans to hold weekly "liquidity support" buybacks of up to $2 billion per operation in nominal coupon securities, and up to $500 million per operation in TIPS.
Buybacks are similar to other government outlays, said Josh Frost, the Treasury's assistant secretary for Financial Markets, in a press briefing after the refunding announcement.
"Unlike other outlays, these ... actually extinguish marketable debt."
At an International Swaps and Derivatives Association conference in September, Frost had said debt buybacks can help improve liquidity in the bond market by providing a regular opportunity for market participants to sell back to Treasury off-the-run securities, which are older and less liquid, across the yield curve.
No cash management buybacks have been planned for the May to July 2024 quarter.
Those buybacks could begin later in 2024 depending on fiscal flows and market conditions.
The Treasury said it intends to announce a tentative buyback schedule at each quarterly refunding.
On a proposal from the Treasury Borrowing Advisory Committee (TBAC) to find ways to reduce borrowing costs and expand the investor base, Frost said this was a periodic request by the Treasury to the group.
TBAC's proposal "is best viewed through the lens of exploratory in nature, without recommendations coming out of it."
"There may be future work in the future, but at this point it was largely exploratory," he said.
The Treasury also announced plans to change the regular six-week cash management bills into a benchmark bill, as part of regular weekly bill issuance schedule going forward, based on the recommendation of primary dealers and TBAC.
Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by David Lawder in Washington; Editing by Andrew Heavens, Alexandra Hudson and Richard Chang
https://www.reuters.com/markets/us/us-t ... 024-05-01/
Re: THE DAILY NEWS
REUTERS
"US construction spending falls in March"
By Reuters
May 1, 2024
WASHINGTON, May 1(Reuters) - U.S. construction spending unexpectedly fell in March likely as a resurgence in mortgage rates weighed on homebuilding, but activity remains supported by an acute housing shortage.
The Commerce Department's Census Bureau said on Wednesday that construction spending slipped 0.2% after being unchanged in February.
Economists polled by Reuters had forecast construction spending gaining 0.3%.
Construction spending increased 9.6% year-on-year in March.
Spending on private construction projects decreased 0.5% in March after rising 0.2% in February.
Investment in residential construction dropped 0.7% after increasing 0.7% in the prior month.
Outlays on new single-family construction projects fell 0.2%.
Census Department data on Tuesday showed there were 728,000 housing units for sale in the first quarter compared to 665,000 in the first three months of 2023.
Supply is below the 1.145 million units before the COVID-19 pandemic.
Residential investment grew at its fastest pace in more than three years in the first quarter, contributing to the economy's 1.6% annualized expansion pace.
Higher borrowing costs, however, are an obstacle.
The average rate on the popular 30-year fixed-rate mortgage has jumped to a five-month high of 7.17%, latest data from mortgage finance agency Freddie Mac showed.
Outlays on multi-family housing projects dropped 0.6% in March.
Spending on private non-residential structures like factories fell 0.2%.
There were decreases in spending on hotels and motels, churches and power stations.
They more than offset gains in amusement and recreation facilities as well as manufacturing, office space and education facilities.
Spending on structures contracted in the first quarter for the first time in more than a year as the boost from policies by the Biden administration to bring the production of semiconductor manufacturing back to the United States faded.
Investment in public construction projects increased 0.8% after falling 0.4% in February.
State and local government spending rose 0.6% and outlays on federal government projects surged 3.6%.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-c ... 024-05-01/
"US construction spending falls in March"
By Reuters
May 1, 2024
WASHINGTON, May 1(Reuters) - U.S. construction spending unexpectedly fell in March likely as a resurgence in mortgage rates weighed on homebuilding, but activity remains supported by an acute housing shortage.
The Commerce Department's Census Bureau said on Wednesday that construction spending slipped 0.2% after being unchanged in February.
Economists polled by Reuters had forecast construction spending gaining 0.3%.
Construction spending increased 9.6% year-on-year in March.
Spending on private construction projects decreased 0.5% in March after rising 0.2% in February.
Investment in residential construction dropped 0.7% after increasing 0.7% in the prior month.
Outlays on new single-family construction projects fell 0.2%.
Census Department data on Tuesday showed there were 728,000 housing units for sale in the first quarter compared to 665,000 in the first three months of 2023.
Supply is below the 1.145 million units before the COVID-19 pandemic.
Residential investment grew at its fastest pace in more than three years in the first quarter, contributing to the economy's 1.6% annualized expansion pace.
Higher borrowing costs, however, are an obstacle.
The average rate on the popular 30-year fixed-rate mortgage has jumped to a five-month high of 7.17%, latest data from mortgage finance agency Freddie Mac showed.
Outlays on multi-family housing projects dropped 0.6% in March.
Spending on private non-residential structures like factories fell 0.2%.
There were decreases in spending on hotels and motels, churches and power stations.
They more than offset gains in amusement and recreation facilities as well as manufacturing, office space and education facilities.
Spending on structures contracted in the first quarter for the first time in more than a year as the boost from policies by the Biden administration to bring the production of semiconductor manufacturing back to the United States faded.
Investment in public construction projects increased 0.8% after falling 0.4% in February.
State and local government spending rose 0.6% and outlays on federal government projects surged 3.6%.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
https://www.reuters.com/markets/us/us-c ... 024-05-01/
Re: THE DAILY NEWS
REUTERS
"US manufacturing sector regresses in April; prices paid near two-year high"
By Reuters
May 1, 2024
WASHINGTON, May 1(Reuters) - U.S. manufacturing contracted in April amid a decline in orders after briefly expanding in the prior month, while a measure of prices paid by factories for inputs approached a two-year high.
The Institute for Supply Management (ISM) said on Wednesday that its manufacturing PMI dropped to 49.2 last month from 50.3 in March, which was the highest and first reading above 50 since September 2022.
A PMI reading above 50 indicates growth in the manufacturing sector, which accounts for 10.4% of the economy.
Economists polled by Reuters had forecast the PMI little changed at 50.
Manufacturing is being constrained by higher borrowing costs and spending shifting back to services and away from goods.
Spending on goods fell in the first quarter.
The ISM survey's forward-looking new orders sub-index decreased to 49.1 from 51.4 in March.
Output at factories slowed, with the production sub-index slipping to 51.3 after jumping to 54.6 in the prior month.
Despite weakening demand, inflation at the factory gate continued to heat up, suggesting that goods price disinflation could be close to running its course.
Falling goods prices were the major driver of the moderation in inflation last year.
The survey's measure of prices paid by manufacturers shot up to 60.9, the highest reading since June 2022, from 55.8 in March.
With price pressures picking up in the first quarter, the surge in input costs is unlikely to be welcomed by Federal Reserve officials as they wrap up their two-day policy meeting.
Policy makers are on Wednesday expected to leave the U.S. central bank's benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since July.
They have raised the policy rate by 525 basis points since March 2022.
Financial markets have pushed back expectations of a rate cut this year to September from June.
A handful of economists continue to expect that borrowing costs may be lowered in July in the belief that the labor market will slow noticeably in the coming months.
Others see the window closing for the Fed to start its easing cycle.
Input prices are rising even as delivery performance of suppliers to manufacturers has improved significantly, though the ISM noted in March that "some suppliers are struggling to keep up."
The survey's measure of supplier deliveries fell to 48.9 from 49.9 in March.
A reading below 50 indicates faster deliveries.
Factory employment continued to contract, but the pace is slowing.
The survey's measure of manufacturing employment increased to 48.6 from 47.4 in March.
This measure has, however, not been useful in predicting manufacturing payrolls in the government's closely watched employment report.
Manufacturing employment has been little changed this year.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-m ... 024-05-01/
"US manufacturing sector regresses in April; prices paid near two-year high"
By Reuters
May 1, 2024
WASHINGTON, May 1(Reuters) - U.S. manufacturing contracted in April amid a decline in orders after briefly expanding in the prior month, while a measure of prices paid by factories for inputs approached a two-year high.
The Institute for Supply Management (ISM) said on Wednesday that its manufacturing PMI dropped to 49.2 last month from 50.3 in March, which was the highest and first reading above 50 since September 2022.
A PMI reading above 50 indicates growth in the manufacturing sector, which accounts for 10.4% of the economy.
Economists polled by Reuters had forecast the PMI little changed at 50.
Manufacturing is being constrained by higher borrowing costs and spending shifting back to services and away from goods.
Spending on goods fell in the first quarter.
The ISM survey's forward-looking new orders sub-index decreased to 49.1 from 51.4 in March.
Output at factories slowed, with the production sub-index slipping to 51.3 after jumping to 54.6 in the prior month.
Despite weakening demand, inflation at the factory gate continued to heat up, suggesting that goods price disinflation could be close to running its course.
Falling goods prices were the major driver of the moderation in inflation last year.
The survey's measure of prices paid by manufacturers shot up to 60.9, the highest reading since June 2022, from 55.8 in March.
With price pressures picking up in the first quarter, the surge in input costs is unlikely to be welcomed by Federal Reserve officials as they wrap up their two-day policy meeting.
Policy makers are on Wednesday expected to leave the U.S. central bank's benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since July.
They have raised the policy rate by 525 basis points since March 2022.
Financial markets have pushed back expectations of a rate cut this year to September from June.
A handful of economists continue to expect that borrowing costs may be lowered in July in the belief that the labor market will slow noticeably in the coming months.
Others see the window closing for the Fed to start its easing cycle.
Input prices are rising even as delivery performance of suppliers to manufacturers has improved significantly, though the ISM noted in March that "some suppliers are struggling to keep up."
The survey's measure of supplier deliveries fell to 48.9 from 49.9 in March.
A reading below 50 indicates faster deliveries.
Factory employment continued to contract, but the pace is slowing.
The survey's measure of manufacturing employment increased to 48.6 from 47.4 in March.
This measure has, however, not been useful in predicting manufacturing payrolls in the government's closely watched employment report.
Manufacturing employment has been little changed this year.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama
https://www.reuters.com/markets/us/us-m ... 024-05-01/