REUTERS
"Hot inflation may put Fed rate cut in thick of election season"
By Howard Schneider
April 11, 2024
WASHINGTON, April 11 (Reuters) - Hot U.S. inflation data has put the Federal Reserve's debate over a first interest rate cut on a potential collision course with the presidential election calendar, although a parade of top-level Fed-watching economists also predict the Fed won't make its move until after Americans go to the polls.
Rate futures markets now show investors see a first rate cut as most likely occurring at the Fed's Sept. 17-18 meeting after data showed inflation through the entire first quarter of 2024 was stiffer than expected and had demonstrably slowed progress on bringing it back to the Fed's 2% target.
A rate cut then - just seven weeks before Election Day - would shine a spotlight on the Fed, which goes to pains to keep itself out of the political tussle.
Not cutting by then won't necessarily dim that light, though.
Fed officials are adamant their policy decisions are fully divorced from political concerns or influence - be it incumbent President's Joe Biden's hope for a soft landing of low inflation and low unemployment to carry into heart of the campaign season this autumn, or presumptive Republican nominee - and former president - Donald Trump's brewing argument that if the Fed cuts rates it will only be doing so to help his Democratic rival.
No Fed official has offered a potential start date, but policymakers' projections last month indicated on balance they still expected to deliver three, quarter-percentage-point rate cuts this year, an outlook first presented last December.
With that as a guide, investors for months had settled on June for a first cut, with the two other reductions staggered over the rest of the year.
It was a timetable that had seemed well-phased around the hottest moments of the presidential campaign, but was thrown off this week when Consumer Price Index data for March extended a streak of unexpectedly strong readings, leading a growing number of Fed officials to say there would likely be no near-term move on rates.
At the same time, a core of professional Fed watchers now see an outcome where the Fed misses the presidential election cycle entirely, though that doesn't mean the central bank won't be a campaign focus.
In the hours since March inflation data came in hot, analysts from JP Morgan, Bank of America, Jefferies, Deutsche Bank and others tore up their prior predictions that rate cuts would be well underway by the election - a possible boon to Biden - and some pushed them back to year end or even 2025.
"We do not think the Fed will gain the confidence it needs to start cutting rates until December," Bank of America economists wrote, meaning Biden would be campaigning against the stigma of both higher borrowing costs and persistent inflation.
Biden, for his part, said he felt the Fed's baseline outlook for rate cuts this year would prove correct, even if recent data have thrown it into doubt.
"We don’t know what the Fed is going to do for certain," Biden said after Wednesday's inflation report, but "I do stand by my prediction that before the year is out there will a rate cut."
Reporting by Howard Schneider; Editing by Dan Burns and Andrea Ricci
https://www.reuters.com/world/us/hot-in ... 024-04-11/
THE DAILY NEWS
Re: THE DAILY NEWS
REUTERS
"Fed officials in no rush to cut rates as inflation worries rise"
By Michael S. Derby and Howard Schneider
April 11, 2024
NEW YORK/WASHINGTON, April 11 (Reuters) - The ranks of Federal Reserve officials saying there is no rush to cut interest rates continue to grow, with still-too-hot-for-comfort U.S. inflation a rising concern at home and casting a shadow over expectations for policy easing abroad as well.
"There's no clear need to adjust monetary policy in the very near term," New York Fed President John Williams told reporters on Thursday, a day after disappointingly strong consumer price inflation prompted traders and some analysts to predict a later start to Fed rate cuts, and likely fewer of them.
“Recent data suggest it may take more time than I had previously thought to gain greater confidence in inflation’s downward trajectory, before beginning to ease policy,” Boston Fed President Susan Collins said at a different venue in New York, adding that a strong labor market "also reduces the urgency to ease."
The two were among several U.S. central bankers voicing caution in recent days about moving too quickly to cut interest rates when inflation appears to be - at best - on what Fed Chair Jerome Powell has called a "bumpy" path back to the central bank's 2% annual target.
Inflation is proving to be a stickier problem than U.S. central bank officials had anticipated it would be just a couple of months ago, while other measures of the economy show little signs of slowing down.
That combination has pushed the anticipated start of an easing cycle further down the road.
Richmond Fed President Thomas Barkin, who had already noted his concerns about the breadth of inflation being hard to "reconcile" with a near-term shift to rate cuts, said Thursday the latest numbers "did not increase my confidence" that price pressures were easing on a broader basis throughout the economy.
To be sure, both Collins and Williams, the vice chair of the central bank's rate-setting Federal Open Market Committee, believe rate cuts will be needed down the road, with Collins saying "later this year" and Williams saying "eventually."
And Williams said the recent "bumps" in inflation readings have not been unexpected, and that if there had been surprises it was over how fast price pressures eased last year.
SPILLOVERS
In Europe, where the labor market has begun to soften and growth is stagnating, central bankers left the policy rate unchanged on Thursday but signaled they remain on track to cut rates as soon as June.
But even as European Central Bank President Christine Lagarde asserted the ECB's independence from the vagaries of U.S. inflation, sources told Reuters the ECB could pause after June to await more clarity from the Fed on its rate decisions.
Meanwhile IMF chief Kristalina Georgieva said continued higher U.S. interest rates is "not great news" for the rest of the world because they act as a magnet for global financial flows and leave the rest of the world "somewhat struggling."
U.S. consumer price index data came in stronger than expected in March, prompting a broad resetting of expectations for when the Fed will be able to cut rates this year.
Financial markets are now pricing in a July or September start to Fed rate cuts, versus an earlier view of June.
Economists at a string of Wall Street firms, including Goldman Sachs, Bank of America, Barclays and Wells Fargo, also shifted their calls after the CPI data, predicting just one or two rate cuts for the year, instead of the previous three moves.
A few economists now say there may be no reductions in U.S. borrowing costs until 2025.
Reporting by Michael S. Derby in New York and Howard Schneider in Washington; Writing by Dan Burns and Ann Saphir; Editing by Paul Simao and Andrea Ricci
https://www.reuters.com/markets/us/feds ... 024-04-11/
"Fed officials in no rush to cut rates as inflation worries rise"
By Michael S. Derby and Howard Schneider
April 11, 2024
NEW YORK/WASHINGTON, April 11 (Reuters) - The ranks of Federal Reserve officials saying there is no rush to cut interest rates continue to grow, with still-too-hot-for-comfort U.S. inflation a rising concern at home and casting a shadow over expectations for policy easing abroad as well.
"There's no clear need to adjust monetary policy in the very near term," New York Fed President John Williams told reporters on Thursday, a day after disappointingly strong consumer price inflation prompted traders and some analysts to predict a later start to Fed rate cuts, and likely fewer of them.
“Recent data suggest it may take more time than I had previously thought to gain greater confidence in inflation’s downward trajectory, before beginning to ease policy,” Boston Fed President Susan Collins said at a different venue in New York, adding that a strong labor market "also reduces the urgency to ease."
The two were among several U.S. central bankers voicing caution in recent days about moving too quickly to cut interest rates when inflation appears to be - at best - on what Fed Chair Jerome Powell has called a "bumpy" path back to the central bank's 2% annual target.
Inflation is proving to be a stickier problem than U.S. central bank officials had anticipated it would be just a couple of months ago, while other measures of the economy show little signs of slowing down.
That combination has pushed the anticipated start of an easing cycle further down the road.
Richmond Fed President Thomas Barkin, who had already noted his concerns about the breadth of inflation being hard to "reconcile" with a near-term shift to rate cuts, said Thursday the latest numbers "did not increase my confidence" that price pressures were easing on a broader basis throughout the economy.
To be sure, both Collins and Williams, the vice chair of the central bank's rate-setting Federal Open Market Committee, believe rate cuts will be needed down the road, with Collins saying "later this year" and Williams saying "eventually."
And Williams said the recent "bumps" in inflation readings have not been unexpected, and that if there had been surprises it was over how fast price pressures eased last year.
SPILLOVERS
In Europe, where the labor market has begun to soften and growth is stagnating, central bankers left the policy rate unchanged on Thursday but signaled they remain on track to cut rates as soon as June.
But even as European Central Bank President Christine Lagarde asserted the ECB's independence from the vagaries of U.S. inflation, sources told Reuters the ECB could pause after June to await more clarity from the Fed on its rate decisions.
Meanwhile IMF chief Kristalina Georgieva said continued higher U.S. interest rates is "not great news" for the rest of the world because they act as a magnet for global financial flows and leave the rest of the world "somewhat struggling."
U.S. consumer price index data came in stronger than expected in March, prompting a broad resetting of expectations for when the Fed will be able to cut rates this year.
Financial markets are now pricing in a July or September start to Fed rate cuts, versus an earlier view of June.
Economists at a string of Wall Street firms, including Goldman Sachs, Bank of America, Barclays and Wells Fargo, also shifted their calls after the CPI data, predicting just one or two rate cuts for the year, instead of the previous three moves.
A few economists now say there may be no reductions in U.S. borrowing costs until 2025.
Reporting by Michael S. Derby in New York and Howard Schneider in Washington; Writing by Dan Burns and Ann Saphir; Editing by Paul Simao and Andrea Ricci
https://www.reuters.com/markets/us/feds ... 024-04-11/
Re: THE DAILY NEWS
REUTERS
"Tame US producer price data soothes inflation concerns"
By Lucia Mutikani
April 11, 2024
WASHINGTON, April 11 (Reuters) - U.S. producer prices increased moderately in March as a rise in the cost of services was softened by a fall in goods prices, calming fears of a resurgence in inflation.
The report from the Labor Department on Thursday led economists to anticipate milder increases in the inflation measures tracked by the Federal Reserve for monetary policy relative to the strong consumer price readings in March.
High inflation and persistent labor market strength have prompted financial markets and most economists to push back expectations for an initial Fed interest rate cut to September from June.
The minutes of the U.S. central bank's March 19-20 policy meeting, which were released on Wednesday, also showed policymakers were concerned that progress on inflation might have stalled.
"Producer prices tell us that inflation is not worsening, yet," said Christopher Rupkey, chief economist at FWDBONDS.
"Policymakers can remain vigilant as they await more data on where inflation is heading next."
"Tamer producer prices may spell some relief for consumers in coming months."
The producer price index for final demand rose 0.2% last month after increasing by an unrevised 0.6% in February, the Labor Department's Bureau of Labor Statistics said.
Economists polled by Reuters had forecast the PPI would gain 0.3%.
In the 12 months through March, the PPI advanced 2.1% after rising 1.6% in February.
Consumer prices increased more than expected in March for the third straight month, government data showed on Wednesday.
Since March of 2022, the Fed has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range, where it has been since last July.
The cost of services increased 0.3% in March after rising by the same margin in February, the PPI report showed.
That was driven by a 3.1% surge in the cost of securities brokerage, dealing, investment advice and related services.
Portfolio management fees gained 0.5%.
There were also increases in the prices of professional and commercial equipment wholesaling, investment banking as well as computer hardware, software and supplies retailing.
Airline fares rose 2.2% after climbing 2.7% in February.
But the cost of hotel and motel rooms fell 3.8%.
Health and medical insurance rose 0.2%.
GOODS PRICES FALL
Portfolio management fees, healthcare, hotel and motel accommodation, and airline fares are among the components that go into the calculation of the personal consumption expenditures (PCE) price index, which the Fed uses to track it 2% inflation target.
Goods prices slipped 0.1% after jumping 1.2% in February.
The decline reflected a 3.6% drop in wholesale gasoline prices.
There were also decreases in the prices of eggs, carbon steel scrap, jet fuel, fresh fruit and melons.
But prices for processed poultry jumped 10.7%, likely reflecting shortages triggered by outbreaks of bird flu.
Prices for fresh and dry vegetables, residential electric power and motor vehicles also increased.
Excluding food and energy, goods prices edged up 0.1% after advancing 0.3% in February.
Based on the PPI and CPI data, economists estimated a moderate pace of increase in the core PCE price index, with unrounded estimates ranging from 0.21% to 0.28%.
Core inflation rose 0.3% in February.
The annual increase in core inflation is estimated to have slowed to 2.7%, which would be the smallest gain in three years, from 2.8% in February.
Overall PCE inflation was forecast to have climbed 0.28%, which would lift the year-on-year increase to 2.6%.
PCE inflation rose 0.3% in February and advanced 2.5% on a year-on-year basis.
"Although the pace of disinflation has slowed, fears of a resurgence in inflation look overdone," said Paul Ashworth, chief North America economist at Capital Economics.
Stocks on Wall Street were trading higher.
The dollar rose marginally against a basket of currencies.
U.S. Treasury prices were mixed, with the yield on the two-year note hitting 5% for the first time since November.
Despite the promising producer price data, the last mile in the road to low inflation will likely remain tough amid a persistently tight labor market.
In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 211,000 for the week ended April 6.
Economists had forecast 215,000 claims for the latest week.
Unadjusted claims increased 17,037 to 214,386 last week.
There was a surge of 4,190 in filings in New Jersey, likely the result of temporary layoffs related to spring breaks at public schools.
There were also notable increases in claims in New York, Texas, Oregon and Pennsylvania.
The Easter and Passover holidays, whose timing shifts every year, also tend to inject volatility into the claims data.
Nonetheless, last week's data suggested the labor market remained healthy early in the second quarter.
Job growth accelerated in March, while the unemployment rate slipped to 3.8% from 3.9% in February.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 28,000 to 1.817 million during the week ending March 30, the highest level since January, the claims report showed.
The uninsured unemployment rate was unchanged at 1.2%.
"Even though hiring is slowing, net payroll growth remains strong thanks to the low level of layoffs in the economy, and there is no sign from the claims data that the story is changing," said Michael Pearce, deputy chief U.S. economist at Oxford Economics.
Reporting by Lucia Mutikani; Editing by Andrea Ricci and Paul Simao
https://www.reuters.com/markets/us/us-w ... 024-04-11/
"Tame US producer price data soothes inflation concerns"
By Lucia Mutikani
April 11, 2024
WASHINGTON, April 11 (Reuters) - U.S. producer prices increased moderately in March as a rise in the cost of services was softened by a fall in goods prices, calming fears of a resurgence in inflation.
The report from the Labor Department on Thursday led economists to anticipate milder increases in the inflation measures tracked by the Federal Reserve for monetary policy relative to the strong consumer price readings in March.
High inflation and persistent labor market strength have prompted financial markets and most economists to push back expectations for an initial Fed interest rate cut to September from June.
The minutes of the U.S. central bank's March 19-20 policy meeting, which were released on Wednesday, also showed policymakers were concerned that progress on inflation might have stalled.
"Producer prices tell us that inflation is not worsening, yet," said Christopher Rupkey, chief economist at FWDBONDS.
"Policymakers can remain vigilant as they await more data on where inflation is heading next."
"Tamer producer prices may spell some relief for consumers in coming months."
The producer price index for final demand rose 0.2% last month after increasing by an unrevised 0.6% in February, the Labor Department's Bureau of Labor Statistics said.
Economists polled by Reuters had forecast the PPI would gain 0.3%.
In the 12 months through March, the PPI advanced 2.1% after rising 1.6% in February.
Consumer prices increased more than expected in March for the third straight month, government data showed on Wednesday.
Since March of 2022, the Fed has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range, where it has been since last July.
The cost of services increased 0.3% in March after rising by the same margin in February, the PPI report showed.
That was driven by a 3.1% surge in the cost of securities brokerage, dealing, investment advice and related services.
Portfolio management fees gained 0.5%.
There were also increases in the prices of professional and commercial equipment wholesaling, investment banking as well as computer hardware, software and supplies retailing.
Airline fares rose 2.2% after climbing 2.7% in February.
But the cost of hotel and motel rooms fell 3.8%.
Health and medical insurance rose 0.2%.
GOODS PRICES FALL
Portfolio management fees, healthcare, hotel and motel accommodation, and airline fares are among the components that go into the calculation of the personal consumption expenditures (PCE) price index, which the Fed uses to track it 2% inflation target.
Goods prices slipped 0.1% after jumping 1.2% in February.
The decline reflected a 3.6% drop in wholesale gasoline prices.
There were also decreases in the prices of eggs, carbon steel scrap, jet fuel, fresh fruit and melons.
But prices for processed poultry jumped 10.7%, likely reflecting shortages triggered by outbreaks of bird flu.
Prices for fresh and dry vegetables, residential electric power and motor vehicles also increased.
Excluding food and energy, goods prices edged up 0.1% after advancing 0.3% in February.
Based on the PPI and CPI data, economists estimated a moderate pace of increase in the core PCE price index, with unrounded estimates ranging from 0.21% to 0.28%.
Core inflation rose 0.3% in February.
The annual increase in core inflation is estimated to have slowed to 2.7%, which would be the smallest gain in three years, from 2.8% in February.
Overall PCE inflation was forecast to have climbed 0.28%, which would lift the year-on-year increase to 2.6%.
PCE inflation rose 0.3% in February and advanced 2.5% on a year-on-year basis.
"Although the pace of disinflation has slowed, fears of a resurgence in inflation look overdone," said Paul Ashworth, chief North America economist at Capital Economics.
Stocks on Wall Street were trading higher.
The dollar rose marginally against a basket of currencies.
U.S. Treasury prices were mixed, with the yield on the two-year note hitting 5% for the first time since November.
Despite the promising producer price data, the last mile in the road to low inflation will likely remain tough amid a persistently tight labor market.
In a separate report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 211,000 for the week ended April 6.
Economists had forecast 215,000 claims for the latest week.
Unadjusted claims increased 17,037 to 214,386 last week.
There was a surge of 4,190 in filings in New Jersey, likely the result of temporary layoffs related to spring breaks at public schools.
There were also notable increases in claims in New York, Texas, Oregon and Pennsylvania.
The Easter and Passover holidays, whose timing shifts every year, also tend to inject volatility into the claims data.
Nonetheless, last week's data suggested the labor market remained healthy early in the second quarter.
Job growth accelerated in March, while the unemployment rate slipped to 3.8% from 3.9% in February.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 28,000 to 1.817 million during the week ending March 30, the highest level since January, the claims report showed.
The uninsured unemployment rate was unchanged at 1.2%.
"Even though hiring is slowing, net payroll growth remains strong thanks to the low level of layoffs in the economy, and there is no sign from the claims data that the story is changing," said Michael Pearce, deputy chief U.S. economist at Oxford Economics.
Reporting by Lucia Mutikani; Editing by Andrea Ricci and Paul Simao
https://www.reuters.com/markets/us/us-w ... 024-04-11/
Re: THE DAILY NEWS
REUTERS
"Soaring insurance costs hit as US buyers get a break on car prices"
By Timothy Aeppel
April 11, 2024
April 11 (Reuters) - A new form of sticker shock has hit American car buyers like Darin Davis.
In January, when the 56-year-old Dallas real estate agent renewed the insurance on the pearly-white 2024 Cadillac XT4 that he bought just a few months earlier, the rate nearly doubled.
"It takes the fun out of owning a new car when you’re paying so much money," said Davis, adding that if he’d known such a massive increase was coming, he might have opted for a less expensive model.
But by then it was too late.
In one of the cruel twists of an inflation-weary U.S. economy, car prices are coming down after surging by record amounts during the COVID-19 pandemic.
But at least part of those gains for consumers are getting gobbled up by rising auto insurance rates that for some models now account for more than a quarter of the total cost of owning a vehicle.
Car prices have eased as the supply chain snarls of the pandemic -- especially shortages of vital computer chips -- have untangled and automakers boost inventories on their lots.
Meanwhile, factors including rising costs associated with repairing increasingly complicated vehicles and more storm damage amid climate change is pushing insurance rates higher.
And car buyers aren't the only ones with an axe to grind over insurance inflation.
For Federal Reserve policymakers working to lower inflation overall, it's an example of the unwelcome surprises that have conspired to slow their progress.
HURTING AFFORDABILITY
The Consumer Price Index rose 3.5% last month from a year earlier, according to the Labor Department.
But auto insurance costs were up 22.2% over the same period, the biggest increase since the 1970s.
Car prices, meanwhile, continued to moderate.
New vehicle prices declined 0.1%, compared to a year earlier, while used prices slipped 2.2%.
Car dealers are offering more incentives to buyers, which helps bring down up-front costs.
The degree to which insurance rates are weighing on buying decisions is unclear, but there are signs it’s become a bigger factor, especially for consumers on tight budgets.
"We’re hearing from a number of shoppers that they’re declining to buy a car - or returning one - because they can afford the car, but not the insurance for it," said Sean Tucker, a senior editor at Kelley Blue Book, a car valuation and research company in Irvine, California.
Tucker said Kelley Blue Book recently added insurance guidance to its list of buying tips, urging shoppers to get an insurance quote before they put down any money.
Car insurance rates vary widely across the country and are influenced by everything from the cost local collision repair shops charge to the potential for damage from tropical storms and wildfires.
According to the insurance shopping site Insurify, the average cost in the U.S. for full auto coverage rose 24% last year and now stands at just over $182 a month.
The company said 63% of drivers it surveyed saw rates increase in 2023 and predicts rates will rise another 7% in 2024.
But that figure could rise.
"We’re seeing a lot of activity in (the first quarter) that indicate to us it may increase even more," said Jessica Edmondson, a data specialist at Insurify.
TOTAL COST
Insurance seems poised to continue to grow as a share of the so-called total cost of owning of a vehicle, which factors in things like routine maintenance, taxes, depreciation, and fuel, as well as insurance.
According to Kelley Blue Book, insurance accounted for an average 16% of this gauge for a compact car in 2019 and will grow to 26% in 2024.
For a compact SUV, it was 13% in 2019, but will be 20% this year.
Multiple forces have combined to fuel the current surge in rates.
More cars are being totaled than in the past and quality issues mounted during the production disruptions caused by the pandemic that can lead to insurance claims.
A shortage of mechanics has meant it takes longer to fix a car, which in turn drives up the cost to insurance companies that provide rental cars to policyholders waiting for those repairs.
A typical car is also increasingly laden with electronics that can make them costlier and more difficult to repair.
"A bumper is just a bumper - but a bumper full of sensors costs more to repair," said Kristin Dziczek, a policy advisor at the Federal Reserve Bank of Chicago who is an expert in automotive industry trends.
She noted that electric cars, on average, cost 30% more and can take longer to repair.
There are also changes in how carmakers are producing cars that carry insurance implications.
For instance, Tesla has pioneered a process called gigacasting, which involves casting a single part that can replace 30 or more separate pieces of metal in a traditional vehicle.
That reduces production costs but can make it costlier to repair a vehicle involved in an accident.
Other carmakers are following suit.
Cadillac makes one model now that uses 16 gigacastings.
Meanwhile, Davis -- the Dallas real estate agent who bought a new Cadillac -- said he eventually found a cheaper option by bundling his car and homeowners insurance and increasing the deductible.
https://www.reuters.com/markets/us/soar ... 024-04-11/
"Soaring insurance costs hit as US buyers get a break on car prices"
By Timothy Aeppel
April 11, 2024
April 11 (Reuters) - A new form of sticker shock has hit American car buyers like Darin Davis.
In January, when the 56-year-old Dallas real estate agent renewed the insurance on the pearly-white 2024 Cadillac XT4 that he bought just a few months earlier, the rate nearly doubled.
"It takes the fun out of owning a new car when you’re paying so much money," said Davis, adding that if he’d known such a massive increase was coming, he might have opted for a less expensive model.
But by then it was too late.
In one of the cruel twists of an inflation-weary U.S. economy, car prices are coming down after surging by record amounts during the COVID-19 pandemic.
But at least part of those gains for consumers are getting gobbled up by rising auto insurance rates that for some models now account for more than a quarter of the total cost of owning a vehicle.
Car prices have eased as the supply chain snarls of the pandemic -- especially shortages of vital computer chips -- have untangled and automakers boost inventories on their lots.
Meanwhile, factors including rising costs associated with repairing increasingly complicated vehicles and more storm damage amid climate change is pushing insurance rates higher.
And car buyers aren't the only ones with an axe to grind over insurance inflation.
For Federal Reserve policymakers working to lower inflation overall, it's an example of the unwelcome surprises that have conspired to slow their progress.
HURTING AFFORDABILITY
The Consumer Price Index rose 3.5% last month from a year earlier, according to the Labor Department.
But auto insurance costs were up 22.2% over the same period, the biggest increase since the 1970s.
Car prices, meanwhile, continued to moderate.
New vehicle prices declined 0.1%, compared to a year earlier, while used prices slipped 2.2%.
Car dealers are offering more incentives to buyers, which helps bring down up-front costs.
The degree to which insurance rates are weighing on buying decisions is unclear, but there are signs it’s become a bigger factor, especially for consumers on tight budgets.
"We’re hearing from a number of shoppers that they’re declining to buy a car - or returning one - because they can afford the car, but not the insurance for it," said Sean Tucker, a senior editor at Kelley Blue Book, a car valuation and research company in Irvine, California.
Tucker said Kelley Blue Book recently added insurance guidance to its list of buying tips, urging shoppers to get an insurance quote before they put down any money.
Car insurance rates vary widely across the country and are influenced by everything from the cost local collision repair shops charge to the potential for damage from tropical storms and wildfires.
According to the insurance shopping site Insurify, the average cost in the U.S. for full auto coverage rose 24% last year and now stands at just over $182 a month.
The company said 63% of drivers it surveyed saw rates increase in 2023 and predicts rates will rise another 7% in 2024.
But that figure could rise.
"We’re seeing a lot of activity in (the first quarter) that indicate to us it may increase even more," said Jessica Edmondson, a data specialist at Insurify.
TOTAL COST
Insurance seems poised to continue to grow as a share of the so-called total cost of owning of a vehicle, which factors in things like routine maintenance, taxes, depreciation, and fuel, as well as insurance.
According to Kelley Blue Book, insurance accounted for an average 16% of this gauge for a compact car in 2019 and will grow to 26% in 2024.
For a compact SUV, it was 13% in 2019, but will be 20% this year.
Multiple forces have combined to fuel the current surge in rates.
More cars are being totaled than in the past and quality issues mounted during the production disruptions caused by the pandemic that can lead to insurance claims.
A shortage of mechanics has meant it takes longer to fix a car, which in turn drives up the cost to insurance companies that provide rental cars to policyholders waiting for those repairs.
A typical car is also increasingly laden with electronics that can make them costlier and more difficult to repair.
"A bumper is just a bumper - but a bumper full of sensors costs more to repair," said Kristin Dziczek, a policy advisor at the Federal Reserve Bank of Chicago who is an expert in automotive industry trends.
She noted that electric cars, on average, cost 30% more and can take longer to repair.
There are also changes in how carmakers are producing cars that carry insurance implications.
For instance, Tesla has pioneered a process called gigacasting, which involves casting a single part that can replace 30 or more separate pieces of metal in a traditional vehicle.
That reduces production costs but can make it costlier to repair a vehicle involved in an accident.
Other carmakers are following suit.
Cadillac makes one model now that uses 16 gigacastings.
Meanwhile, Davis -- the Dallas real estate agent who bought a new Cadillac -- said he eventually found a cheaper option by bundling his car and homeowners insurance and increasing the deductible.
https://www.reuters.com/markets/us/soar ... 024-04-11/
Re: THE DAILY NEWS
REUTERS
"Fed's Collins sees no urgency to cut rates"
By Michael S. Derby
April 11, 2024
NEW YORK, April 11 (Reuters) - Federal Reserve Bank of Boston President Susan Collins said Thursday the strength of the economy and uneven retreat of inflation argues against a near term push to lower rates by the central bank.
“I do expect it will be appropriate to begin lowering the federal funds rate later this year,” Collins said in the text of a speech prepared for delivery before a gathering of the Economic Club of New York.
That said, “recent data suggest it may take more time than I had previously thought to gain greater confidence in inflation’s downward trajectory, before beginning to ease policy,” the official said.
What does it mean?
Collins weighed in as markets have been digesting stronger-than-expected inflation data over the start of the year.
Coupled with ongoing robust job gains, traders and investors have been marking down the prospects of Fed rate cuts and pushing back the start date of the easing, even as Fed officials say they think they’re still on track for some sort of lowering of what is now a 5.25% to 5.5% federal funds rate.
In her remarks, Collins said monetary policy is in a good position right now and there’s increasing evidence that despite the high level of the short-term rate target policy may not be providing as much restraint as expected.
“It may just take more time than previously thought for activity to moderate, and to see further progress in inflation returning durably to our target,” Collins said.
“Less concern about labor market fragilities, combined with the possibility that policy is only modestly restrictive, also reduces the urgency to ease,” she said.
Collins said that while it’s not a surprise that inflation’s retreat toward 2% hasn’t been as robust over recent months as it was last year, “disinflation may continue to be uneven.”
For the Fed, “this also implies that less easing of policy this year than previously thought may be warranted.”
While risks for the outlook abound, Collins said she was cautiously optimistic about the outlook.
“I expect to see further evidence that inflation is durably, if unevenly, returning toward 2 percent, and that the economy is coming into better balance, with demand and supply more closely aligned amid a healthy labor market,” the official said.
Reporting by Michael S. Derby; Editing by Chizu Nomiyama
https://www.reuters.com/markets/rates-b ... 024-04-11/
"Fed's Collins sees no urgency to cut rates"
By Michael S. Derby
April 11, 2024
NEW YORK, April 11 (Reuters) - Federal Reserve Bank of Boston President Susan Collins said Thursday the strength of the economy and uneven retreat of inflation argues against a near term push to lower rates by the central bank.
“I do expect it will be appropriate to begin lowering the federal funds rate later this year,” Collins said in the text of a speech prepared for delivery before a gathering of the Economic Club of New York.
That said, “recent data suggest it may take more time than I had previously thought to gain greater confidence in inflation’s downward trajectory, before beginning to ease policy,” the official said.
What does it mean?
Collins weighed in as markets have been digesting stronger-than-expected inflation data over the start of the year.
Coupled with ongoing robust job gains, traders and investors have been marking down the prospects of Fed rate cuts and pushing back the start date of the easing, even as Fed officials say they think they’re still on track for some sort of lowering of what is now a 5.25% to 5.5% federal funds rate.
In her remarks, Collins said monetary policy is in a good position right now and there’s increasing evidence that despite the high level of the short-term rate target policy may not be providing as much restraint as expected.
“It may just take more time than previously thought for activity to moderate, and to see further progress in inflation returning durably to our target,” Collins said.
“Less concern about labor market fragilities, combined with the possibility that policy is only modestly restrictive, also reduces the urgency to ease,” she said.
Collins said that while it’s not a surprise that inflation’s retreat toward 2% hasn’t been as robust over recent months as it was last year, “disinflation may continue to be uneven.”
For the Fed, “this also implies that less easing of policy this year than previously thought may be warranted.”
While risks for the outlook abound, Collins said she was cautiously optimistic about the outlook.
“I expect to see further evidence that inflation is durably, if unevenly, returning toward 2 percent, and that the economy is coming into better balance, with demand and supply more closely aligned amid a healthy labor market,” the official said.
Reporting by Michael S. Derby; Editing by Chizu Nomiyama
https://www.reuters.com/markets/rates-b ... 024-04-11/
Re: THE DAILY NEWS
The New York Post
"Yellen pitches Bidenomics in Beijing — making America a laughingstock"
By Social Links for Philip Pilkington
Published April 11, 2024
Imagine your family finds your cooking so revolting, they refuse to eat it — and in response you decide it’s time to take a plate over to your neighbor’s house.
This is precisely what the Biden administration is doing with its economic platform.
It’s no secret Americans are sick of Bidenomics.
A recent Economist/YouGov survey showed 29% of voters are worried more about the economy and inflation than any other issue.
Only 22% of black Americans, 13% of Hispanics and 18% of young adults — all key would-be Biden voters — think they are better off financially than they were a year ago.
The verdict is in: Voters do not like what Joe is cooking.
Rather than reflect on these numbers, Treasury Secretary Janet Yellen found herself in China this week offering a round of slops to the locals.
Although China rolled out the red carpet for Yellen in Beijing and Guangzhou, both the Chinese and the Americans ultimately saw her visit as a failure.
Looking under the hood, it’s not hard to see why.
No matter what you think about China’s trade strategies, it is obvious they are proving very successful for the Chinese.
European car manufacturers are terrified of a tsunami of cheap, newly high-quality Chinese electric vehicles about to wash over their shores.
America seems to feel the same way about Chinese EVs, having already imposed a 27.5% tariff on them.
Yet despite Western aversion to these products, they are flooding the rest of the global market.
In 2022, China itself accounted for 60% of EV purchases and provided 35% of global EV exports — up from 4.2% in 2018.
Despite negative headlines throughout 2023, the Chinese beat their growth target of 5% for the year.
In contrast to many Western countries, they achieved this economic growth with very low inflation.
Inflation at the end of 2023 was 3.4% in both America and Europe — in China, inflation for the year came in at -0.3%.
Considering these numbers, most people would see Yellen heading over to the Middle Kingdom to give economic advice as a hard sell.
But Yellen was undeterred.
She informed the Chinese their trade practices are too aggressive and their products too cheap.
While this may be true, the alternative advice she gave them was a stretch too far: Yellen said they should embrace Bidenomics.
America’s treasury secretary told the Chinese Communists they should focus less on their competitiveness and engage in more government expenditure to generate economic growth.
News reports suggest Yellen even tried to sell the Chinese on stimulus checks — or “stimmies,” as they came to be known during the pandemic.
This is very strange advice, as the Biden “stimmie” program is now widely thought to be the first in a series of policy blunders that led to the outburst of inflation that’s made the president so unpopular.
Put yourself in the shoes of the Chinese here: Yellen’s Treasury has created a cost-of-living crisis in America, and now she wants to Chinese to sign on to her funny-money program.
It was only a decade ago that the so-called Washington Consensus encouraged other countries to embrace free-market economics and improve their competitiveness.
Now Yellen and the gang are traveling the world trying to sell the economic equivalent of magic beans.
No doubt there are problems with China flooding Western markets with its cheap goods.
The question of how to address this is a large one, but surely the answer involves trying to recreate competitive industries in Western countries.
These countries, emerging from painful inflation, have had more than enough doses of Dr. Yellen’s Magic Money Juice.
Trying to peddle the same snake oil on the world stage is, frankly, an embarrassment to the United States, which used to pride itself on sound economic management.
Washington has decided firmly, on a bipartisan basis, that it no longer wants to rely on China for cheap imports.
Policymakers are now laser-focused on trying to bring jobs back to American shores.
This is a laudable goal, but there are better and worse ways of doing it.
Creating a carnivalesque roadshow in which the US treasury secretary travels the world promoting the same harebrained economic policies that have led to so much economic pain for the average American is not a good way to go about this.
If the Chinese had signed on for regular doses of Yellen’s snake oil, it might hobble their economy and give America the edge on the world stage.
But it’s safe to predict the Chinese will “just say no” to importing Bidenomics into Beijing.
Philip Pilkington is a macroeconomist and investment professional.
https://nypost.com/2024/04/11/opinion/y ... hingstock/
"Yellen pitches Bidenomics in Beijing — making America a laughingstock"
By Social Links for Philip Pilkington
Published April 11, 2024
Imagine your family finds your cooking so revolting, they refuse to eat it — and in response you decide it’s time to take a plate over to your neighbor’s house.
This is precisely what the Biden administration is doing with its economic platform.
It’s no secret Americans are sick of Bidenomics.
A recent Economist/YouGov survey showed 29% of voters are worried more about the economy and inflation than any other issue.
Only 22% of black Americans, 13% of Hispanics and 18% of young adults — all key would-be Biden voters — think they are better off financially than they were a year ago.
The verdict is in: Voters do not like what Joe is cooking.
Rather than reflect on these numbers, Treasury Secretary Janet Yellen found herself in China this week offering a round of slops to the locals.
Although China rolled out the red carpet for Yellen in Beijing and Guangzhou, both the Chinese and the Americans ultimately saw her visit as a failure.
Looking under the hood, it’s not hard to see why.
No matter what you think about China’s trade strategies, it is obvious they are proving very successful for the Chinese.
European car manufacturers are terrified of a tsunami of cheap, newly high-quality Chinese electric vehicles about to wash over their shores.
America seems to feel the same way about Chinese EVs, having already imposed a 27.5% tariff on them.
Yet despite Western aversion to these products, they are flooding the rest of the global market.
In 2022, China itself accounted for 60% of EV purchases and provided 35% of global EV exports — up from 4.2% in 2018.
Despite negative headlines throughout 2023, the Chinese beat their growth target of 5% for the year.
In contrast to many Western countries, they achieved this economic growth with very low inflation.
Inflation at the end of 2023 was 3.4% in both America and Europe — in China, inflation for the year came in at -0.3%.
Considering these numbers, most people would see Yellen heading over to the Middle Kingdom to give economic advice as a hard sell.
But Yellen was undeterred.
She informed the Chinese their trade practices are too aggressive and their products too cheap.
While this may be true, the alternative advice she gave them was a stretch too far: Yellen said they should embrace Bidenomics.
America’s treasury secretary told the Chinese Communists they should focus less on their competitiveness and engage in more government expenditure to generate economic growth.
News reports suggest Yellen even tried to sell the Chinese on stimulus checks — or “stimmies,” as they came to be known during the pandemic.
This is very strange advice, as the Biden “stimmie” program is now widely thought to be the first in a series of policy blunders that led to the outburst of inflation that’s made the president so unpopular.
Put yourself in the shoes of the Chinese here: Yellen’s Treasury has created a cost-of-living crisis in America, and now she wants to Chinese to sign on to her funny-money program.
It was only a decade ago that the so-called Washington Consensus encouraged other countries to embrace free-market economics and improve their competitiveness.
Now Yellen and the gang are traveling the world trying to sell the economic equivalent of magic beans.
No doubt there are problems with China flooding Western markets with its cheap goods.
The question of how to address this is a large one, but surely the answer involves trying to recreate competitive industries in Western countries.
These countries, emerging from painful inflation, have had more than enough doses of Dr. Yellen’s Magic Money Juice.
Trying to peddle the same snake oil on the world stage is, frankly, an embarrassment to the United States, which used to pride itself on sound economic management.
Washington has decided firmly, on a bipartisan basis, that it no longer wants to rely on China for cheap imports.
Policymakers are now laser-focused on trying to bring jobs back to American shores.
This is a laudable goal, but there are better and worse ways of doing it.
Creating a carnivalesque roadshow in which the US treasury secretary travels the world promoting the same harebrained economic policies that have led to so much economic pain for the average American is not a good way to go about this.
If the Chinese had signed on for regular doses of Yellen’s snake oil, it might hobble their economy and give America the edge on the world stage.
But it’s safe to predict the Chinese will “just say no” to importing Bidenomics into Beijing.
Philip Pilkington is a macroeconomist and investment professional.
https://nypost.com/2024/04/11/opinion/y ... hingstock/
Re: THE DAILY NEWS
FOX News
"Democrat claiming 'inflation rates are down' interrupted by higher than expected inflation report"
Story by Lindsay Kornick
12 APRIL 2024
Reality collided with a Democratic congressman’s efforts to defend President Biden’s record on inflation Wednesday morning.
South Carolina Rep. James Clyburn spoke to MSNBC’s "Morning Joe" regarding a recent focus group accusing the president of "gaslighting" them on the economy.
Though Clyburn acknowledged that people are concerned over inflation, he said inflation rates have largely come down since Biden took office.
"I do believe, just from my own observations, from the conversations I have had with people, there are concerns about things like inflation, but what we’ve got to get them to see is that inflation today is about 40% of what it was when Joe Biden took office."
"And so, the inflation rates are down, and people’s incomes are up."
"Unemployment is on the decrease."
"And although we see the prices at the stores costing more money, people are, in fact, earning greater incomes," Clyburn said.
As he spoke, co-host Mika Brzezinski interrupted him to report on the news that inflation rose faster than expected.
"So I will validate that, I think the disinformation out there is distorting the entire process, I think social media doesn’t help, but there’s also a lack of validation that these voters feel, and I’m going to bring in Andrew Ross Sorkin right now because we just got breaking news, the consumer price index increased at a faster than expected pace last month, a signal that inflation remains stubbornly high," Brzezinski reported.
Right before the news broke, Clyburn decried the "disinformation" regarding inflation.
"So what we’ve got to do is make sure that people see the policies of the Biden administration, how they affect their everyday lives, and get them to see in his policies that which is real, not what they may hear on social media."
"One of the focus-group people talked about social media and the misrepresentation, disinformation, all of those things are out there and that’s the battle that we have to fight, and we’ve got to do a better job of fighting it more effectively," Clyburn said.
The Labor Department said Wednesday that the consumer price index, a broad measure of the price of everyday goods including gasoline, groceries and rent, rose 0.4% in March from the previous month.
Prices climbed 3.5% from the same time last year, above the 3.2% figure recorded in February.
The segment referred to a focus group of undecided voters from battleground states who unanimously agreed former President Trump’s economic policies were better than Biden's and even laughed at Biden claiming otherwise.
Michigan voter Omar, who previously voted for Biden in 2020, said, "The point is, Biden needs to hear the people, because when he's talking about the economy doing stellar, he's talking about the stock market."
"He's not looking at homelessness or joblessness."
"He's not…thinking about how much it costs to go to the grocery store, and he's gaslighting literally everyone in the process."
https://www.msn.com/en-us/news/politics ... a494&ei=45
"Democrat claiming 'inflation rates are down' interrupted by higher than expected inflation report"
Story by Lindsay Kornick
12 APRIL 2024
Reality collided with a Democratic congressman’s efforts to defend President Biden’s record on inflation Wednesday morning.
South Carolina Rep. James Clyburn spoke to MSNBC’s "Morning Joe" regarding a recent focus group accusing the president of "gaslighting" them on the economy.
Though Clyburn acknowledged that people are concerned over inflation, he said inflation rates have largely come down since Biden took office.
"I do believe, just from my own observations, from the conversations I have had with people, there are concerns about things like inflation, but what we’ve got to get them to see is that inflation today is about 40% of what it was when Joe Biden took office."
"And so, the inflation rates are down, and people’s incomes are up."
"Unemployment is on the decrease."
"And although we see the prices at the stores costing more money, people are, in fact, earning greater incomes," Clyburn said.
As he spoke, co-host Mika Brzezinski interrupted him to report on the news that inflation rose faster than expected.
"So I will validate that, I think the disinformation out there is distorting the entire process, I think social media doesn’t help, but there’s also a lack of validation that these voters feel, and I’m going to bring in Andrew Ross Sorkin right now because we just got breaking news, the consumer price index increased at a faster than expected pace last month, a signal that inflation remains stubbornly high," Brzezinski reported.
Right before the news broke, Clyburn decried the "disinformation" regarding inflation.
"So what we’ve got to do is make sure that people see the policies of the Biden administration, how they affect their everyday lives, and get them to see in his policies that which is real, not what they may hear on social media."
"One of the focus-group people talked about social media and the misrepresentation, disinformation, all of those things are out there and that’s the battle that we have to fight, and we’ve got to do a better job of fighting it more effectively," Clyburn said.
The Labor Department said Wednesday that the consumer price index, a broad measure of the price of everyday goods including gasoline, groceries and rent, rose 0.4% in March from the previous month.
Prices climbed 3.5% from the same time last year, above the 3.2% figure recorded in February.
The segment referred to a focus group of undecided voters from battleground states who unanimously agreed former President Trump’s economic policies were better than Biden's and even laughed at Biden claiming otherwise.
Michigan voter Omar, who previously voted for Biden in 2020, said, "The point is, Biden needs to hear the people, because when he's talking about the economy doing stellar, he's talking about the stock market."
"He's not looking at homelessness or joblessness."
"He's not…thinking about how much it costs to go to the grocery store, and he's gaslighting literally everyone in the process."
https://www.msn.com/en-us/news/politics ... a494&ei=45
Re: THE DAILY NEWS
RIGZONE
"Oil Rises as Israel Braces for Iranian Attack"
by Bloomberg | Julia Fanzeres
Friday, April 12, 2024
Oil rose as Israel braced for a possible attack from Iran, a development that would threaten major disruptions in a region that accounts for a third of the world’s crude output.
An assault is expected to come as soon as the next 48 hours, which would mark a significant widening of the conflict that started when Hamas attacked Israel in October.
Global benchmark Brent surged as much as 2.7% to top $92 a barrel — a level last reached during the early days of the war — before paring gains to settle above $90 a barrel.
US benchmark West Texas Intermediate climbed as much as 3.1% before its advance faded.
Israel is expecting a drone or missile attack on government targets within days, either directly or from Iran’s proxies, people familiar with Western intelligence assessments said.
The move still hasn’t been approved by Tehran’s highest-ranking officials, the people said, while the US has moved additional military assets into the region.
“Direct Iranian engagement puts higher odds of a potential supply disruption in the region, causing many traders to continue to reach for exposure in crude and upside crude call options,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth.
“Heading into a weekend with significant headline risk, there are few sellers willing to step in and sell the rally.”
WTI has surged about 19% this year as the Middle East conflict bolsters a market shaped by supply restrictions and stronger-than-expected demand.
The escalating geopolitical tensions — also including attacks on Russian energy infrastructure by Ukraine — have spurred bullish activity in the oil options market.
There has been elevated buying of call options — which profit when prices rise — in recent days, with implied volatility jumping to a two-month high.
The options on Brent are still trading at a premium over bearish puts.
Prices:
West Texas Intermediate for May delivery rose 64 cents to settle at $85.66 a barrel.
Brent for June settlement climbed 71 cents to settle at $90.45.
https://www.rigzone.com/news/wire/oil_r ... 5-article/
"Oil Rises as Israel Braces for Iranian Attack"
by Bloomberg | Julia Fanzeres
Friday, April 12, 2024
Oil rose as Israel braced for a possible attack from Iran, a development that would threaten major disruptions in a region that accounts for a third of the world’s crude output.
An assault is expected to come as soon as the next 48 hours, which would mark a significant widening of the conflict that started when Hamas attacked Israel in October.
Global benchmark Brent surged as much as 2.7% to top $92 a barrel — a level last reached during the early days of the war — before paring gains to settle above $90 a barrel.
US benchmark West Texas Intermediate climbed as much as 3.1% before its advance faded.
Israel is expecting a drone or missile attack on government targets within days, either directly or from Iran’s proxies, people familiar with Western intelligence assessments said.
The move still hasn’t been approved by Tehran’s highest-ranking officials, the people said, while the US has moved additional military assets into the region.
“Direct Iranian engagement puts higher odds of a potential supply disruption in the region, causing many traders to continue to reach for exposure in crude and upside crude call options,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth.
“Heading into a weekend with significant headline risk, there are few sellers willing to step in and sell the rally.”
WTI has surged about 19% this year as the Middle East conflict bolsters a market shaped by supply restrictions and stronger-than-expected demand.
The escalating geopolitical tensions — also including attacks on Russian energy infrastructure by Ukraine — have spurred bullish activity in the oil options market.
There has been elevated buying of call options — which profit when prices rise — in recent days, with implied volatility jumping to a two-month high.
The options on Brent are still trading at a premium over bearish puts.
Prices:
West Texas Intermediate for May delivery rose 64 cents to settle at $85.66 a barrel.
Brent for June settlement climbed 71 cents to settle at $90.45.
https://www.rigzone.com/news/wire/oil_r ... 5-article/
Re: THE DAILY NEWS
CNBC
"Treasury yields fall as investors weigh state of economy"
Hakyung Kim @HAKYUNGKIM_ Sophie Kiderlin @IN/SOPHIE-KIDERLIN-B327B914A/ @SKIDERLIN
PUBLISHED FRI, APR 12 2024
U.S. Treasury yields declined on Friday as investors considered the state of the economy after the release of inflation data and weighed the path ahead for interest rates.
At 4 p.m. ET, the yield on the 10-year Treasury was down more than 5 basis points at 4.52%.
The 2-year Treasury yield was last at 4.894% after falling 6 basis points.
The Treasury yields were still up sharply for the week despite Friday’s decline.
The benchmark 10-year was up more than 10 basis points during that time, while the 2-year has risen more than 15 basis points.
Yields and prices have an inverted relationship.
One basis point is equivalent to 0.01%.
Investors considered the state of the economy after key economic data releases, and assessed what this could mean for upcoming monetary policy decisions from the Federal Reserve.
Import prices in the start of 2024 posted their largest three-month gain since May 2022, according to new data from the Labor Department.
Boosted by a 4.7% jump in fuel, import prices rose 0.4% in March, higher than the 0.3% Dow Jones estimate.
On a 12-month basis, import prices rose 0.4%, the first increase since January 2023.
The March producer price index, which tracks wholesale inflation, came in below expectations on Thursday, reflecting a 0.2% increase from the previous month.
Economists polled by Dow Jones had been expecting it to rise 0.3%.
The reading eased concerns about persistent inflationary pressures slightly.
Investors have been fretting about what sticky inflation could mean for interest rate cuts that are expected to take place later this year.
Market expectations for when the first rate cut will take place shifted from June to September in recent days after the March consumer price index came in higher than expected earlier this week.
Some investors are also considering the possibility of there being no rate cuts at all this year.
The Fed has frequently said its decision-making on rate cuts will be data-led, and that it is waiting for inflation to move lower before easing monetary policy.
https://www.cnbc.com/2024/04/12/us-trea ... onomy.html
"Treasury yields fall as investors weigh state of economy"
Hakyung Kim @HAKYUNGKIM_ Sophie Kiderlin @IN/SOPHIE-KIDERLIN-B327B914A/ @SKIDERLIN
PUBLISHED FRI, APR 12 2024
U.S. Treasury yields declined on Friday as investors considered the state of the economy after the release of inflation data and weighed the path ahead for interest rates.
At 4 p.m. ET, the yield on the 10-year Treasury was down more than 5 basis points at 4.52%.
The 2-year Treasury yield was last at 4.894% after falling 6 basis points.
The Treasury yields were still up sharply for the week despite Friday’s decline.
The benchmark 10-year was up more than 10 basis points during that time, while the 2-year has risen more than 15 basis points.
Yields and prices have an inverted relationship.
One basis point is equivalent to 0.01%.
Investors considered the state of the economy after key economic data releases, and assessed what this could mean for upcoming monetary policy decisions from the Federal Reserve.
Import prices in the start of 2024 posted their largest three-month gain since May 2022, according to new data from the Labor Department.
Boosted by a 4.7% jump in fuel, import prices rose 0.4% in March, higher than the 0.3% Dow Jones estimate.
On a 12-month basis, import prices rose 0.4%, the first increase since January 2023.
The March producer price index, which tracks wholesale inflation, came in below expectations on Thursday, reflecting a 0.2% increase from the previous month.
Economists polled by Dow Jones had been expecting it to rise 0.3%.
The reading eased concerns about persistent inflationary pressures slightly.
Investors have been fretting about what sticky inflation could mean for interest rate cuts that are expected to take place later this year.
Market expectations for when the first rate cut will take place shifted from June to September in recent days after the March consumer price index came in higher than expected earlier this week.
Some investors are also considering the possibility of there being no rate cuts at all this year.
The Fed has frequently said its decision-making on rate cuts will be data-led, and that it is waiting for inflation to move lower before easing monetary policy.
https://www.cnbc.com/2024/04/12/us-trea ... onomy.html
Re: THE DAILY NEWS
REUTERS
"Wall St ends sharply lower on mixed earnings, sticky inflation, geopolitical fears"
By Stephen Culp
April 12, 2024
Summary
* JPMorgan Chase falls on NII forecast miss
* Wells Fargo Citigroup down after lower Q1 profits
* U.S. Steel dips after shareholders approve Nippon Steel merger
* Indexes down: Dow 1.24%, S&P 1.46%, Nasdaq 1.62%
NEW YORK, April 12 (Reuters) - U.S. stocks sold off on Friday after major U.S. banks' results failed to impress, capping a week marked by market-moving inflation data, evolving expectations for U.S. Federal Reserve policy, and looming geopolitical tensions.
All three major indexes fell more than 1%, and registered losses on the week.
The S&P 500 index notched its biggest weekly percentage loss since January, while the Dow Jones Industrial Average's weekly loss was its steepest since March 2023.
"When we look at what's happened in the macro space, inflation has taken a turn for the worse and that has put more pressure on companies to deliver this earnings season," said Mike Dickson, head of research at Horizon Investments in Charlotte, North Carolina.
"Everyone's a bit jittery with intense focus on how good earnings need to be."
Results from a trio of big banks marked the unofficial launch of first-quarter earnings season.
JPMorgan Chase & Co, the biggest U.S. bank by assets, posted a 6% profit increase but its net interest income forecast fell short of expectations.
Its shares slid 6.5%.
Wells Fargo & Co's stock inched lower after profits fell 7% as net interest income dropped on weak borrowing demand.
Citigroup posted a loss after spending on employee severance and deposit insurance.
Its stock dipped 1.7%.
Economic data this week, particularly Wednesday's hotter-than-expected Consumer Price Index report, has suggested that inflation could be stickier than previously thought, prompting investors to reset expectations about the timing and extent of the U.S. Federal Reserve's rate cuts this year.
"It's a very real risk that we won't get any rate cuts this year," Dickson said, adding that while he does not expect a hike, the Fed would probably prefer to keep rates higher for longer.
"There's just no data point that you can actually look at right now that says the Fed should cut rates."
Boston Fed President Susan Collins said she expects a couple of rate cuts this year, even though it could take inflation some time to return to its targeted level.
Austan Goolsbee, president of the Chicago Fed, said he remains focused on the Personal Consumption Expenditures (PCE) report due on April 26 for a clearer picture of inflation's progress toward the central bank's target.
Geopolitical tensions continue to simmer as Iran threatened to take revenge on Israel for the April 1 airstrike on its embassy in Damascus, adding momentum to the sell-off.
"Geopolitical risks are difficult to nail down but they could keep energy prices elevated, which would not be helpful to for the CPI situation."
The Dow Jones Industrial Average fell 475.84 points, or 1.24%, to 37,983.24.
The S&P 500 lost 75.65 points, or 1.46%, at 5,123.41 and the Nasdaq Composite dropped 267.10 points, or 1.62%, to 16,175.09.
All 11 major sectors in the S&P 500 closed in the red, with materials suffering the steepest percentage loss.
Advanced Micro Devices and Intel fell 4.2% and 5.2%, respectively, following a report that Chinese officials told the country's largest telecom firm earlier this year to phase out foreign chips by 2027.
U.S. Steel slid 2.1% after shareholders voted to approve a proposed merger with Nippon Steel Corporation.
Declining issues outnumbered advancers on the NYSE by a 4.19-to-1 ratio; on Nasdaq, a 3.16-to-1 ratio favored decliners.
The S&P 500 posted 12 new 52-week highs and nine new lows; the Nasdaq Composite recorded 35 new highs and 211 new lows.
Volume on U.S. exchanges was 11.67 billion shares, compared with the 11.41 billion average for the full session over the last 20 trading days.
Reporting by Stephen Culp; Additional reporting by Shashwat Chauhan and Shristi Achar A in Bangalore; Editing by Richard Chang
https://www.reuters.com/markets/us/futu ... 024-04-12/
"Wall St ends sharply lower on mixed earnings, sticky inflation, geopolitical fears"
By Stephen Culp
April 12, 2024
Summary
* JPMorgan Chase falls on NII forecast miss
* Wells Fargo Citigroup down after lower Q1 profits
* U.S. Steel dips after shareholders approve Nippon Steel merger
* Indexes down: Dow 1.24%, S&P 1.46%, Nasdaq 1.62%
NEW YORK, April 12 (Reuters) - U.S. stocks sold off on Friday after major U.S. banks' results failed to impress, capping a week marked by market-moving inflation data, evolving expectations for U.S. Federal Reserve policy, and looming geopolitical tensions.
All three major indexes fell more than 1%, and registered losses on the week.
The S&P 500 index notched its biggest weekly percentage loss since January, while the Dow Jones Industrial Average's weekly loss was its steepest since March 2023.
"When we look at what's happened in the macro space, inflation has taken a turn for the worse and that has put more pressure on companies to deliver this earnings season," said Mike Dickson, head of research at Horizon Investments in Charlotte, North Carolina.
"Everyone's a bit jittery with intense focus on how good earnings need to be."
Results from a trio of big banks marked the unofficial launch of first-quarter earnings season.
JPMorgan Chase & Co, the biggest U.S. bank by assets, posted a 6% profit increase but its net interest income forecast fell short of expectations.
Its shares slid 6.5%.
Wells Fargo & Co's stock inched lower after profits fell 7% as net interest income dropped on weak borrowing demand.
Citigroup posted a loss after spending on employee severance and deposit insurance.
Its stock dipped 1.7%.
Economic data this week, particularly Wednesday's hotter-than-expected Consumer Price Index report, has suggested that inflation could be stickier than previously thought, prompting investors to reset expectations about the timing and extent of the U.S. Federal Reserve's rate cuts this year.
"It's a very real risk that we won't get any rate cuts this year," Dickson said, adding that while he does not expect a hike, the Fed would probably prefer to keep rates higher for longer.
"There's just no data point that you can actually look at right now that says the Fed should cut rates."
Boston Fed President Susan Collins said she expects a couple of rate cuts this year, even though it could take inflation some time to return to its targeted level.
Austan Goolsbee, president of the Chicago Fed, said he remains focused on the Personal Consumption Expenditures (PCE) report due on April 26 for a clearer picture of inflation's progress toward the central bank's target.
Geopolitical tensions continue to simmer as Iran threatened to take revenge on Israel for the April 1 airstrike on its embassy in Damascus, adding momentum to the sell-off.
"Geopolitical risks are difficult to nail down but they could keep energy prices elevated, which would not be helpful to for the CPI situation."
The Dow Jones Industrial Average fell 475.84 points, or 1.24%, to 37,983.24.
The S&P 500 lost 75.65 points, or 1.46%, at 5,123.41 and the Nasdaq Composite dropped 267.10 points, or 1.62%, to 16,175.09.
All 11 major sectors in the S&P 500 closed in the red, with materials suffering the steepest percentage loss.
Advanced Micro Devices and Intel fell 4.2% and 5.2%, respectively, following a report that Chinese officials told the country's largest telecom firm earlier this year to phase out foreign chips by 2027.
U.S. Steel slid 2.1% after shareholders voted to approve a proposed merger with Nippon Steel Corporation.
Declining issues outnumbered advancers on the NYSE by a 4.19-to-1 ratio; on Nasdaq, a 3.16-to-1 ratio favored decliners.
The S&P 500 posted 12 new 52-week highs and nine new lows; the Nasdaq Composite recorded 35 new highs and 211 new lows.
Volume on U.S. exchanges was 11.67 billion shares, compared with the 11.41 billion average for the full session over the last 20 trading days.
Reporting by Stephen Culp; Additional reporting by Shashwat Chauhan and Shristi Achar A in Bangalore; Editing by Richard Chang
https://www.reuters.com/markets/us/futu ... 024-04-12/