THE DAILY NEWS

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CNBC

"Consumer prices rise more than expected as energy costs surge"


Jeff Cox @JEFF.COX.7528 @JEFFCOXCNBCCOM

PUBLISHED WED, OCT 13 2021

KEY POINTS

* Consumer prices overall rose 0.4% in September, pushing the year-over-year gain to 5.4%.

* Excluding food and energy, the gain was just 0.2% and 4%, respectively.

* Energy and food prices climbed, while used car prices, which had been a central story in the inflation picture this year, declined.


Consumer prices increased slightly more than expected in September as food and energy price rises offset declines in used cars, the Labor Department reported Wednesday.

The consumer price index for all items rose 0.4% for the month, compared with the 0.3% Dow Jones estimate.

On a year-over-year basis, prices increased 5.4% versus the estimate for 5.3% and the highest since January 1991.

However, excluding volatile food and energy prices, the CPI increased 0.2% on the month and 4% year over year, against respective estimates for 0.3% and 4%.

Dow futures were slightly positive following the news but fell sharply through the morning, while government bond yields were mostly lower as investors gravitated toward safe-haven fixed income.

Gasoline prices rose another 1.2% for the month, bringing the annual increase to 42.1%.

Fuel oil shot up 3.9%, for a 42.6% year over year surge.


Food prices also showed notable gains for the month, with food at home rising 1.2%.

Meat prices rose 3.3% just in September and increased 12.6% year over year.

“Food and energy are more variable, but that’s where the problem is,” said Bob Doll, chief investment officer at Crossmark Global Investments.

“Hopefully, we start solving our supply shortage problem."

"But when the dust settles, inflation is not going back to zero to 2 [percent] where it was for the last decade.”

Used car prices, which have been at the center of much of the inflation pressures in recent months, fell 0.7% for the month, pulling the 12-month increase down to 24.4%.

However, the continued rise in prices even with the drop in vehicle costs could lend credence to the notion that inflation is more persistent than policymakers think.

Airline fares tumbled 6.4% for the month after falling 9.1% in July.

Shelter prices, which make up about a third of the CPI, increased 0.4% for the month and are up 3.2% for the 12-month period.

Owners’ equivalent rent or how much an owner of a property would have to pay to rent it, increased 0.4% as well, its largest monthly gain since June 2006.


“This might just be an overshoot after a couple of relatively modest increases, but we can’t rule out the idea that the fundamentals — rapid house price gains, more aggressive landlord pricing, low inventory, and faster wage growth — are pushing up the trend,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Apparel prices also declined 1.1% in September while transportation services dropped 0.5%.

Both sectors have been rising consistently and still showed respective annual gains of 3.4% and 4.4%.

Federal Reserve officials have called the current inflation run “transitory,” and attribute it largely to supply chain and demand issues that they expect to subside in the months ahead.

However, that view has been receiving substantial pushback lately.

“This is one more data point to say, ‘Fed, your trying to convince us that inflation is transitory is just not believable,’” Doll said.

“If you know anybody who doesn’t have to live somewhere, doesn’t eat any food and doesn’t use energy, then inflation is maybe not a particular problem."

"But come on.”


On Tuesday, the International Monetary Fund warned that the Fed and its global peers should be preparing contingency plans should inflation prove persistent.

That would mean raising interest rates sooner than expected to control the price gains.

Later in the day, St. Louis Fed President James Bullard told CNBC that he thinks the Fed should be more aggressive in withdrawing its economic support, and in particular its monthly bond purchases, should inflation prove a problem and require rate hikes next year.

Also on Tuesday, Atlanta Fed President Raphael Bostic said the factors that have pushed inflation higher “will not be brief.”

“Today’s number shouldn’t move the needle for the Fed,” said Seema Shah, chief investment strategist at Principal Global Investors.

“Inflation has already surpassed its goal and, if anything, the higher-than-expected September CPI just reinforces the need to start tapering."

"November tapering, here we come.”

JPMorgan Chase CEO Jamie Dimon on Monday took the transitory side of the argument, saying that the current conditions will clear up and inflation won’t be a factor in 2022.

https://www.cnbc.com/2021/10/13/the-con ... imate.html
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REUTERS

"Fed lays out plan to reduce bond purchases, flags inflation worries"


By Ann Saphir and Jonnelle Marte, Lindsay Dunsmuir

October 13, 2021

Summary

* Policymakers discuss plan for 'gradual' cut in bond-buying

* Taper could start in mid-November or mid-December -minutes

* Minutes contain fewer references to 'transitory' inflation


Oct 13 (Reuters) - The Federal Reserve signaled on Wednesday it could start reducing its crisis-era support for the U.S. economy by the middle of next month, with a growing number of its policymakers worried that high inflation could persist longer than previously thought.

Though no decision on a "taper" of the U.S. central bank's $120 billion in monthly asset purchases was reached at its Sept. 21-22 policy meeting, "participants generally assessed that, provided that the economic recovery remained broadly on track, a gradual tapering process that concluded around the middle of next year would likely be appropriate," according to the minutes of that meeting.

With the economy set to grow this year at its fastest pace in decades, inflation riding well above the Fed's comfort zone and the labor market much healed from the devastation of the coronavirus pandemic, Fed Chair Jerome Powell and his colleagues want to start cutting back on the bond-buying program the central bank put in place to spur the economic recovery from the coronavirus pandemic.

Policymakers discussed cutting the Fed's purchases of Treasuries by $10 billion a month and those of mortgage-backed securities by $5 billion a month, said the minutes, which were released on Wednesday, though "several" participants preferred a faster reduction.

If a decision to begin tapering takes place at the Fed's Nov. 2-3 policy meeting, the minutes said, the process could begin in either the middle of that month or mid-December.

In a change from readouts of Fed meetings over the summer, policymakers were no longer described as "generally" expecting inflation pressures to ease as transitory factors "dissipated."

Instead, the minutes suggested there were intensifying worries within the Fed over inflation, with "most" policymakers now seeing upside risks, and "some" concerned about elevated inflation feeding through to inflation expectations or more broadly into prices.


Still, "several other" policymakers attributed upward price pressures to pandemic-related supply bottlenecks that could be expected to abate.

FOCUS ON RATES

With the wind-down in asset purchases imminent, attention now shifts to the timing of future interest rate hikes.

The Fed has promised to keep its benchmark overnight lending rate at the current near-zero level until the economy reaches full employment, and inflation has not only reached its 2% goal but is on track to stay modestly above that level for some time.

The central bank set those parameters when inflation had been running below 2% for years, and the big challenge was seen as lifting it up rather than tamping it down.

But now, the opposite problem may be emerging, as pent-up consumer demand fuels spending in a reopening economy and businesses, hobbled by supply bottlenecks, struggle to keep up.

In forecasts released alongside last month's policy statement, half of Fed policymakers thought a rate hike would be needed before the end of next year, with all but one forecasting a first increase in borrowing costs before the end of 2023.

Key for investors - and the millions of Americans who still can't find jobs - is the question of whether policymakers will need to begin raising rates earlier to stop inflation from spiraling upward, potentially sacrificing labor market gains in the process.

Powell has played down the possibility of being forced into that uncomfortable position.

But the data may be trending against him.

U.S. consumer prices rose 5.4% in the 12 months through September, the U.S. government reported on Wednesday, and traders of interest rate futures boosted their bets that the Fed would have to start lifting rates by next September.

In the minutes, "various" policymakers thought that economic conditions would likely justify keeping rates near their current level for "the next couple of years."

A "number," however, felt rates would need to rise by the end of next year because they felt it would have reached full employment; "some" also thought inflation would remain elevated with risks to the upside, the minutes showed.

Reporting by Ann Saphir, Lindsay Dunsmuir, Jonnelle Marte; Editing by Dan Burns and Paul Simao

https://www.reuters.com/business/patien ... 021-10-13/
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REUTERS

"Higher inflation squeezing U.S. consumers as food prices, rents accelerate"


By Lucia Mutikani

October 13, 2021

Summary

* Consumer price index increases 0.4% in September

* Food, rents account for more than half of the rise

* Core CPI gains 0.2%; increases 4.0% year-on-year


WASHINGTON, Oct 13 (Reuters) - U.S. consumer prices increased solidly in September as Americans paid more for food, rent and a range of other goods, putting pressure on the Biden administration to urgently resolve strained supply chains, which are hampering economic growth.

With prices likely to rise further in the months ahead following a recent surge in the costs of energy products, the report from the Labor Department on Wednesday could test Federal Reserve Chair Jerome Powell's repeated assertion that high inflation is transitory.

Powell and the White House have blamed supply chain bottlenecks for the high inflation.

Supply chains have been gummed up by robust demand as economies emerge from the COVID-19 pandemic, thanks to more than $10 trillion in global economic stimulus, about half of it in the United States.

The coronavirus pandemic has caused a global shortage of workers needed to produce raw materials and move goods from factories to consumers.

President Joe Biden on Wednesday announced that the Port of Los Angeles would start operating around the clock, following the Port of Long Beach's lead, to ease congestion.

Retailers like Walmart Inc as well as shipping companies FedEx Corp and UPS also agreed to move goods 24 hours a day and seven days a week.

"Inflation is no longer 'transitory,'" said Sung Won Sohn, professor of finance and economics at Loyola Marymount University in Los Angeles.

"Supply-chain bottlenecks are getting worse."

"The logjam is unlikely to ease anytime soon despite the latest intervention by the White House."


The consumer price index rose 0.4% last month after climbing 0.3% in August.

Food prices jumped 0.9% after increasing 0.4% in the prior month.

The largest rise in food prices since April 2020 was driven by a surge in the cost of meat.

Owners' equivalent rent of primary residence, which is what a homeowner would receive from renting a home, increased 0.4%.

That was the biggest gain in five years and followed a 0.3% rise in August.

Rent of primary residence shot up 0.5%, the largest advance since May 2001.

Rents are rising as demand for housing in cities rebounds after a pandemic-induced exodus to suburbs and other low-density locations.

Economists expect rents, which account for nearly a third of the CPI, will be a major source of inflation in the months ahead.

"If shelter prices continue to pick up steam, it could mean higher inflation is more baked in than originally thought," said Will Compernolle, senior economist at FHN Financial in New York.

Food and rents accounted for more than half of the increase in the CPI.


Economists polled by Reuters had forecast the overall CPI would rise 0.3%.

In the 12 months through September, the CPI increased 5.4% after advancing 5.3% on a year-on-year basis in August.

Though gasoline prices rose moderately relative to August, prices at the pump have accelerated after the price of Brent crude shot above $80 a barrel.

Natural gas prices have also surged.

Major U.S. stock indexes closed higher.

The dollar fell against a basket of currencies.

Yields on the two-year Treasury note, which is sensitive to changes in interest rates, rose.

NEW CARS MORE EXPENSIVE

Excluding the volatile food and energy components, the CPI climbed 0.2% after edging up 0.1% in August.

In addition to rents, the co-called core CPI was lifted by a 1.3% increase in the cost of new motor vehicles, which marked the fifth straight month of gains above 1%.

A global semiconductor shortage has forced auto manufacturers to cut production.

The average price of a new motor vehicle topped $45,000 for the first time ever in September, according to Kelley Blue Book, a vehicle valuation and automotive research company in California.

There were also increases in the prices of household furnishings and operations, with furniture and bedding posting the biggest gain since March 1988.

Consumers also paid more for motor vehicle insurance.


Though prices for airline fares and used cars and trucks fell, economists expected a rebound, noting that air travel was picking up as infections driven by the Delta variant of the coronavirus subside.

Auction data pointed to rising prices for used motor vehicles.

The so-called core CPI rose 4.0% on a year-on-year basis last month, matching the gain in August.

Accelerating wage growth is also exerting upward pressure on inflation.

The government reported last week that average hourly earnings increased by the most in seven months on a year-on-year basis in September because of worker shortages.

With the number of people voluntarily quitting their jobs hitting a record high in August and at least 10.4 million unfilled positions, wage inflation is set to rise further.

Minutes of the Fed's Sept. 21-22 policy meeting, which were released on Wednesday, showed some U.S. central bank officials "expressed concerns that elevated rates of inflation could feed through into longer-term inflation expectations of households."

Fed officials signaled they could start reducing the central bank's massive bond-buying program in mid-November, the minutes showed.

Strong inflation, if persistent, could force the Fed to increase interest rates.

"Stickier more persistent factors are becoming more prevalent, which the Fed is more likely to respond to," said Michelle Meyer, chief U.S. economist at Bank of America Securities in New York.

The Fed's preferred inflation measure for its flexible 2% target, the core personal consumption expenditures price index, increased 3.6% in the 12 months through August, rising by the same margin for a third straight month.

September's data is due later this month.

The Fed last month upgraded its core PCE inflation projection for this year to 3.7% from the 3.0% it projected in June.

Rising inflation, which is eroding consumers' purchasing power, and supply constraints led economists to anticipate that economic growth braked to below a 3% annualized rate in the third quarter.

The economy grew at a 6.7% pace in the April-June quarter.

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao

https://www.reuters.com/world/us/us-con ... 021-10-13/
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REUTERS

"S&P 500, Nasdaq rise with growth stocks; JPMorgan a drag"


By Caroline Valetkevitch

OCTOBER 13, 2021

NEW YORK (Reuters) - The S&P 500 and Nasdaq ended higher on Wednesday, led by gains in shares of big growth names like Amazon.com and Microsoft, but JPMorgan shares fell along with other bank shares and weighed on the market.

The S&P 500 briefly added to gains following the release of minutes from the September Federal Reserve policy meeting.

U.S. central bankers signaled they could start reducing crisis-era support for the economy in mid-November, though they remained divided over how much of a threat high inflation poses and how soon they may need to raise interest rates, the minutes showed.

Earlier, a Labor Department report showed consumer prices increased solidly in September, further strengthening the case for a Fed interest-rate hike.

Shares of JPMorgan Chase & Co fell 2.6% even though JPMorgan’s third-quarter earnings beat expectations, helped by global dealmaking boom and release of more loan loss reserves.

The stock declined along with the other bank shares and was among the biggest drags on the S&P 500 and Dow, which ended flat.

The S&P 500 bank index was down 1.3%, with longer-dated Treasury yields down on the day.

The day’s corporate results kicked off third-quarter earnings for S&P 500 companies.

“My hope is that as we work our way through earnings season, that the forward-looking guidance will be good enough that we’ll close the year higher."

"But right now the market is in a show-me phase,” said Jim Awad, senior managing director at Clearstead Advisors LLC in New York.

Mega-caps growth names including Amazon.com Inc, Google-parent Alphabet and Microsoft Corp all rose.

The Dow Jones Industrial Average fell 0.53 points to 34,377.81, the S&P 500 gained 13.15 points, or 0.30%, to 4,363.8 and the Nasdaq Composite added 105.71 points, or 0.73%, to 14,571.64.

BlackRock Inc gained 3.8% after the world’s largest money manager beat quarterly profit estimates as an improving economy helped boost its assets under management, driving up fee income.

Also in earnings, Delta Air Lines fell 5.8% after the company reported its first quarterly profit without federal aid since the coronavirus pandemic, but warned of a pre-tax loss for the fourth quarter due to a sharp rise in fuel prices.

Analysts expect corporate America to report strong profit growth in the third quarter but investor worries have been mounting over how supply chain problems, labor shortages and higher energy prices might affect businesses emerging from the pandemic.

Bank of America, Citigroup, Wells Fargo and Morgan Stanley will report results on Thursday, while Goldman Sachs is due to report on Friday.

Among other movers, Apple Inc dipped 0.4% after a report said the iPhone marker was planning to cut production of its iPhone 13.

Advancing issues outnumbered declining ones on the NYSE by a 1.73-to-1 ratio; on Nasdaq, a 1.39-to-1 ratio favored advancers.

The S&P 500 posted 8 new 52-week highs and 9 new lows; the Nasdaq Composite recorded 47 new highs and 56 new lows.

Volume on U.S. exchanges was 9.31 billion shares, compared with the 10.8 billion average for the full session over the last 20 trading days.

Additional reporting by Devik Jain and Bansari Mayur Kamdar in Bengaluru; Editing by Arun Koyyur and David Gregorio

https://www.reuters.com/article/usa-sto ... SL1N2R9306
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REUTERS

"White House asks U.S. oil-and-gas companies to help lower fuel costs -sources"


By Jarrett Renshaw

OCTOBER 13, 2021

(Reuters) -The White House has been speaking with U.S. oil and gas producers in recent days about helping to bring down rising fuel costs, according to two sources familiar with the matter.

Energy costs are rising worldwide, in some cases leading to shortages in major economies like China and India.

In the United States, the average retail cost of a gallon of gas is at a seven-year high, and winter fuel costs are expected to surge, according to the U.S. Energy Department.

Oil-and-gas production remains below the nation’s peak reached in 2019.

The talks with energy companies touched on several issues, including prices, according to a third person familiar with the discussions.

The administration has been in discussions with the oil industry over limiting methane emissions in recent months.

“We are closely monitoring the cost of oil and the cost of gas Americans are paying at the pump."

"And we are using every tool at our disposal to address anti-competitive practices in U.S. and global energy markets to ensure reliable and stable energy markets,” a White House official said.


U.S. crude oil recently hit $80 a barrel for the first time in seven years, as the Organization of the Petroleum Exporting Countries and their allies known as OPEC+ restrict output.

The White House has discussed rising prices with top OPEC producer Saudi Arabia in recent weeks.

The average retail price of a gallon of gasoline has risen to $3.29, according to AAA figures.

The U.S. Energy Department said on Wednesday that household heating costs are expected to rise dramatically this winter for all fuels, but particularly for heating oil and propane.

U.S. oil production has been slow to rebound from 2020, when output dropped during the coronavirus outbreak.

Production hit a record of nearly 13 million barrels per day (bpd) in late 2019, but the U.S. Energy Department said Wednesday that output will only average 11 million bpd in 2021, rising to 11.7 million bpd in 2022.

Natural gas prices are up sharply this year, the result of supply shortages and stronger-than-expected demand in Europe and Asia.

U.S. shale producers, who are responsible for the boom in crude oil output in the last 10 years, have been less willing to drill for more oil after years of weak financial performance, and have instead focused on cutting spending to boost returns for investors.

It can take six months to drill and complete a new well and bring the oil and gas to market.

Any call by the White House for an increase in U.S. production is likely to fall on deaf ears, according to one oil executive, who did not want to be identified criticizing the approach.

The industry has also been unhappy with some of President Joe Biden’s earlier actions, including a temporary drilling halt on federal lands, that they see as an attack on the industry.

“By pursuing policies that restrict supply and make it harder to produce oil and natural gas here in America, Americans will have to pay more for their energy,” said Anne Bradbury, chief executive officer at the American Exploration and Production Council, which lobbies for independent oil-and-gas producers.


Biden’s administration has been conducting internal discussions about rising fuel costs, one of the two sources added.

The United States has so far been insulated from natural gas fuel shortages seen in Asia and Europe, analysts said, because of the nation’s limited ability to export liquefied natural gas.

U.S. benchmark natural gas prices are currently $5.68 per million British thermal units - but prices overseas have been in the $30s.

“I don’t think the fundamentals back those supersized numbers,” said Robert Yawger, director of energy futures at Mizuho.

The White House has been trying to tackle supply bottlenecks that have boosted the price of various goods, from meat to semiconductors.

Officials said Wednesday that the administration has been working with major ports in Los Angeles and Long Beach, along with shipping giants UPS and FedEx, to alleviate congestion slowing deliveries.

Reporting by Jarrett Renshaw, Ron Bousso and David French; Editing by Andrea Ricci and Alistair Bell

https://www.reuters.com/article/usa-bid ... SKBN2H31VQ
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THE WASHINGTON EXAMINER

"Marine who blasted military leaders over Afghanistan withdrawal expected to plead guilty"


Virginia Aabram

13 OCTOBER 2021

A Marine officer who posted a video criticizing military leaders over the chaotic pullout of U.S. forces from Afghanistan will plead guilty to charges but will argue for favorable discharge, according to one of his lawyers.

Lt. Col. Stuart Scheller is set to appear for a court-martial hearing on Thursday and faces charges, including disrespecting commissioned officers, disobeying a superior commissioned officer, and dereliction of duties.

His lawyer, Tim Parlatore, told the Washington Post on Tuesday they hope for a general or honorable discharge rather than dishonorable discharge.

Scheller also wants to avoid jail time.

“Our hope is for him to get a letter of reprimand, and no more,” Parlatore said.

In addition, the lawyer said the exact details of a pretrial agreement are “still up in the air.”

In August, Scheller posted a video in uniform demanding accountability from military higher-ups after an explosion at Kabul's airport killed 13 U.S. service members and roughly 170 Afghans.

After Scheller posted the video, he was removed from his role as commander of the Advanced Infantry Training Battalion at Camp Lejeune in North Carolina.

His hearing will take place at Camp Lejeune.

He was in confinement until being released earlier this month following outcry from Republican lawmakers.


https://www.msn.com/en-us/news/world/ma ... d=msedgntp
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REUTERS

"U.S. Jan. 6 panel to advance contempt charges if subpoenas not followed - Cheney"


13 OCTOBER 2021

WASHINGTON (Reuters) - The U.S. House of Representatives Select Committee investigating the deadly Jan. 6 riot at the Capitol will move criminal contempt charges against those who do not comply with its subpoenas, Representative Liz Cheney, the panel's vice chair, said on Tuesday.

The committee late last month subpoenaed four members of former President Donald Trump's administration.

They were Trump's former chief of staff Mark Meadows, former White House adviser Steve Bannon, former White House Deputy Chief of Staff Dan Scavino and former Defense Department official Kash Patel.

The committee has already threatened criminal contempt charges against Bannon for refusing to cooperate with the inquiry into the attack, in which a mob of Trump's supporters stormed the seat of the U.S. government.

Those subpoenaed will have the opportunity to cooperate, but if they do not, the committee will enforce its subpoenas, Cheney, a Republican, told reporters at the U.S. Capitol.


She leads the committee along with its chairman, Democratic Representative Bennie Thompson.

"In general, people are going to have to appear, or, you know, we will move contempt charges against them," Cheney said.

She said the entire committee was in agreement on that point.

Cheney said the committee expected to have depositions from Meadows and Patel later this week.

"We'll see if they show up."

"If they show up, we'll be prepared," she said.

The riot took place as Congress was meeting to certify Democrat Joe Biden's election victory, delaying that process for several hours as then-Vice President Mike Pence, members of Congress, staff and journalists fled.

More than 600 people now face criminal charges stemming from the event.

House Democrats formed the committee over objections from Trump's fellow Republicans in the House.

Cheney is one of two Republicans on the committee.

(Reporting by Susan Cornwell; Editing by Peter Cooney)

https://www.msn.com/en-us/news/politics ... d=msedgntp
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RIGZONE

"Crude Rally Resumed On Thursday"


by Bloomberg | Julia Fanzeres

Thursday, October 14, 2021

Oil rose in tandem with equities after traders digested a U.S. inventory report showing the biggest decline in crude stockpiles at the Cushing, Oklahoma, storage hub since June.

Futures in New York rose 1.1% on Thursday to settle at a fresh, nearly seven-year high with the stock market heading toward its best day since March.

Supplies at the nation’s largest storage site at Cushing slid last week as traders sent more crude to the U.S. Gulf Coast for export.

“The market is in a severe backwardation right now, so there’s really no incentive to store crude oil,” said Tariq Zahir, managing member of the global macro program at Tyche Capital Advisors LLC.

However, domestic crude inventories increased by more than 6 million barrels last week -- more than expected -- while oil production climbed for a fifth straight week, according to the Energy Information Administration report.

Refineries are entering the peak of what’s known as “turnaround season,” where plants spruce up equipment and typically use less crude.

Crude’s rally in recent months has been underscored by a growing natural gas crisis.

The International Energy Agency on Thursday became the latest to say gas shortages in Europe and Asia are boosting demand for crude.

Banks including UBS Group AG and Citigroup Inc. this week raised their oil price forecasts because of gas-to-oil switching.

Meanwhile, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman reiterated the need for OPEC and its allies to take a gradual, phased approach to supply hikes.

“We have done a remarkable job,” he said during the Russian Energy Week conference.

“Gas markets, coal markets, other sources of energy need a regulator."

"This situation is telling us that people need to copy and paste what OPEC has done.”

Prices:

West Texas Intermediate crude for November delivery rose 87 cents to settle at $81.31 a barrel in New York.

Brent for December settlement advanced 82 cents to settle at $84 a barrel.

U.S. State Department Spokesman Ned Price said the U.S. engaged in diplomacy with OPEC+ members and is “expressing in private our concerns.”

“We are concerned, and we are monitoring the situation very closely,” Price said Thursday during a briefing.

https://www.rigzone.com/news/wire/crude ... 7-article/
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CNBC

"10-year Treasury yield dips after lower-than-expected producer inflation"


Hannah Miao @HANNAHMIAO_ Vicky McKeever @VMCKEEVERCNBC

PUBLISHED THU, OCT 14 2021

The 10-year U.S. Treasury yield dipped Thursday as investors digested a lighter-than-expected September producer inflation reading.

The yield on the benchmark 10-year Treasury note gave up 3.1 basis points, falling to 1.518% at 4:12 p.m. ET.

The yield on the 30-year Treasury bond was 2.3 basis points lower at 2.018%.

Yields move inversely to prices and 1 basis point is equal to 0.01%.

September’s producer price index released Thursday came in slightly lower than anticipated with wholesale prices rising 0.5% from the month prior versus the 0.6% Dow Jones estimate.

The producer inflation reading came after data out on Wednesday showed slightly higher than expected consumer price inflation in September.

The consumer price index rose 0.4% month-on-month, versus a Dow Jones estimate of 0.3%.

The index showed prices had grown 5.4% year-on-year, compared with an expected print of 5.3%.

Also released Thursday, initial jobless claims for the week ended Oct. 9 fell below 300,000 for the first time since the pandemic began.

The initial claims totaled 293,000, below the 318,000 estimate.

“Jobs numbers are keeping the taper announcement on track ... with the bond market generally in agreement that this will not stop the Fed from tapering,” Jason Brady, president and CEO of Thornburg Investment Management, said.

The 10-year rate fell to around 1.54% in afternoon trading on Wednesday, following the release of the minutes from the Fed’s September meeting.

The minutes indicated that Fed officials felt that the central bank had nearly reached its economic goals and could soon begin to slowly reduce the pace of its monthly asset purchasing program.

— CNBC’s Jeff Cox contributed to this market report.

Data also provided by Reuters

https://www.cnbc.com/2021/10/14/us-bond ... nutes.html
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REUTERS

"TREASURIES-U.S. yields decline after labor market, inflation data"


By Chuck Mikolajczak

OCTOBER 14, 2021

NEW YORK, Oct 14 (Reuters) - U.S. Treasury yields fell on Thursday after data on the labor market and inflation eased worries the Federal Reserve may need to take action earlier than expected to combat rising prices, with shorter-dated notes poised to snap an extended run higher.

Weekly initial claims for state unemployment benefits dropped 36,000 to a seasonally adjusted 293,000 versus expectations of 316,000.

Other data showed the producer price index for final demand increased 0.5% in September after advancing 0.7% in August and was just shy of the 0.6% estimate.

Shorter-term yields have risen over the past two days while longer dated yields have dipped, which has served to flatten the yield curve, indicating the market is anticipating a rate hike by the Fed.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 1.4 basis points at 0.354% and poised for its first decline after
seven straight days of gains, its longest streak since June.

The gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, fell for a third straight day to hit 115.6 basis points, its lowest level since September 24 and was last at 116.4.

"With all the supply-demand situation going on with goods coming into the country, economists are starting to feel that maybe GDP won’t be what it is supposed to be, it will probably be around the 2 to 3 percent level," said Tom di Galoma, managing director at Seaport Global Holdings in New York.

"Short-term we got to levels where the market found buyers."

The yield on 10-year Treasury notes was down 3 basis points to 1.519%.

St. Louis Fed President James Bullard said the current high levels of inflation may not abate as soon as many Federal Reserve policymakers expect, and again urged the central bank to pursue a faster taper of its bond-buying program.

San Francisco Federal Reserve Bank President Mary Daly on Thursday said inflation and employment have made enough progress for the U.S. central bank to begin scaling back its monthly bond buying, but is far from ready for interest rate hikes.

Tom Barkin, President of the Richmond Federal Reserve, said he does not expect the Fed's plan to begin to taper its asset purchases to hobble economic growth, but it could be a "positive" move in setting expectations for inflation.


The yield on the 30-year Treasury bond was down 1.7 basis points to 2.024%.

(Reporting by Chuck Mikolajczak; Editing by Will Dunham and Diane Craft)

https://www.reuters.com/article/usa-bon ... SL1N2RA2EQ
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