CNBC
"10-year Treasury yield falls as traders weigh recession risk"
Sarah Min @_SARAHMIN Sam Meredith @SMEREDITH19
PUBLISHED THU, JUN 23 2022
The yield on the benchmark U.S. 10-year Treasury note fell sharply Thursday, as investors continued to assess the likelihood of a recession.
The yield on the 10-year Treasury note dropped 7 basis points to 3.089%.
Earlier in the day, the yield hit a low of 3.005%, or its lowest level in roughly two weeks.
The yield on the 30-year Treasury bond fell roughly 4 basis points to trade at 3.198%.
Yields move inversely to prices.
Market participants are increasingly concerned that aggressive monetary tightening could tip the world’s largest economy into a recession.
Federal Reserve Chairman Jerome Powell capped two days of testimony before Congress on Thursday, reiterating that the U.S. central bank is “strongly committed” to cooling the soaring inflation rate.
“At the Fed, we understand the hardship high inflation is causing,” Powell said to the Senate Banking Committee on Wednesday.
“We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so.”
Last week, the Fed increased its benchmark funds rate by 75 basis points, its largest increase since 1994, but it is thought aggressive tightening could mean exerting further downward pressure on growth.
Several banks on Wall Street raised their odds of a recession this week.
UBS increased the chance of a recession to 69%, pointing to weak reports in housing, industrial production and capital goods.
“We are now watching out for any further negative follow-through or whether we simply hit a local peak and some growth momentum in the hard data resumes,” UBS said in a Thursday note.
Citigroup pointed to a drop in consumer spending that could make a soft landing more difficult for the Federal Reserve, raising the probability of a recession to 50%.
Goldman Sachs said the probability of a downturn is “higher and more front-loaded” than it was previously, raising the chances of a U.S. recession to 30%, up from 15%, over the next year.
On Thursday, the Labor Department said U.S. weekly jobless claims fell 2,000 to a seasonally adjusted 229,000 for the week ended June 18, though the labor market remains tight.
— CNBC’s Elliot Smith contributed to this report.
https://www.cnbc.com/2022/06/23/us-bond ... -risk.html
THE DAILY NEWS
Re: THE DAILY NEWS
CNBC
"Russia’s ruble hit its strongest level in 7 years despite massive sanctions. Here’s why"
Natasha Turak @NATASHATURAK
PUBLISHED THU, JUN 23 2022
KEY POINTS
* Russia’s ruble hit 52.3 to the dollar on Wednesday, an increase of roughly 1.3% on the previous day and its strongest level since May 2015.
* The ruble has actually gotten so strong that Russia’s central bank is actively taking measures to try to weaken it, fearing this will make the country’s exports less competitive.
Russia’s ruble hit 52.3 to the dollar on Wednesday, its strongest level since May 2015.
On Thursday afternoon in Moscow, the currency was trading at 54.2 to the greenback, slightly weaker but still near seven-year highs.
That’s a world away from its plunge to 139 to the dollar in early March, when the U.S. and European Union started rolling out unprecedented sanctions on Moscow in response to its invasion of Ukraine.
The ruble’s stunning surge in the following months is being cited by the Kremlin as “proof” that Western sanctions aren’t working.
“The idea was clear: crush the Russian economy violently,” Russian President Vladimir Putin said last week during the annual St. Petersburg International Economic Forum.
“They did not succeed."
"Obviously, that didn’t happen.”
In late February, following the ruble’s initial tumble and four days after the invasion of Ukraine began on Feb 24, Russia more than doubled the country’s key interest rate to a whopping 20% from a prior 9.5%.
Since then, the currency’s value has improved to the point that it’s lowered the interest rate three times to reach 11% in late May.
The ruble has actually gotten so strong that Russia’s central bank is actively taking measures to try to weaken it, fearing that this will make the country’s exports less competitive.
But what’s really behind the currency’s rise, and can it be sustained?
Russia is raking in record oil and gas revenue
The reasons are, to put it simply: strikingly high energy prices, capital controls and sanctions themselves.
Russia is the world’s largest exporter of gas and the second-largest exporter of oil.
Its primary customer?
The European Union, which has been buying billions of dollars worth of Russian energy per week while simultaneously trying to punish it with sanctions.
That’s put the EU in an awkward spot – it has now sent exponentially more money to Russia in oil, gas and coal purchases than it has sent Ukraine in aid, which has helped fill the Kremlin’s war chest.
And with Brent crude prices 60% higher than they were this time last year, even though many Western countries have curbed their Russian oil buying, Moscow is still making a record profit.
In the Russia-Ukraine war’s first 100 days, the Russian Federation raked in $98 billion in revenue from fossil fuel exports, according to the Centre for Research on Energy and Clean Air, a research organization based in Finland.
More than half of those earnings came from the EU, at about $60 billion.
And while many EU countries are intent on cutting their reliance on Russian energy imports, this process could take years – in 2020, the bloc relied on Russia for 41% of its gas imports and 36% of its oil imports, according to Eurostat.
Yes, the EU passed a landmark sanctions package in May partially banning imports of Russian oil by the end of this year, but it had significant exemptions for oil delivered by pipeline, since landlocked countries like Hungary and Slovenia couldn’t access alternative oil sources that are shipped by sea.
“That exchange rate you see for the ruble is there because Russia is earning record current account surpluses in foreign exchange,” Max Hess, a fellow at the Foreign Policy Research Institute, told CNBC.
That revenue is mostly in dollars and euros via a complex ruble-swap mechanism.
“Although Russia may be selling slightly less to the West right now, as the West moves to cutting off [reliance on Russia], they are still selling a ton at all-time high oil and gas prices."
"So this is bringing in a big current account surplus.”
Russia’s current account surplus from January to May of this year was just over $110 billion, according to Russia’s central bank – more than 3.5 times the amount of that period last year.
Strict capital controls
Capital controls – or the government’s limiting of foreign currency leaving its country – have played a big role here, plus the simple fact that Russia can’t import as much any more thanks to sanctions, meaning it’s spending less of its money buying stuff from elsewhere.
“Authorities implemented pretty strict capital controls as soon as sanctions came on,” said Nick Stadtmiller, director of emerging markets strategy at Medley Global Advisors in New York.
“The result is money is flowing in from exports while there are relatively few capital outflows."
"The net effect of all this is a stronger ruble.”
Russia has now relaxed some of its capital controls and lowered its interest rate in an effort to weaken the ruble, since a stronger currency actually hurts its fiscal account.
The ruble: Really a ‘Potemkin rate’?
Because Russia is now cut off from the SWIFT international banking system and blocked from trading internationally in dollars and euros, it’s been left to essentially trade with itself, Hess said.
That means that while Russia’s built up a formidable volume of foreign reserves that bolster its currency at home, it can’t use those reserves to serve its import needs, thanks to sanctions.
The ruble’s exchange rate “is really a Potemkin rate, because sending money from Russia abroad given the sanctions — both on Russian individuals and Russian banks — is incredibly difficult, not to mention Russia’s own capital controls,” Hess said.
In politics and economics, Potemkin refers to fake villages that were purportedly constructed to provide an illusion of prosperity to Russian Empress Catherine the Great.
“So yes, the ruble on paper is quite a bit stronger, but that’s the result of crashing imports, and what’s the point of building up forex reserves, but to go and buy things from abroad that you need for your economy?"
"And Russia can’t do that.”
“We should really be looking at the underlying issues in the Russian economy, including the cratering imports,” Hess added.
“Even if the ruble says it has a high value, that is going to have a devastating impact on the economy and on quality of life.”
Does this reflect the actual Russian economy?
Does the ruble’s strength mean that Russia’s economic fundamentals are sound and have escaped the blow of sanctions?
Not so fast, analysts say.
“Ruble strength is linked to a surplus in the overall balance of payments, which is much more driven by exogenous factors linked to sanctions, commodity prices and policy measures than by longer term underlying macroeconomic trends and fundamentals,” said Themos Fiotakis, head of FX research at Barclays.
Russia’s Ministry of Economy said in mid-May that it expects unemployment to hit nearly 7% this year, and that a return to 2021 levels is unlikely until 2025 at the earliest.
Since Russia’s war in Ukraine began, thousands of international companies have exited Russia, leaving huge numbers of unemployed Russians in their wake.
Foreign investment has taken a massive hit, and poverty nearly doubled in just the first five weeks of the war alone, according to Russia’s federal statistics agency, Rosstat.
“The Russian ruble is no longer an indicator for the health of the economy,” Hess said.
“While the ruble has surged thanks to the Kremlin’s interference, its inattention to Russian’s well-being continues."
"Even Russia’s own statistics agency, famous for massaging numbers to meet the Kremlin’s goals, acknowledged that the number of Russians living in poverty rose from 12 [million] to 21 million people in Q1 2022.”
As for whether the ruble’s strength can be sustained, Fiotakis said, “It is very uncertain and depends on how the geopolitics evolve and policy adjusts.”
https://www.cnbc.com/2022/06/23/russias ... tions.html
"Russia’s ruble hit its strongest level in 7 years despite massive sanctions. Here’s why"
Natasha Turak @NATASHATURAK
PUBLISHED THU, JUN 23 2022
KEY POINTS
* Russia’s ruble hit 52.3 to the dollar on Wednesday, an increase of roughly 1.3% on the previous day and its strongest level since May 2015.
* The ruble has actually gotten so strong that Russia’s central bank is actively taking measures to try to weaken it, fearing this will make the country’s exports less competitive.
Russia’s ruble hit 52.3 to the dollar on Wednesday, its strongest level since May 2015.
On Thursday afternoon in Moscow, the currency was trading at 54.2 to the greenback, slightly weaker but still near seven-year highs.
That’s a world away from its plunge to 139 to the dollar in early March, when the U.S. and European Union started rolling out unprecedented sanctions on Moscow in response to its invasion of Ukraine.
The ruble’s stunning surge in the following months is being cited by the Kremlin as “proof” that Western sanctions aren’t working.
“The idea was clear: crush the Russian economy violently,” Russian President Vladimir Putin said last week during the annual St. Petersburg International Economic Forum.
“They did not succeed."
"Obviously, that didn’t happen.”
In late February, following the ruble’s initial tumble and four days after the invasion of Ukraine began on Feb 24, Russia more than doubled the country’s key interest rate to a whopping 20% from a prior 9.5%.
Since then, the currency’s value has improved to the point that it’s lowered the interest rate three times to reach 11% in late May.
The ruble has actually gotten so strong that Russia’s central bank is actively taking measures to try to weaken it, fearing that this will make the country’s exports less competitive.
But what’s really behind the currency’s rise, and can it be sustained?
Russia is raking in record oil and gas revenue
The reasons are, to put it simply: strikingly high energy prices, capital controls and sanctions themselves.
Russia is the world’s largest exporter of gas and the second-largest exporter of oil.
Its primary customer?
The European Union, which has been buying billions of dollars worth of Russian energy per week while simultaneously trying to punish it with sanctions.
That’s put the EU in an awkward spot – it has now sent exponentially more money to Russia in oil, gas and coal purchases than it has sent Ukraine in aid, which has helped fill the Kremlin’s war chest.
And with Brent crude prices 60% higher than they were this time last year, even though many Western countries have curbed their Russian oil buying, Moscow is still making a record profit.
In the Russia-Ukraine war’s first 100 days, the Russian Federation raked in $98 billion in revenue from fossil fuel exports, according to the Centre for Research on Energy and Clean Air, a research organization based in Finland.
More than half of those earnings came from the EU, at about $60 billion.
And while many EU countries are intent on cutting their reliance on Russian energy imports, this process could take years – in 2020, the bloc relied on Russia for 41% of its gas imports and 36% of its oil imports, according to Eurostat.
Yes, the EU passed a landmark sanctions package in May partially banning imports of Russian oil by the end of this year, but it had significant exemptions for oil delivered by pipeline, since landlocked countries like Hungary and Slovenia couldn’t access alternative oil sources that are shipped by sea.
“That exchange rate you see for the ruble is there because Russia is earning record current account surpluses in foreign exchange,” Max Hess, a fellow at the Foreign Policy Research Institute, told CNBC.
That revenue is mostly in dollars and euros via a complex ruble-swap mechanism.
“Although Russia may be selling slightly less to the West right now, as the West moves to cutting off [reliance on Russia], they are still selling a ton at all-time high oil and gas prices."
"So this is bringing in a big current account surplus.”
Russia’s current account surplus from January to May of this year was just over $110 billion, according to Russia’s central bank – more than 3.5 times the amount of that period last year.
Strict capital controls
Capital controls – or the government’s limiting of foreign currency leaving its country – have played a big role here, plus the simple fact that Russia can’t import as much any more thanks to sanctions, meaning it’s spending less of its money buying stuff from elsewhere.
“Authorities implemented pretty strict capital controls as soon as sanctions came on,” said Nick Stadtmiller, director of emerging markets strategy at Medley Global Advisors in New York.
“The result is money is flowing in from exports while there are relatively few capital outflows."
"The net effect of all this is a stronger ruble.”
Russia has now relaxed some of its capital controls and lowered its interest rate in an effort to weaken the ruble, since a stronger currency actually hurts its fiscal account.
The ruble: Really a ‘Potemkin rate’?
Because Russia is now cut off from the SWIFT international banking system and blocked from trading internationally in dollars and euros, it’s been left to essentially trade with itself, Hess said.
That means that while Russia’s built up a formidable volume of foreign reserves that bolster its currency at home, it can’t use those reserves to serve its import needs, thanks to sanctions.
The ruble’s exchange rate “is really a Potemkin rate, because sending money from Russia abroad given the sanctions — both on Russian individuals and Russian banks — is incredibly difficult, not to mention Russia’s own capital controls,” Hess said.
In politics and economics, Potemkin refers to fake villages that were purportedly constructed to provide an illusion of prosperity to Russian Empress Catherine the Great.
“So yes, the ruble on paper is quite a bit stronger, but that’s the result of crashing imports, and what’s the point of building up forex reserves, but to go and buy things from abroad that you need for your economy?"
"And Russia can’t do that.”
“We should really be looking at the underlying issues in the Russian economy, including the cratering imports,” Hess added.
“Even if the ruble says it has a high value, that is going to have a devastating impact on the economy and on quality of life.”
Does this reflect the actual Russian economy?
Does the ruble’s strength mean that Russia’s economic fundamentals are sound and have escaped the blow of sanctions?
Not so fast, analysts say.
“Ruble strength is linked to a surplus in the overall balance of payments, which is much more driven by exogenous factors linked to sanctions, commodity prices and policy measures than by longer term underlying macroeconomic trends and fundamentals,” said Themos Fiotakis, head of FX research at Barclays.
Russia’s Ministry of Economy said in mid-May that it expects unemployment to hit nearly 7% this year, and that a return to 2021 levels is unlikely until 2025 at the earliest.
Since Russia’s war in Ukraine began, thousands of international companies have exited Russia, leaving huge numbers of unemployed Russians in their wake.
Foreign investment has taken a massive hit, and poverty nearly doubled in just the first five weeks of the war alone, according to Russia’s federal statistics agency, Rosstat.
“The Russian ruble is no longer an indicator for the health of the economy,” Hess said.
“While the ruble has surged thanks to the Kremlin’s interference, its inattention to Russian’s well-being continues."
"Even Russia’s own statistics agency, famous for massaging numbers to meet the Kremlin’s goals, acknowledged that the number of Russians living in poverty rose from 12 [million] to 21 million people in Q1 2022.”
As for whether the ruble’s strength can be sustained, Fiotakis said, “It is very uncertain and depends on how the geopolitics evolve and policy adjusts.”
https://www.cnbc.com/2022/06/23/russias ... tions.html
Re: THE DAILY NEWS
REUTERS
"Biden, 11 U.S. states to boost support for offshore wind energy"
Reuters
June 23, 2022
WASHINGTON, June 23 (Reuters) - The Biden administration is partnering with 11 East Coast states to accelerate development of offshore wind facilities and create jobs by supporting a domestic supply chain for the industry, the White House said on Thursday.
The move is part of President Joe Biden's push to fight climate change by expanding clean energy technologies.
That agenda has been weighed down recently by rising prices, particularly for gasoline.
Offshore wind is a major component of that strategy.
The administration has set a goal of reaching 30 gigawatts of capacity by 2030, up from just 42 megawatts currently with two small projects.
"The partnership will support efforts to provide Americans with cleaner and cheaper energy, create good-paying jobs, and make historic investments in new American energy supply chains, manufacturing, shipbuilding, and servicing," the White House said in a statement.
Biden administration officials met with state governors and labor leaders at the White House on Thursday.
"This is a real boost to our energy security," Biden told reporters following the meeting.
Administration officials were also scheduled to meet with oil refiners, one day after Biden floated a gasoline tax holiday to help ease fuel costs for U.S. families and workers.
The wind initiative will provide funding to create a domestic offshore wind supply chain and support a fleet of specialized vessels to build and service the projects, the White House said.
Ships ferrying workers and enormous components are crucial for offshore wind installations.
Until the United States develops its own fleet, offshore wind developers are expected to rely on vessels built overseas.
Congress is considering legislation to require those vessels to be staffed by American crews or mariners from the nation that matches the flag of the ship.
The offshore wind industry opposes the provision on the grounds that there are not currently enough American mariners trained to operate those vessels.
It is lobbying the Senate to exclude it from the bill, which passed in the House of Representatives.
"As written, the House maritime crewing provision is an existential threat to the future of offshore wind in the United States and the immediate result would be the delay and potential cancellation of the 19 offshore wind projects with power offtake contracts or awards," more than two dozen offshore wind companies and trade groups said in a letter to key senators on Thursday.
The federal-state wind partnership initially includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, and Rhode Island.
It will seek to expand to Western and Gulf states as those markets develop.
Reporting by Susan Heavey, additional reporting by Nichola Groom; Editing by Toby Chopra and David Gregorio
https://www.reuters.com/world/us/biden- ... 022-06-23/
"Biden, 11 U.S. states to boost support for offshore wind energy"
Reuters
June 23, 2022
WASHINGTON, June 23 (Reuters) - The Biden administration is partnering with 11 East Coast states to accelerate development of offshore wind facilities and create jobs by supporting a domestic supply chain for the industry, the White House said on Thursday.
The move is part of President Joe Biden's push to fight climate change by expanding clean energy technologies.
That agenda has been weighed down recently by rising prices, particularly for gasoline.
Offshore wind is a major component of that strategy.
The administration has set a goal of reaching 30 gigawatts of capacity by 2030, up from just 42 megawatts currently with two small projects.
"The partnership will support efforts to provide Americans with cleaner and cheaper energy, create good-paying jobs, and make historic investments in new American energy supply chains, manufacturing, shipbuilding, and servicing," the White House said in a statement.
Biden administration officials met with state governors and labor leaders at the White House on Thursday.
"This is a real boost to our energy security," Biden told reporters following the meeting.
Administration officials were also scheduled to meet with oil refiners, one day after Biden floated a gasoline tax holiday to help ease fuel costs for U.S. families and workers.
The wind initiative will provide funding to create a domestic offshore wind supply chain and support a fleet of specialized vessels to build and service the projects, the White House said.
Ships ferrying workers and enormous components are crucial for offshore wind installations.
Until the United States develops its own fleet, offshore wind developers are expected to rely on vessels built overseas.
Congress is considering legislation to require those vessels to be staffed by American crews or mariners from the nation that matches the flag of the ship.
The offshore wind industry opposes the provision on the grounds that there are not currently enough American mariners trained to operate those vessels.
It is lobbying the Senate to exclude it from the bill, which passed in the House of Representatives.
"As written, the House maritime crewing provision is an existential threat to the future of offshore wind in the United States and the immediate result would be the delay and potential cancellation of the 19 offshore wind projects with power offtake contracts or awards," more than two dozen offshore wind companies and trade groups said in a letter to key senators on Thursday.
The federal-state wind partnership initially includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, and Rhode Island.
It will seek to expand to Western and Gulf states as those markets develop.
Reporting by Susan Heavey, additional reporting by Nichola Groom; Editing by Toby Chopra and David Gregorio
https://www.reuters.com/world/us/biden- ... 022-06-23/
Re: THE DAILY NEWS
REUTERS
"TREASURIES-Yields tumble to two-week lows on recession fears"
By Karen Brettell
JUNE 23, 2022
NEW YORK, June 23 (Reuters) - U.S. Treasury yields fell to two-week lows on Thursday on concerns that the Federal Reserve will cause a recession by aggressively hiking interest rates, and on a growing belief that yields may have topped for the near term even if inflation stays high.
Yields have dropped from more-than-decade highs reached before last week’s Fed meeting, when the U.S. central bank hiked rates by 75 basis points, the biggest increase since 1994, and signaled a similar move is possible in July.
Fed Chairman Jerome Powell said on Thursday that the Fed's commitment to reining in 40-year-high inflation is "unconditional" but also comes with the risk of higher unemployment.
There are “growing recession fears,” said Benjamin Jeffery, an interest rate strategist at BMO Capital Markets.
As concerns about an economic downturn increase, Jeffery said 10-year yields could drop back to the 2.50%-to-2.75% area, “especially if we started to see even more concerning economic data and even maybe some slowing in terms of hiring.”
Benchmark 10-year yields fell to 3.005%, before rebounding to 3.070%.
They have dropped from 3.498% on June 14, the highest since April 2011.
Two-year Treasury yields reached 2.876%, before rising back to 3.012%.
They are down from 3.456% on June 14, which was the highest since November 2007.
The closely watched yield curve between two-year and 10-year notes was at 6 basis points, after inverting early last week.
An inversion in this part of the curve is seen as a reliable indicator that a recession is likely in one to two years.
Powell said on Wednesday that the Fed is not trying to engineer a recession to stop inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn.
Fed funds futures traders have pared back expectations on how high the Fed is likely to raise its benchmark rate.
They are now pricing for the rate to peak at 3.55% in March, down from expectations last week that it would increase to around 4%.
It is currently 1.58%.
U.S. data on Thursday showed that the number of Americans filing new claims for unemployment benefits edged down last week as labor market conditions remained tight, while U.S. business activity slowed considerably in June.
Bonds were boosted earlier on Thursday after a survey showed that euro zone business growth has slowed significantly this month - and by much more than expected.
The Treasury saw solid demand for an $18 billion sale of five-year Treasury Inflation-Protected Securities (TIPS).
The notes sold at a high yield of 0.362%, around 3 basis points below where they had traded before the auction, and had an average bid-to-cover ratio of 2.61 times.
Inflation expectations priced in to the notes have fallen in the past week as fears of a recession have increased.
Breakeven rates, a measure of expected annual inflation for the next five years, reached 2.69% on Thursday, the lowest since Feb. 8.
They are down from a five-week high of 3.25% reached on June 13.
(Reporting by Karen Brettell in New York; Additional reporting by Dhara Ranasinghe in London; Editing by Jonathan Oatis and Matthew Lewis)
https://www.reuters.com/article/usa-bon ... SL1N2YA2BF
"TREASURIES-Yields tumble to two-week lows on recession fears"
By Karen Brettell
JUNE 23, 2022
NEW YORK, June 23 (Reuters) - U.S. Treasury yields fell to two-week lows on Thursday on concerns that the Federal Reserve will cause a recession by aggressively hiking interest rates, and on a growing belief that yields may have topped for the near term even if inflation stays high.
Yields have dropped from more-than-decade highs reached before last week’s Fed meeting, when the U.S. central bank hiked rates by 75 basis points, the biggest increase since 1994, and signaled a similar move is possible in July.
Fed Chairman Jerome Powell said on Thursday that the Fed's commitment to reining in 40-year-high inflation is "unconditional" but also comes with the risk of higher unemployment.
There are “growing recession fears,” said Benjamin Jeffery, an interest rate strategist at BMO Capital Markets.
As concerns about an economic downturn increase, Jeffery said 10-year yields could drop back to the 2.50%-to-2.75% area, “especially if we started to see even more concerning economic data and even maybe some slowing in terms of hiring.”
Benchmark 10-year yields fell to 3.005%, before rebounding to 3.070%.
They have dropped from 3.498% on June 14, the highest since April 2011.
Two-year Treasury yields reached 2.876%, before rising back to 3.012%.
They are down from 3.456% on June 14, which was the highest since November 2007.
The closely watched yield curve between two-year and 10-year notes was at 6 basis points, after inverting early last week.
An inversion in this part of the curve is seen as a reliable indicator that a recession is likely in one to two years.
Powell said on Wednesday that the Fed is not trying to engineer a recession to stop inflation but is fully committed to bringing prices under control even if doing so risks an economic downturn.
Fed funds futures traders have pared back expectations on how high the Fed is likely to raise its benchmark rate.
They are now pricing for the rate to peak at 3.55% in March, down from expectations last week that it would increase to around 4%.
It is currently 1.58%.
U.S. data on Thursday showed that the number of Americans filing new claims for unemployment benefits edged down last week as labor market conditions remained tight, while U.S. business activity slowed considerably in June.
Bonds were boosted earlier on Thursday after a survey showed that euro zone business growth has slowed significantly this month - and by much more than expected.
The Treasury saw solid demand for an $18 billion sale of five-year Treasury Inflation-Protected Securities (TIPS).
The notes sold at a high yield of 0.362%, around 3 basis points below where they had traded before the auction, and had an average bid-to-cover ratio of 2.61 times.
Inflation expectations priced in to the notes have fallen in the past week as fears of a recession have increased.
Breakeven rates, a measure of expected annual inflation for the next five years, reached 2.69% on Thursday, the lowest since Feb. 8.
They are down from a five-week high of 3.25% reached on June 13.
(Reporting by Karen Brettell in New York; Additional reporting by Dhara Ranasinghe in London; Editing by Jonathan Oatis and Matthew Lewis)
https://www.reuters.com/article/usa-bon ... SL1N2YA2BF
Re: THE DAILY NEWS
REUTERS
"Germany triggers gas alarm stage, accuses Russia of 'economic attack'"
By Holger Hansen, Vera Eckert
JUNE 23, 2022
BERLIN (Reuters) - Germany triggered the “alarm stage” of its emergency gas plan on Thursday in response to falling Russian supplies but stopped short of allowing utilities to pass on soaring energy costs to customers in Europe’s largest economy.
The measure is the latest escalation in a standoff between Europe and Moscow since the Russian invasion of Ukraine that has exposed the bloc’s dependence on Russian gas supplies and sparked a frantic search for alternative energy sources.
The step is a largely symbolic signal to companies and households but marks a major shift for Germany, which cultivated strong energy ties with Moscow stretching back to the Cold War.
Lower gas flows sparked warnings this week that Germany could fall into recession if Russian supplies halted altogether.
A survey on Thursday showed the economy losing momentum in the second quarter.
“We must not fool ourselves: The cut in gas supplies is an economic attack on us by (Russian President Vladimir) Putin,” Economy Minister Robert Habeck said in a statement.
Gas rationing would hopefully be avoided but cannot be ruled out, Habeck said:
“From now on, gas is a scarce commodity in Germany ..."
"We are therefore now obliged to reduce gas consumption, now already in summer.”
Russia has denied the supply cuts were deliberate, with state supplier Gazprom blaming a delay in the return of serviced equipment caused by Western sanctions.
The Kremlin on Thursday said Russia “strictly fulfils all its obligations” to Europe.
Berlin will provide a 15 billion euro ($15.76 billion) credit line to fill gas storage and launch a gas auction model this summer to encourage industrial users to save gas.
The second “alarm stage” of a three-stage emergency plan means authorities see a high risk of long-term supply shortages.
It includes a clause allowing utilities to immediately pass on high prices to industry and households.
Habeck said Germany was not at that point, but the clause might get triggered if the supply squeeze and price gains persisted, pushing power companies deeper into the red.
“If this minus becomes so big that the companies can’t bear it any more and they fall down, the whole market threatens to fall down at some point - so a Lehman Brothers effect in the energy system,” he said, referring to the U.S. investment bank’s 2008 collapse that rippled through global financial markets.
Local utility association VKU asked the government to protect consumers with subsidies or risk utilities going bust because of low-income retail customers defaulting on payments.
The President of the Federal Network Agency, Klaus Mueller, believed it was possible for consumer prices for gas to triple.
“If you extrapolate it, it depends a lot on how you heat, how your building is built, but it can triple the previous gas bill,” he told RTL/ntv broadcasters.
The move to Phase 2 had been anticipated since Gazprom cut flows via the Nord Stream 1 pipeline across the Baltic Sea to just 40% of capacity last week.
Data released on Thursday showed Germany has imported 22% less natural gas in the first four months of 2022 but the cost surged 170% over the same period.
Facing dwindling deliveries from main supplier Russia, Germany has since late March been at Phase 1, which includes stricter monitoring of daily flows and a focus on filling gas storage facilities.
“The declaration of the alarm stage does not immediately change the fundamental status quo,” German energy provider E.ON said.
It was important, though, that the government was preparing and taking steps to stabilize markets and gas supply, it said an emailed statement to Reuters.
RISK OF FULL DISRUPTION
In the second stage, the market is still able to function without the need for state intervention that would kick in the final emergency stage.
Nord Stream 1 is due to undergo maintenance on July 11-21 when flows will stop.
Hanns Koenig of consultancy Aurora Energy Services in Berlin said Gazprom might find reasons to drag out the process.
“Extended maintenance of Nord Stream 1 would further tighten the market and make it harder to fill gas storage until winter."
"This is of course in Russia’s strategic interest.”
Russia may cut off gas to Europe entirely to bolster its political leverage, the head of the International Energy Agency (IEA) warned on Wednesday, urging Europe to prepare now.
Russian gas flows to Europe via Nord Stream 1 and through Ukraine were stable on Thursday, while reverse flows on the Yamal pipeline edged up, operator data showed.
Dutch wholesale gas prices, the European benchmark, rose as much as 8% on Thursday.
Several countries have outlined measures to withstand a supply squeeze and avert winter energy shortages and an inflation spike that could test Europe’s resolve to maintain sanctions on Russia.
Supply cuts have driven German companies to contemplate painful production cuts and resorting to polluting energy sources previously considered unthinkable.
The European Union and Norway unveiled a deal on Thursday allowing the bloc to tap more gas from western Europe’s biggest producer.
The EU also signalled a temporary return to coal to plug the gap after calling Moscow’s gas supply cuts “rogue moves.”
Its climate policy chief Frans Timmermans said 10 of the EU’s 27 member countries have issued an “early warning” on gas supply - the first of three crisis levels.
“The risk of full gas disruption is now more real than ever before,” he said.
Reporting by Holger Hansen, Christoph Steitz, Christian Kraemer, Vera Eckert, Tom Sims, Marwa Rashad, Kate Abnett, Nora Buli, Tom Käckenhoff, Paul Carrel, Miranda Murray and Riham Alkousaa; writing by Matthias Williams; Editing by Tomasz Janowski, Elaine Hardcastle
https://www.reuters.com/article/ukraine ... SKBN2O40C2
"Germany triggers gas alarm stage, accuses Russia of 'economic attack'"
By Holger Hansen, Vera Eckert
JUNE 23, 2022
BERLIN (Reuters) - Germany triggered the “alarm stage” of its emergency gas plan on Thursday in response to falling Russian supplies but stopped short of allowing utilities to pass on soaring energy costs to customers in Europe’s largest economy.
The measure is the latest escalation in a standoff between Europe and Moscow since the Russian invasion of Ukraine that has exposed the bloc’s dependence on Russian gas supplies and sparked a frantic search for alternative energy sources.
The step is a largely symbolic signal to companies and households but marks a major shift for Germany, which cultivated strong energy ties with Moscow stretching back to the Cold War.
Lower gas flows sparked warnings this week that Germany could fall into recession if Russian supplies halted altogether.
A survey on Thursday showed the economy losing momentum in the second quarter.
“We must not fool ourselves: The cut in gas supplies is an economic attack on us by (Russian President Vladimir) Putin,” Economy Minister Robert Habeck said in a statement.
Gas rationing would hopefully be avoided but cannot be ruled out, Habeck said:
“From now on, gas is a scarce commodity in Germany ..."
"We are therefore now obliged to reduce gas consumption, now already in summer.”
Russia has denied the supply cuts were deliberate, with state supplier Gazprom blaming a delay in the return of serviced equipment caused by Western sanctions.
The Kremlin on Thursday said Russia “strictly fulfils all its obligations” to Europe.
Berlin will provide a 15 billion euro ($15.76 billion) credit line to fill gas storage and launch a gas auction model this summer to encourage industrial users to save gas.
The second “alarm stage” of a three-stage emergency plan means authorities see a high risk of long-term supply shortages.
It includes a clause allowing utilities to immediately pass on high prices to industry and households.
Habeck said Germany was not at that point, but the clause might get triggered if the supply squeeze and price gains persisted, pushing power companies deeper into the red.
“If this minus becomes so big that the companies can’t bear it any more and they fall down, the whole market threatens to fall down at some point - so a Lehman Brothers effect in the energy system,” he said, referring to the U.S. investment bank’s 2008 collapse that rippled through global financial markets.
Local utility association VKU asked the government to protect consumers with subsidies or risk utilities going bust because of low-income retail customers defaulting on payments.
The President of the Federal Network Agency, Klaus Mueller, believed it was possible for consumer prices for gas to triple.
“If you extrapolate it, it depends a lot on how you heat, how your building is built, but it can triple the previous gas bill,” he told RTL/ntv broadcasters.
The move to Phase 2 had been anticipated since Gazprom cut flows via the Nord Stream 1 pipeline across the Baltic Sea to just 40% of capacity last week.
Data released on Thursday showed Germany has imported 22% less natural gas in the first four months of 2022 but the cost surged 170% over the same period.
Facing dwindling deliveries from main supplier Russia, Germany has since late March been at Phase 1, which includes stricter monitoring of daily flows and a focus on filling gas storage facilities.
“The declaration of the alarm stage does not immediately change the fundamental status quo,” German energy provider E.ON said.
It was important, though, that the government was preparing and taking steps to stabilize markets and gas supply, it said an emailed statement to Reuters.
RISK OF FULL DISRUPTION
In the second stage, the market is still able to function without the need for state intervention that would kick in the final emergency stage.
Nord Stream 1 is due to undergo maintenance on July 11-21 when flows will stop.
Hanns Koenig of consultancy Aurora Energy Services in Berlin said Gazprom might find reasons to drag out the process.
“Extended maintenance of Nord Stream 1 would further tighten the market and make it harder to fill gas storage until winter."
"This is of course in Russia’s strategic interest.”
Russia may cut off gas to Europe entirely to bolster its political leverage, the head of the International Energy Agency (IEA) warned on Wednesday, urging Europe to prepare now.
Russian gas flows to Europe via Nord Stream 1 and through Ukraine were stable on Thursday, while reverse flows on the Yamal pipeline edged up, operator data showed.
Dutch wholesale gas prices, the European benchmark, rose as much as 8% on Thursday.
Several countries have outlined measures to withstand a supply squeeze and avert winter energy shortages and an inflation spike that could test Europe’s resolve to maintain sanctions on Russia.
Supply cuts have driven German companies to contemplate painful production cuts and resorting to polluting energy sources previously considered unthinkable.
The European Union and Norway unveiled a deal on Thursday allowing the bloc to tap more gas from western Europe’s biggest producer.
The EU also signalled a temporary return to coal to plug the gap after calling Moscow’s gas supply cuts “rogue moves.”
Its climate policy chief Frans Timmermans said 10 of the EU’s 27 member countries have issued an “early warning” on gas supply - the first of three crisis levels.
“The risk of full gas disruption is now more real than ever before,” he said.
Reporting by Holger Hansen, Christoph Steitz, Christian Kraemer, Vera Eckert, Tom Sims, Marwa Rashad, Kate Abnett, Nora Buli, Tom Käckenhoff, Paul Carrel, Miranda Murray and Riham Alkousaa; writing by Matthias Williams; Editing by Tomasz Janowski, Elaine Hardcastle
https://www.reuters.com/article/ukraine ... SKBN2O40C2
Re: THE DAILY NEWS
REUTERS
"U.S. stocks climb as yields fall to two-week low; copper tumbles"
By Caroline Valetkevitch
June 23, 2022
Summary
* Wall St ends solidly higher with tech, defensives
* Crude oil futures settle lower
* U.S. Treasury yields fall to 2-week low
NEW YORK, June 23 (Reuters) - Stocks in global markets rose on Thursday as U.S. Treasury yields fell to two-week lows, while copper was at 16-month lows as investors worried about a possible global economic slowdown.
The Nasdaq led the way higher on Wall Street, rising more than 1.6%.
Technology shares including Apple Inc and defensive shares gave the S&P 500 its biggest boost as investors continued to worry about a potential recession.
Investors have been weighing the risk of hefty interest rate rises tipping economies into recession.
Federal Reserve Chairman Jerome Powell testified before Congress for a second day, a day after saying the Fed is committed to cutting inflation at all costs, and acknowledged a recession was "certainly a possibility."
"What we're seeing here is a (stock) market trying to absorb the Fed's tightening and basically trying to put in a low in a bear market," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"We have yields that are coming down, and so that's helping stocks," he said.
"For now, the market has probably discounted somewhat of a mild recession."
Gauges of factory activity released on Thursday in Japan, Britain, the euro zone and United States all softened in June, with U.S. producers reporting the first outright drop in new orders in two years.
Manufacturing growth is slowing worldwide partly because China's COVID-19 curbs and Russia's invasion of Ukraine have disrupted supply chains and added to inflation problems.
The Dow Jones Industrial Average rose 194.23 points, or 0.64%, to 30,677.36, the S&P 500 gained 35.84 points, or 0.95%, to 3,795.73 and the Nasdaq Composite added 179.11 points, or 1.62%, to 11,232.19.
The pan-European STOXX 600 index lost 0.82% and MSCI's gauge of stocks across the globe gained 0.43%.
In the U.S. bond market, yields fell, partly on a growing belief that yields may have topped for the near term even if inflation stays high.
Yields have dropped from their highest level in more than a decade, reached before last week’s Fed meeting, when the U.S. central bank hiked rates by 75 basis points, the biggest increase since 1994.
Benchmark U.S. 10-year yields fell to 3.005%, before rebounding to 3.070%.
They have dropped from 3.498% on June 14, the highest since April 2011.
Copper prices slumped as rising interest rates and weak economic data fed worries about demand.
Copper on the London Metal Exchange (LME) hit its lowest level since February 2021.
In the foreign exchange market, the euro slid across the board following the weaker-than-expected German and French PMI data.
Against the dollar, the euro declined 0.5% to $1.0509.
It earlier declined below a key $1.05 level for the third time this week.
The euro also declined 1.4% versus the Japanese currency to 141.85 yen.
Oil prices ended lower as investors weighed the risk of a recession.
Brent crude futures fell $1.69 to settle at $110.05 a barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped $1.92 to settle at $104.27.
Reporting by Caroline Valetkevitch in New York; Additional reporting by Gertrude Chavez-Dreyfuss and Karen Brettell in New York, and Huw Jones in London; Editing by David Gregorio and Matthew Lewis
https://www.reuters.com/markets/europe/ ... 022-06-23/
"U.S. stocks climb as yields fall to two-week low; copper tumbles"
By Caroline Valetkevitch
June 23, 2022
Summary
* Wall St ends solidly higher with tech, defensives
* Crude oil futures settle lower
* U.S. Treasury yields fall to 2-week low
NEW YORK, June 23 (Reuters) - Stocks in global markets rose on Thursday as U.S. Treasury yields fell to two-week lows, while copper was at 16-month lows as investors worried about a possible global economic slowdown.
The Nasdaq led the way higher on Wall Street, rising more than 1.6%.
Technology shares including Apple Inc and defensive shares gave the S&P 500 its biggest boost as investors continued to worry about a potential recession.
Investors have been weighing the risk of hefty interest rate rises tipping economies into recession.
Federal Reserve Chairman Jerome Powell testified before Congress for a second day, a day after saying the Fed is committed to cutting inflation at all costs, and acknowledged a recession was "certainly a possibility."
"What we're seeing here is a (stock) market trying to absorb the Fed's tightening and basically trying to put in a low in a bear market," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"We have yields that are coming down, and so that's helping stocks," he said.
"For now, the market has probably discounted somewhat of a mild recession."
Gauges of factory activity released on Thursday in Japan, Britain, the euro zone and United States all softened in June, with U.S. producers reporting the first outright drop in new orders in two years.
Manufacturing growth is slowing worldwide partly because China's COVID-19 curbs and Russia's invasion of Ukraine have disrupted supply chains and added to inflation problems.
The Dow Jones Industrial Average rose 194.23 points, or 0.64%, to 30,677.36, the S&P 500 gained 35.84 points, or 0.95%, to 3,795.73 and the Nasdaq Composite added 179.11 points, or 1.62%, to 11,232.19.
The pan-European STOXX 600 index lost 0.82% and MSCI's gauge of stocks across the globe gained 0.43%.
In the U.S. bond market, yields fell, partly on a growing belief that yields may have topped for the near term even if inflation stays high.
Yields have dropped from their highest level in more than a decade, reached before last week’s Fed meeting, when the U.S. central bank hiked rates by 75 basis points, the biggest increase since 1994.
Benchmark U.S. 10-year yields fell to 3.005%, before rebounding to 3.070%.
They have dropped from 3.498% on June 14, the highest since April 2011.
Copper prices slumped as rising interest rates and weak economic data fed worries about demand.
Copper on the London Metal Exchange (LME) hit its lowest level since February 2021.
In the foreign exchange market, the euro slid across the board following the weaker-than-expected German and French PMI data.
Against the dollar, the euro declined 0.5% to $1.0509.
It earlier declined below a key $1.05 level for the third time this week.
The euro also declined 1.4% versus the Japanese currency to 141.85 yen.
Oil prices ended lower as investors weighed the risk of a recession.
Brent crude futures fell $1.69 to settle at $110.05 a barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped $1.92 to settle at $104.27.
Reporting by Caroline Valetkevitch in New York; Additional reporting by Gertrude Chavez-Dreyfuss and Karen Brettell in New York, and Huw Jones in London; Editing by David Gregorio and Matthew Lewis
https://www.reuters.com/markets/europe/ ... 022-06-23/
Re: THE DAILY NEWS
REUTERS
"U.S. recession fears darken outlook for global growth"
By Lucia Mutikani, Jonathan Cable and Leika Kihara
June 23, 2022
WASHINGTON/LONDON/TOKYO, June 23 (Reuters) - Manufacturing growth is slowing worldwide as China's COVID-19 curbs and Russia's invasion of Ukraine disrupt supply chains and keep inflation at the highest in years, while the growing risk of a U.S. recession poses a new threat to the global economy.
Gauges of factory activity released Thursday in Japan, Britain, the euro zone and United States all softened in June, with U.S. producers reporting the first outright drop in new orders in two years in the face of slumping consumer and business confidence.
S&P Global's flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, dropped to 51.2 this month from a final reading of 53.6 in May and the slowest growth pace in five months.
The manufacturing component dropped to 52.4, the lowest in nearly two years, from 57 in May and was notably weaker than the estimate of 56 in a Reuters poll of economists.
"Business confidence is now at a level which would typically herald an economic downturn, adding to the risk of recession," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Meanwhile, high prices in the euro zone meant demand for manufactured goods fell in June at the fastest rate since May 2020 when the coronavirus pandemic was taking hold, with S&P Global's headline factory Purchasing Managers' Index falling to a near two-year low.
"June's euro zone PMI surveys showed a further slowdown in the services sector, while output in the manufacturing sector now seems to be falling outright," said Jack Allen-Reynolds at Capital Economics.
"With the price indices remaining extremely strong, the euro zone appears to have entered a period of stagflation."
There is a roughly one-in-three chance of a recession in the bloc within 12 months, economists in a Reuters poll published earlier on Thursday predicted.
They also said inflation - which hit a record high of high of 8.1% last month - was yet to peak.
Jerome Powell, chair of the Federal Reserve, said on Wednesday the central bank was not trying to engineer a recession in the United States to stop inflation but was fully committed to bringing prices under control even if doing so risks an economic downturn.
He acknowledged a recession was "certainly a possibility".
Inflation continues to run at least three times higher than the Fed's targeted level of 2% and it is expected to deliver another 75 basis point interest rate hike next month, according to economists polled by Reuters.
Despite Powell's comments a few primary dealers have either started predicting a recession as early as this year or have brought forward their recession calls.
U.S. investment firm PIMCO warned on Wednesday that central banks tightening monetary policy to fight persistently high inflation raised the recessionary risk.
There is a 40% chance of a U.S. recession over the next two years, with a 25% chance of that happening in the coming year, a Reuters poll found earlier this month.
"Stagflation, which is characterised by persistent high inflation, high unemployment and weak demand, has become the dominant risk theme since late 1Q22 and a plausible potential risk scenario," said Fitch Ratings in a report released this week.
A string of recent data globally showed policymakers are walking a tight rope as they try to defuse inflation pressures without tipping their economies into a steep downturn.
U.S. retail sales unexpectedly fell in May and existing home sales tumbled to a two-year low, a sign high inflation and rising borrowing costs were starting to hurt demand.
Britain's economy unexpectedly shrank in April, adding to fears of a sharp slowdown as companies complain of rising production costs.
Its PMI also showed signs the economy was stalling as high inflation hit new orders and businesses reported levels of concern that normally signal a recession.
There is a 35% chance of a British recession within 12 months, another Reuters poll showed.
In Asia, South Korea's exports for the first 10 days of June shrank almost 13% year-on-year, underscoring the heightening risk to the region's export-driven economies.
While Chinese exporters enjoyed solid sales in May, helped by easing domestic COVID-19 curbs, many analysts expect a more challenging outlook for the world's second-biggest economy due to the Ukraine war and rising raw material costs.
The au Jibun Bank flash Japan Manufacturing PMI marked its slowest expansion since February.
Reporting by Lucia Mutikani in Washington, Jonathan Cable in London and Leika Kihara in Tokyo; Editing by Shri Navaratnam and Toby Chopra
https://www.reuters.com/markets/europe/ ... 022-06-23/
"U.S. recession fears darken outlook for global growth"
By Lucia Mutikani, Jonathan Cable and Leika Kihara
June 23, 2022
WASHINGTON/LONDON/TOKYO, June 23 (Reuters) - Manufacturing growth is slowing worldwide as China's COVID-19 curbs and Russia's invasion of Ukraine disrupt supply chains and keep inflation at the highest in years, while the growing risk of a U.S. recession poses a new threat to the global economy.
Gauges of factory activity released Thursday in Japan, Britain, the euro zone and United States all softened in June, with U.S. producers reporting the first outright drop in new orders in two years in the face of slumping consumer and business confidence.
S&P Global's flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, dropped to 51.2 this month from a final reading of 53.6 in May and the slowest growth pace in five months.
The manufacturing component dropped to 52.4, the lowest in nearly two years, from 57 in May and was notably weaker than the estimate of 56 in a Reuters poll of economists.
"Business confidence is now at a level which would typically herald an economic downturn, adding to the risk of recession," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Meanwhile, high prices in the euro zone meant demand for manufactured goods fell in June at the fastest rate since May 2020 when the coronavirus pandemic was taking hold, with S&P Global's headline factory Purchasing Managers' Index falling to a near two-year low.
"June's euro zone PMI surveys showed a further slowdown in the services sector, while output in the manufacturing sector now seems to be falling outright," said Jack Allen-Reynolds at Capital Economics.
"With the price indices remaining extremely strong, the euro zone appears to have entered a period of stagflation."
There is a roughly one-in-three chance of a recession in the bloc within 12 months, economists in a Reuters poll published earlier on Thursday predicted.
They also said inflation - which hit a record high of high of 8.1% last month - was yet to peak.
Jerome Powell, chair of the Federal Reserve, said on Wednesday the central bank was not trying to engineer a recession in the United States to stop inflation but was fully committed to bringing prices under control even if doing so risks an economic downturn.
He acknowledged a recession was "certainly a possibility".
Inflation continues to run at least three times higher than the Fed's targeted level of 2% and it is expected to deliver another 75 basis point interest rate hike next month, according to economists polled by Reuters.
Despite Powell's comments a few primary dealers have either started predicting a recession as early as this year or have brought forward their recession calls.
U.S. investment firm PIMCO warned on Wednesday that central banks tightening monetary policy to fight persistently high inflation raised the recessionary risk.
There is a 40% chance of a U.S. recession over the next two years, with a 25% chance of that happening in the coming year, a Reuters poll found earlier this month.
"Stagflation, which is characterised by persistent high inflation, high unemployment and weak demand, has become the dominant risk theme since late 1Q22 and a plausible potential risk scenario," said Fitch Ratings in a report released this week.
A string of recent data globally showed policymakers are walking a tight rope as they try to defuse inflation pressures without tipping their economies into a steep downturn.
U.S. retail sales unexpectedly fell in May and existing home sales tumbled to a two-year low, a sign high inflation and rising borrowing costs were starting to hurt demand.
Britain's economy unexpectedly shrank in April, adding to fears of a sharp slowdown as companies complain of rising production costs.
Its PMI also showed signs the economy was stalling as high inflation hit new orders and businesses reported levels of concern that normally signal a recession.
There is a 35% chance of a British recession within 12 months, another Reuters poll showed.
In Asia, South Korea's exports for the first 10 days of June shrank almost 13% year-on-year, underscoring the heightening risk to the region's export-driven economies.
While Chinese exporters enjoyed solid sales in May, helped by easing domestic COVID-19 curbs, many analysts expect a more challenging outlook for the world's second-biggest economy due to the Ukraine war and rising raw material costs.
The au Jibun Bank flash Japan Manufacturing PMI marked its slowest expansion since February.
Reporting by Lucia Mutikani in Washington, Jonathan Cable in London and Leika Kihara in Tokyo; Editing by Shri Navaratnam and Toby Chopra
https://www.reuters.com/markets/europe/ ... 022-06-23/
Re: THE DAILY NEWS
RIGZONE
"Oil Posts Back to Back Weekly Loss on Recession Fears"
by Bloomberg | Julia Fanzeres
Friday, June 24, 2022
Oil posted its first back-to-back weekly loss since early April as fears of a demand-sapping global recession and tighter US monetary policy ripped through commodity markets to spur a broad sell-off.
West Texas Intermediate fell 1.7% for the week to settle at $107.62.
US Federal Reserve Chair Jerome Powell’s hawkish testimony to Congress earlier in the week overshadowed a fundamentally tight market.
Prices clawed back some of the week’s losses Friday as the University of Michigan’s final June reading of longer-term consumer inflation expectations settled back from an initially reported 14-year high, potentially reducing the urgency for steeper Federal Reserve interest-rate hikes.
“Wall Street remains optimistic that inflation will improve over the next year, and that is good news for risky assets, especially commodities,” said Ed Moya, senior market analyst at Oanda.
Oil’s rally since Russia’s invasion of Ukraine cooled earlier this month on escalating concern over a global slowdown as central banks, including the US Federal Reserve, boosted interest rates to quell raging inflation.
Prices have sunk despite signs that energy markets remain tight in the near term as the war in Ukraine drags on and supply risks persist.
Prices:
WTI for August delivery rose $3.35 to settle at $107.62 a barrel in New York.
Brent for August settlement added $2.93 to settle at $112.98 a barrel.
Despite declining headline prices, the market remains in backwardation, a bullish pattern in which near-term prices trade above longer-dated ones, has grown in recent days.
Brent’s prompt spread -- the difference between its two nearest contracts -- was $4.02 a barrel, compared with $2.73 a week ago.
That in part reflects still-strong demand for real-world barrels.
Cargoes for Asian buyers are fetching giant premiums to their benchmarks for August loading, signaling confidence in demand over the next few months.
In the Middle East, Murban crude was in a backwardation of more than $10 over its nearest two months, an unprecedented value that indicates major supply scarcity.
In Houston, physical barrels of WTI traded at $2.75 a barrel over futures, the strongest premium in two years, amid short-covering before rollover of July pipeline cycle Friday, according to people familiar with matter.
(with assistance from Sheela Tobben)
https://www.rigzone.com/news/wire/oil_p ... 8-article/
"Oil Posts Back to Back Weekly Loss on Recession Fears"
by Bloomberg | Julia Fanzeres
Friday, June 24, 2022
Oil posted its first back-to-back weekly loss since early April as fears of a demand-sapping global recession and tighter US monetary policy ripped through commodity markets to spur a broad sell-off.
West Texas Intermediate fell 1.7% for the week to settle at $107.62.
US Federal Reserve Chair Jerome Powell’s hawkish testimony to Congress earlier in the week overshadowed a fundamentally tight market.
Prices clawed back some of the week’s losses Friday as the University of Michigan’s final June reading of longer-term consumer inflation expectations settled back from an initially reported 14-year high, potentially reducing the urgency for steeper Federal Reserve interest-rate hikes.
“Wall Street remains optimistic that inflation will improve over the next year, and that is good news for risky assets, especially commodities,” said Ed Moya, senior market analyst at Oanda.
Oil’s rally since Russia’s invasion of Ukraine cooled earlier this month on escalating concern over a global slowdown as central banks, including the US Federal Reserve, boosted interest rates to quell raging inflation.
Prices have sunk despite signs that energy markets remain tight in the near term as the war in Ukraine drags on and supply risks persist.
Prices:
WTI for August delivery rose $3.35 to settle at $107.62 a barrel in New York.
Brent for August settlement added $2.93 to settle at $112.98 a barrel.
Despite declining headline prices, the market remains in backwardation, a bullish pattern in which near-term prices trade above longer-dated ones, has grown in recent days.
Brent’s prompt spread -- the difference between its two nearest contracts -- was $4.02 a barrel, compared with $2.73 a week ago.
That in part reflects still-strong demand for real-world barrels.
Cargoes for Asian buyers are fetching giant premiums to their benchmarks for August loading, signaling confidence in demand over the next few months.
In the Middle East, Murban crude was in a backwardation of more than $10 over its nearest two months, an unprecedented value that indicates major supply scarcity.
In Houston, physical barrels of WTI traded at $2.75 a barrel over futures, the strongest premium in two years, amid short-covering before rollover of July pipeline cycle Friday, according to people familiar with matter.
(with assistance from Sheela Tobben)
https://www.rigzone.com/news/wire/oil_p ... 8-article/
Re: THE DAILY NEWS
CNBC
"‘It’s almost unbelievable’: People are having their job offers rescinded days before they start"
Jennifer Liu @JLJENNIFERLIU
Published Thu, Jun 23 2022
Joynese Speller was excited to start a new job as a project delivery specialist for a health care company on June 6.
As she wrapped up at her old nonprofit job on a Friday, she emailed her new company to confirm her start time on Monday.
Hours later, she got another email: The company had some logistics to work out on their end, so Speller would actually start on Tuesday.
That slid into Wednesday, and then Thursday.
On Friday, Speller got a phone call.
Due to budget cuts, the job she hadn’t even started yet was being eliminated.
“I was told they were trying to find me a position in a different department, but it’s also the end of their fiscal year, so they’re taking a long time to get back to me,” Speller, 26, of Charlotte, North Carolina, tells CNBC Make It.
“I left one job thinking I was going to another, so I wasn’t financially prepared for what was coming.”
Going back to her old workplace, which she says was “toxic” and had high turnover, wasn’t an option — but she needed to pay for a car repair and care for her 4-year-old son.
She’s been doing Doordash deliveries to make ends meet for the past three weeks.
After taking a few days to process her rescinded job offer, Speller fired up LinkedIn to apply for jobs and saw more news of major companies doing layoffs and taking back offers.
“I didn’t realize it was so prevalent until it happened to me,” she says.
Going from rapid hiring to rescinding offers en masse is ‘highly unusual’
The most recent Labor Department data shows that the U.S. labor market is still tight, and workers have more bargaining power than ever.
Job openings and quitting rates have shot up in the last year while unemployment ticked downward.
As of April, there were roughly two job openings for every worker who wanted one.
But over the past few weeks, many employers started scrambling to tighten their budgets due to rising inflation, rumblings of a looming recession and swings in the crypto market.
Tech giants like Uber and Meta said they’d scale back hiring, while others including Robinhood, Peloton and Carvana conducted layoffs.
Weeks after announcing its own hiring freeze, crypto exchange Coinbase laid off 18% of its workforce and began pulling job offers.
Other companies including Twitter and Redfin have rescinded offers in recent weeks.
Most of these high-profile staffing cuts are from hyper-growth tech companies focused on nixing early-career jobs, says Sid Upadhyay, co-founder and CEO of the recruiting company WizeHire.
There could also be trouble brewing for other employers tied closely to economic conditions, like in mortgage and financial sectors.
But the whiplash going from rapid hiring to rescinding offers, due to dramatic market swings, is “highly unusual,” Upadhyay says.
“The broader economic environment has shifted so much: Tech companies were incentivized to grow at all costs, and in a matter of weeks, we’ve moved into a world where we’re focused on resiliency.”
Fears of a ‘crypto winter’ are affecting more than just crypto companies
Marquelle Turner-Gilchrist, 35, of Los Angeles thought he’d found a “match made in professional heaven” when he found an opening with a social commerce company in April.
He hit it off with the team over interviews and dinner, and a few days later, an offer landed in his inbox.
Turner-Gilchrist took the weekend to think it over.
On Monday, he emailed back with a few questions on the job details, and then “I didn’t hear from the co-founder for a few days, which was weird, because communication until then was great,” he says.
A few days later, Turner-Gilchrist got a call from the CEO, who rescinded the job offer — explaining that the company was largely funded by crypto investors whose digital assets were losing value by the day.
“We’re revisiting what’s happening in crypto market which has taken an unfortunate turn, and as a result, we don’t believe it’s a good idea to bring on additional headcount at this time,” Turner-Gilchrist recalls the CEO telling him.
“I’ve heard of offers being rescinded,” Turner-Gilchrist says, noting that background checks or professional references sometimes don’t pass muster.
“But it’s never happened to me [before].”
To an extent, he considers himself lucky: “I could have been laid off in three months, and that’d be worse,” he says.
If anything, the experience taught him to be more cautious in interviews.
He says he’s more inclined to ask about a company’s retention rates, thinks news of rescinded offers or recent layoffs should be noted on hiring boards, and believes senior leaders should be more publicly forthcoming about the financial health of their organization.
“I’m not looking at crypto-adjacent companies at all,” he adds.
Despite volatility in some sectors, it’s still a job-seeker’s market
Jennifer Bell, 27, was set to start a operations manager job with Walmart in Louisville, Kentucky, but within days of accepting the offer, got a call the role was being eliminated.
“It’s almost unbelievable,” she says.
“I had a day to be upset, and then the next day I started applying to jobs left and right.”
A Walmart spokesperson said the company isn’t currently eliminating open positions or rescinding job offers, and declined CNBC Make It’s request to further comment on personnel matters.
Despite the experience, Bell says she’s still in touch with the hiring manager at Walmart — and would take another position with the company, if offered, calling it “recession-proof.”
“I’m hopeful, knowing it’s the type of company that has been stable for decades,” she says.
Still, she adds, getting back into the job hunt is emotionally challenging: “It’s hard to work through and tell yourself every day, ‘Hey, it’s not you,’ when you know it’s not your worth or confidence or background.”
By contrast, Bell says she wouldn’t return to her prior employer even if asked.
In May, Bell was one of 2,500 people laid off from Carvana.
She says some people were escorted off the premises, while others at home were laid off over a Zoom call.
“If Carvana ever reached back out and wanted to bring me on, I don’t care what amount of money they’d offer me."
"I would say ‘no,’” Bell says.
“That trust is betrayed.”
Bell may still have that latitude to turn down job offers: She says she’s taking lots of interviews these days, including for an HR manager job she says she’s excited about.
Upadhyay confirms that it’s still a job-seeker’s market across most sectors, and economists say the demand for tech workers remains so high that anyone laid off in that industry will likely be snatched up quickly by recruiters.
Upadhyay urges candidates to remember: A rescinded job offer is a reflection of a business figuring out its balance sheet, not the job-seeker’s skills or abilities.
“Broadly speaking, we’re seeing rescinded offers in a minority of cases,” Upadhyay says.
“There are still hundreds of thousands of new jobs in the market, and most organizations extending offers are resilient and profitable companies.”
https://www.cnbc.com/2022/06/23/why-peo ... start.html
"‘It’s almost unbelievable’: People are having their job offers rescinded days before they start"
Jennifer Liu @JLJENNIFERLIU
Published Thu, Jun 23 2022
Joynese Speller was excited to start a new job as a project delivery specialist for a health care company on June 6.
As she wrapped up at her old nonprofit job on a Friday, she emailed her new company to confirm her start time on Monday.
Hours later, she got another email: The company had some logistics to work out on their end, so Speller would actually start on Tuesday.
That slid into Wednesday, and then Thursday.
On Friday, Speller got a phone call.
Due to budget cuts, the job she hadn’t even started yet was being eliminated.
“I was told they were trying to find me a position in a different department, but it’s also the end of their fiscal year, so they’re taking a long time to get back to me,” Speller, 26, of Charlotte, North Carolina, tells CNBC Make It.
“I left one job thinking I was going to another, so I wasn’t financially prepared for what was coming.”
Going back to her old workplace, which she says was “toxic” and had high turnover, wasn’t an option — but she needed to pay for a car repair and care for her 4-year-old son.
She’s been doing Doordash deliveries to make ends meet for the past three weeks.
After taking a few days to process her rescinded job offer, Speller fired up LinkedIn to apply for jobs and saw more news of major companies doing layoffs and taking back offers.
“I didn’t realize it was so prevalent until it happened to me,” she says.
Going from rapid hiring to rescinding offers en masse is ‘highly unusual’
The most recent Labor Department data shows that the U.S. labor market is still tight, and workers have more bargaining power than ever.
Job openings and quitting rates have shot up in the last year while unemployment ticked downward.
As of April, there were roughly two job openings for every worker who wanted one.
But over the past few weeks, many employers started scrambling to tighten their budgets due to rising inflation, rumblings of a looming recession and swings in the crypto market.
Tech giants like Uber and Meta said they’d scale back hiring, while others including Robinhood, Peloton and Carvana conducted layoffs.
Weeks after announcing its own hiring freeze, crypto exchange Coinbase laid off 18% of its workforce and began pulling job offers.
Other companies including Twitter and Redfin have rescinded offers in recent weeks.
Most of these high-profile staffing cuts are from hyper-growth tech companies focused on nixing early-career jobs, says Sid Upadhyay, co-founder and CEO of the recruiting company WizeHire.
There could also be trouble brewing for other employers tied closely to economic conditions, like in mortgage and financial sectors.
But the whiplash going from rapid hiring to rescinding offers, due to dramatic market swings, is “highly unusual,” Upadhyay says.
“The broader economic environment has shifted so much: Tech companies were incentivized to grow at all costs, and in a matter of weeks, we’ve moved into a world where we’re focused on resiliency.”
Fears of a ‘crypto winter’ are affecting more than just crypto companies
Marquelle Turner-Gilchrist, 35, of Los Angeles thought he’d found a “match made in professional heaven” when he found an opening with a social commerce company in April.
He hit it off with the team over interviews and dinner, and a few days later, an offer landed in his inbox.
Turner-Gilchrist took the weekend to think it over.
On Monday, he emailed back with a few questions on the job details, and then “I didn’t hear from the co-founder for a few days, which was weird, because communication until then was great,” he says.
A few days later, Turner-Gilchrist got a call from the CEO, who rescinded the job offer — explaining that the company was largely funded by crypto investors whose digital assets were losing value by the day.
“We’re revisiting what’s happening in crypto market which has taken an unfortunate turn, and as a result, we don’t believe it’s a good idea to bring on additional headcount at this time,” Turner-Gilchrist recalls the CEO telling him.
“I’ve heard of offers being rescinded,” Turner-Gilchrist says, noting that background checks or professional references sometimes don’t pass muster.
“But it’s never happened to me [before].”
To an extent, he considers himself lucky: “I could have been laid off in three months, and that’d be worse,” he says.
If anything, the experience taught him to be more cautious in interviews.
He says he’s more inclined to ask about a company’s retention rates, thinks news of rescinded offers or recent layoffs should be noted on hiring boards, and believes senior leaders should be more publicly forthcoming about the financial health of their organization.
“I’m not looking at crypto-adjacent companies at all,” he adds.
Despite volatility in some sectors, it’s still a job-seeker’s market
Jennifer Bell, 27, was set to start a operations manager job with Walmart in Louisville, Kentucky, but within days of accepting the offer, got a call the role was being eliminated.
“It’s almost unbelievable,” she says.
“I had a day to be upset, and then the next day I started applying to jobs left and right.”
A Walmart spokesperson said the company isn’t currently eliminating open positions or rescinding job offers, and declined CNBC Make It’s request to further comment on personnel matters.
Despite the experience, Bell says she’s still in touch with the hiring manager at Walmart — and would take another position with the company, if offered, calling it “recession-proof.”
“I’m hopeful, knowing it’s the type of company that has been stable for decades,” she says.
Still, she adds, getting back into the job hunt is emotionally challenging: “It’s hard to work through and tell yourself every day, ‘Hey, it’s not you,’ when you know it’s not your worth or confidence or background.”
By contrast, Bell says she wouldn’t return to her prior employer even if asked.
In May, Bell was one of 2,500 people laid off from Carvana.
She says some people were escorted off the premises, while others at home were laid off over a Zoom call.
“If Carvana ever reached back out and wanted to bring me on, I don’t care what amount of money they’d offer me."
"I would say ‘no,’” Bell says.
“That trust is betrayed.”
Bell may still have that latitude to turn down job offers: She says she’s taking lots of interviews these days, including for an HR manager job she says she’s excited about.
Upadhyay confirms that it’s still a job-seeker’s market across most sectors, and economists say the demand for tech workers remains so high that anyone laid off in that industry will likely be snatched up quickly by recruiters.
Upadhyay urges candidates to remember: A rescinded job offer is a reflection of a business figuring out its balance sheet, not the job-seeker’s skills or abilities.
“Broadly speaking, we’re seeing rescinded offers in a minority of cases,” Upadhyay says.
“There are still hundreds of thousands of new jobs in the market, and most organizations extending offers are resilient and profitable companies.”
https://www.cnbc.com/2022/06/23/why-peo ... start.html
Re: THE DAILY NEWS
CNBC
"10-year Treasury yield rises but still down for the week as investors weigh slowing economy"
Sarah Min @_SARAHMIN Sam Meredith @SMEREDITH19
PUBLISHED FRI, JUN 24 2022
U.S. Treasury yields were higher on Friday, but closed down for the week, as market participants assessed the prospect of major central banks implementing further interest rate hikes to curb soaring inflation.
The yield on the benchmark 10-year Treasury note was trading higher at 3.134%, down from last Friday’s close of 3.231%.
Meanwhile, the yield on the 30-year Treasury bond rose around 8 basis points to 3.263%, compared to last Friday’s close of 3.282%.
Yields move inversely to prices.
On the data front, a final reading of consumer sentiment for June showed a slight easing of inflation expectations to 5.3% over the next year.
The preliminary reading earlier this month showed an expected 5.4% rise in prices.
Federal Reserve Chairman Jerome Powell has pointed to preliminary reading as a reason the Fed implemented its biggest rate hike since 1994 on June 15.
Yields trimmed their gains after the reading was released.
Powell on Thursday reaffirmed the U.S. central bank’s “unconditional” commitment to reining in 40-year high inflation levels.
Speaking at the U.S. House of Representatives Financial Services Committee, Powell acknowledged that sharply higher interest rates could push up unemployment but said that restoring price stability was “something that we need to do.”
The Fed increased its benchmark funds rate by 75 basis points last week — its largest rate increase since 1994.
The Swiss National Bank also surprised markets in recent days with its first rate hike since 2007, while the Bank of England implemented its fifth rate rise in a row.
— CNBC’s Jesse Pound contributed to this report.
Data also provided by Reuters
https://www.cnbc.com/2022/06/24/us-bond ... eches.html
"10-year Treasury yield rises but still down for the week as investors weigh slowing economy"
Sarah Min @_SARAHMIN Sam Meredith @SMEREDITH19
PUBLISHED FRI, JUN 24 2022
U.S. Treasury yields were higher on Friday, but closed down for the week, as market participants assessed the prospect of major central banks implementing further interest rate hikes to curb soaring inflation.
The yield on the benchmark 10-year Treasury note was trading higher at 3.134%, down from last Friday’s close of 3.231%.
Meanwhile, the yield on the 30-year Treasury bond rose around 8 basis points to 3.263%, compared to last Friday’s close of 3.282%.
Yields move inversely to prices.
On the data front, a final reading of consumer sentiment for June showed a slight easing of inflation expectations to 5.3% over the next year.
The preliminary reading earlier this month showed an expected 5.4% rise in prices.
Federal Reserve Chairman Jerome Powell has pointed to preliminary reading as a reason the Fed implemented its biggest rate hike since 1994 on June 15.
Yields trimmed their gains after the reading was released.
Powell on Thursday reaffirmed the U.S. central bank’s “unconditional” commitment to reining in 40-year high inflation levels.
Speaking at the U.S. House of Representatives Financial Services Committee, Powell acknowledged that sharply higher interest rates could push up unemployment but said that restoring price stability was “something that we need to do.”
The Fed increased its benchmark funds rate by 75 basis points last week — its largest rate increase since 1994.
The Swiss National Bank also surprised markets in recent days with its first rate hike since 2007, while the Bank of England implemented its fifth rate rise in a row.
— CNBC’s Jesse Pound contributed to this report.
Data also provided by Reuters
https://www.cnbc.com/2022/06/24/us-bond ... eches.html