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Post by thelivyjr »


"TREASURIES-Yields rise on strong U.S. data, debt ceiling talks push short-term bills lower"

By Herbert Lash

MAY 25, 2023

NEW YORK, May 25 (Reuters) - Treasury yields surged on Thursday on signs of persistent strength in the U.S. labor market, but gains on short-term bills were pared when top congressional Republican Kevin McCarthy said some progress had been made in talks to raise the debt ceiling.

President Joe Biden later said he and McCarthy had "several productive conversations" on the debt ceiling.

The remarks pushed yields lower on debt maturing on June 1, the date the Treasury has stated when it may start to run out of money.

The six-month Treasury bill due June 1 fell sharply from above 7% to below 6% after McCarthy, the House of Representatives speaker, said negotiators had worked well past midnight, though he acknowledged "outstanding issues" remained.

Ratings agency Fitch late Wednesday put the United States on credit watch for a possible downgrade, while DBRS Morningstar on Thursday placed U.S. credit ratings under review with "negative implications."

Short-term bills have been hammered because of a risk that the debt might not get paid, said Kim Rupert, managing director of global fixed income at Action Economics in San Francisco.

"If there were real concerns of a default nobody would want these things," she said.

"The U.S. isn't dropping off a cliff."

"The number of positives underpinning Treasuries are more than the negatives and they're better than most other forms of debt."

The Treasury sold $35 billion in seven-year notes at a high yield of 3.827% in strong bidding, or more than half a basis point lower at the auction's deadline.

Safe-haven demand helped drive bidding, Rupert said.

"The debt ceiling isn't really a big negative for the coupon auctions," she said.

Federal funds futures rose to a 50.5% probability that the Fed raises rates at the end of a two-day policy on June 14, a sharp rise from the settlement price of 36.4% on Wednesday, according to CME Group's FedWatch tool.

The number of Americans filing new claims for unemployment benefits rose moderately last week, and the prior week's data was revised sharply lower, suggesting persistent labor market strength, the Labor Department said.

Low claims align with recent data on retail sales, factory production and business activity that have suggested the economy regained speed at the start of the second quarter.

The still strong economy could keep inflation "sticky" and harder to lower to the Fed's 2% target.

The Commerce Department on Friday will publish the personal consumption expenditures (PCE) price index for April.

Core PCE is expected to have risen 0.3% from March, and 4.6% year over year, a Reuters poll of analysts shows.

The two-year Treasury yield, which often moves in step with interest rate expectations, rose 16.1 basis points at 4.504%.

On benchmark 10-year notes, the yield rose 9.2 basis points to 3.812%.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as a recession harbinger when the curve is inverted, was at -69.4 basis points.

The 10-year TIPS breakeven rate was last at 2.259%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

The U.S. dollar 5 years forward inflation-linked swap, seen by some as a better gauge of inflation expectations due to possible distortions caused by the Fed's quantitative easing, was last at 2.581%.

(Reporting by Tom Westbrook; Editing by Muralikumar Anantharaman, Will Dunham and Robert Birsel) ... SL1N37M2H7
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Post by thelivyjr »


"Wall Street ends higher as Nvidia sparks rush for AI stocks"

By Noel Randewich and Shreyashi Sanyal

May 25, 2023


* Nvidia hits record high on upbeat forecast

* Heavyweight AI players, Microsoft, Alphabet rise

* Two ratings agencies put US credit on negative watch

* Indexes close: S&P 500 +0.88%, Nasdaq +1.71%, Dow -0.11%

May 25 (Reuters) - Wall Street ended sharply higher on Thursday after a blowout forecast from Nvidia sent the chipmaker's stock soaring and fueled a rally in AI-related companies, while investors watched for signs of progress in U.S. debt ceiling talks.

Nvidia Corp soared 24% to a record high close after the world's most valuable chipmaker forecast quarterly revenue 50% higher than estimates and said it was ramping up supply to meet demand for its artificial-intelligence (AI) chips.

Investors exchanged almost $60 billion worth of Nvidia's shares, accounting for a fifth of all trading in S&P 500 stocks during the session, according to Refintiv data.

"Nvidia has officially replaced FANG as the centerpiece of this market," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

"Investors are obsessed with AI, and Nvidia is the perfect AI story."

Heavyweight AI players Microsoft Corp and Alphabet Inc rose 3.9% and 2.1%, respectively.

Advanced Micro Devices Inc jumped about 11%, Micron Technology Inc added 4.6% and Broadcom Inc climbed more than 7%.

The Philadelphia SE Semiconductor index soared 6.8% to its highest level in more than a year in its biggest daily percentage rise since November.

Intel Corp, which investors view as lagging in the AI race, dropped 5.5%, weighing on the Dow Jones Industrial Average.

Wall Street has been jittery in recent days about dragging negotiations in Washington to raise the nation's $31.4 trillion debt ceiling and avoid a default.

U.S. President Joe Biden and Republican lawmaker Kevin McCarthy on Thursday were edging close to a deal, with the parties just $70 billion apart on discretionary spending, Reuters reported, citing a source familiar with the talks.

Reflecting market uncertainty, two-year yields hit their highest since March after ratings agencies Fitch and DBRS Morningstar put the United States on a credit watch for a possible downgrade.

Meanwhile, data showed the number of Americans filing new claims for unemployment benefits rose only moderately last week, while a Commerce Department report confirmed economic growth slowed in the first quarter.

The S&P 500 climbed 0.88% to end the session at 4,151.28 points.

The Nasdaq surged 1.71% to 12,698.09 points, while the Dow Jones Industrial Average declined 0.11% to 32,764.65 points.

Volume on U.S. exchanges was relatively heavy, with 10.8 billion shares traded, compared to an average of 10.5 billion shares over the previous 20 sessions.

The S&P 500 is now up about 8% so far in 2023 and the Nasdaq has recovered over 30% from its losses last year.

Ralph Lauren Corp rallied 5.3% after the luxury retailer beat profit estimates.

Electronics retailer Best Buy Co Inc rose 3.1% following upbeat quarterly earnings, while discount store chain Dollar Tree Inc tumbled after cutting its annual profit outlook.

Declining stocks outnumbered rising ones within the S&P 500 by a 1.4-to-one ratio.

The S&P 500 posted 11 new highs and 31 new lows; the Nasdaq recorded 56 new highs and 163 new lows.

Reporting by Shreyashi Sanyal and Shristi Achar A in Bengaluru; Editing by Arun Koyyur, Vinay Dwivedi and David Gregorio ... 023-05-25/
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Post by thelivyjr »


"US labor market resilient; declining profits a red flag for economy"

By Lucia Mutikani

May 25, 2023


* Weekly jobless claims increase 4,000 to 229,000

* Claims data for the prior two weeks revised sharply lower

* First-quarter GDP growth revised up to 1.3%

* Corporate profits decline in first quarter

WASHINGTON, May 25 (Reuters) - The number of Americans filing new claims for unemployment benefits increased moderately last week and data for the prior two weeks was revised sharply lower as fraudulent applications from Massachusetts were stripped out, indicating persistent labor market strength.

The report from the Labor Department on Thursday, which also showed fewer people collecting unemployment checks in mid-May, suggested that the economy was enjoying another month of strong employment gains and a lower jobless rate.

The government is scheduled to publish its closely watched employment report for May next Friday.

Some economists said labor market resilience raised the risk that the Federal Reserve could raise interest rates again in June.

Minutes of the Fed's May 2-3 policy meeting published on Wednesday showed U.S. central bank officials "generally agreed" that the need for further rate hikes "had become less certain."

"The worrisome trend of more layoffs just got completely revised away where the labor market isn't loosening up as much as Fed officials and markets had thought," said Christopher Rupkey, chief economist at FWDBONDS in New York.

"The Fed looks further behind the inflation-fighting curve than ever with the labor market tightness refusing to budge."

Initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 229,000 for the week ended May 20.

Data for the prior week was revised to show 17,000 fewer applications received than previously reported.

Claims for the week ending May 6 were revised down by 33,000, leaving filings substantially lower during the period that the government surveyed businesses for the nonfarm payrolls portion of May's employment report.

The economy added 253,000 jobs in April.

Economists polled by Reuters had forecast 245,000 claims for the latest week.

Massachusetts' Department of Unemployment Assistance said this month it was "experiencing an increase in fraudulent claim activities."

Unadjusted claims for Massachusetts fell 2,190 last week.

The labor market has slowed only marginally despite 500 basis points worth of interest rate increases from the Fed since March 2022, when it embarked on its fastest monetary policy tightening campaign since the 1980s to tame inflation.

There were 1.6 job openings for every unemployed person in March, well above the 1.0-1.2 range that is consistent with a jobs market that is not generating too much inflation.

Employers have been hoarding workers after experiencing difficulties finding labor in the wake of the COVID-19 pandemic.

Economists expected layoffs to increase as the effects of the punitive rate hikes spread through the economy and tightening financial conditions make it harder for small businesses to access credit.

That sentiment is shared by policymakers.

The Fed meeting minutes showed that while "participants noted that the labor market remained very tight," they "anticipated that employment growth would likely slow further, reflecting a moderation in aggregate demand coming partly from tighter credit conditions."

The number of people receiving benefits after an initial week of aid, a proxy for hiring, fell 5,000 to 1.794 million during the week ending May 13, the claims report showed.

The so-called continuing claims covered the period during which the government surveyed households for May's unemployment rate.

Continuing claims dropped between the April and May survey weeks.

The unemployment rate fell back to a 53-year low of 3.4% in April.

The low claims align with recent data on retail sales, factory production and business activity that have suggested the economy regained speed at the start of the second quarter.

U.S. stocks were trading higher.

The dollar rose against a basket of currencies.

U.S. Treasury prices fell.


Nevertheless, the economy is on shaky ground amid declining profits, which could hamper hiring and investment down the road.

A stalemate over raising the government's borrowing cap also poses a risk to the economy.

Gross domestic product increased at a 1.3% annualized rate in the first quarter, the Commerce Department said in its second GDP estimate on Thursday, revised up from the 1.1% pace reported last month.

The economy grew at a 2.6% pace in the fourth quarter.

There were upgrades to inventory investment, state and local government spending, business investment as well as exports.

Investment in homebuilding was revised lower.

After-tax profits without inventory valuation and capital consumption adjustment, which correspond to S&P 500 profits, decreased at a 2.1% rate, the third straight quarterly drop.

They were down 6.0% on a year-on-year basis, the largest decline since the second quarter of 2020, a sign that companies were struggling to pass on higher costs to customers.

With profits falling, economic output contracted at a 2.3% pace in the first quarter when measured from the income side.

Gross domestic income declined at a 3.3% rate in the fourth quarter, revised down from the previously reported 1.1% pace of contraction.

That reflected downward revisions to fourth-quarter wages and salaries growth.

In principle, GDP and GDI should be equal, but in practice differ as they are estimated using different and largely independent source data.

The gap between GDI and GDP, also known as the statistical discrepancy, widened sharply in 2021, catching the attention of policymakers.

The statistical discrepancy in 2021 subsequently narrowed when the government carried out its annual revision of the data in 2022, with GDP revised higher and GDI lower.

"This weakness in GDI suggests that real GDP growth in recent quarters may be revised lower," said Jay Bryson, chief economist at Wells Fargo in Charlotte, North Carolina.

"Although one side of the economic accounts may be contracting, the U.S. economy is probably not in recession at present."

The average of GDP and GDI, also referred to as gross domestic output and considered a better measure of economic activity, fell at a 0.5% rate last quarter after slipping at a 0.4% pace in the fourth quarter.

"The true health of the economy likely lies somewhere in-between as neither measure is perfect," said Ryan Sweet, chief economist at Oxford Economics in West Chester, Pennsylvania.

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci ... 023-05-25/
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Post by thelivyjr »

OK! Magazine

"White House Confession in Leaked Memo About Biden Cash Scandal"

Story by Aaron Johnson

25 MAY 2023

House Republicans, led by Oversight Committee Chairman James Comer, are "admitting" to probing into President Joe Biden's family finances as an attempt to damage his reputation, according to a memo obtained by NBC News.

"Extreme MAGA House Republicans are being caught doing something they rarely do: telling the truth,” White House spokesperson Ian Sams said.

“They are admitting through their own words and deeds that these so-called ‘investigations’ are actually intended not to reveal facts but to hurt the President’s political standing.”

Comer commented that Biden's poll numbers are flailing due to the investigation into his financial situation.

“There’s no question,” he said.

“You look at the polling, and right now Donald Trump is 7 points ahead of Joe Biden and trending upward; Joe Biden’s trending downward."

"And I believe that the media is looking around, scratching their head, and they’re realizing the American people are keeping up with our investigation.”

Though Comer said his investigation isn't politically motivated, Sams begs to differ.

“Despite previously insisting that his investigation ‘isn’t political’ and that the ‘only people that see this as a partisan investigation are the media and the hardcore Democrats,’ on Monday morning around 4:00 a.m., Comer took to the Fox airwaves to boast that his investigations are ‘moving the needle’ not because he has uncovered facts but because he claimed (falsely, by the way) that President Biden’s poll numbers are 'trending downward,'" he said.

House Oversight Committee Republicans are investigating foreign payments made to Biden's family members, including Hunter Biden.

“No amount of Washington spin can change these facts or erase these bank records,” House Oversight Committee spokesperson said as they defended Comer's examination.

“The White House must provide the American people with transparency now."

"The Oversight Committee will continue to pursue the truth and accountability for the American people.”

So far, no proof of any payments have been produced.

Recently, Biden, 80, was asked about Hunter in an interview.

"My son has done nothing wrong," he told MSNBC's Stephanie Ruhle when asked the investigation.

"I trust him, I have faith in him."

"And it impacts my presidency by making me feel proud of him." ... c5d5&ei=12
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Post by thelivyjr »

The Daily Caller

"Democrats Want To Jam The Constitution Through A Paper Shredder. Even Obama Knew Better"

Story by Brianna Lyman

25 MAY 2023

In 2011, former President Barack Obama said resolutely that his lawyers were “not persuaded” that taking unilateral authority to raise the debt ceiling is a “winning argument.”

In 2023, it appears President Joe Biden is saying, “Hold my beer (maybe).”

As the debt ceiling default looms overhead, Democrats are encouraging Biden to buck the Constitution and use dictatorial powers to raise the debt ceiling.

Citing the 14th Amendment, Democrats such as Rep. Jamie Raskin have called for invoking the amendment “imperative” to get the job done.

Washington Democratic Rep. Pramila Jayapal said on CNN Biden should invoke the 14th Amendment to raise the debt ceiling.

Independent Vermont Sen. Bernie Sanders also joined the chorus of calls to Biden.

While Biden has acknowledged the possibility, the White House said Wednesday that “at the end of the day, [invoking the 14th Amendment] doesn’t solve the problem that we have now.”

But just simply encouraging the reckless invocation of a clause tucked in the 14th Amendment without looking at the historical context of its creation is a grave injustice to not only the separation of powers, but more importantly, the potential unconstitutional abuse of authority.

Questions regarding who has the power to handle the nation’s finances have been long decided.

As Alexander Hamilton put so wisely in Federalist 78, the executive branch “holds the sword of the community” while Congress “commands the purse.”

Then there is the 14th Amendment, specifically section 4, which reads:

“The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."

"But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss of emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.”

Section 4 was created to ensure that southern states would acknowledge and pay the debts incurred during the war when they technically were not a part of the Union.

Then Pennsylvania Rep. Samuel J. Randall offered a resolution to the Amendment in 1865 which read “Resolved that, as the sense of this House, the public debt created during the late rebellion was contracted upon the faith and honor of the nation; that it is sacred and inviolate, and must and ought to be paid, principal and interest; that any attempt to repudiate or in any manner to impair or scale the debt shall be universally discountenanced, and promptly rejected by Congress if proposed.”

In fact, concerns that the clause would be misinterpreted and abused were so pertinent that Indiana Senator Thomas Hendricks, speaking in opposition of the clause, said, “The fourth section provides that the public debt shall remain inviolate."

"Who has asked us to change the Constitution for the benefit of the bondholders?"

"Are they so much more meritorious than all other classes that they must be specially provided for in the Constitution?”

The resolutions underscored the specific purpose of the clause in relation to the Civil War and fears among lawmakers that another rebellion could arise and saddle the nation with more debt.

It’s fair to argue the president could invoke this unilateral authority if, for instance, there was another Civil War or some other event that stopped Congress from carrying out its enumerated powers.

But that’s simply not the case.

The job could be done if Biden negotiates.

Republicans did their constitutional duty and passed legislation to raise the debt ceiling and avoid default while also slashing federal spending.

Just because Biden and the Democrats don’t like the proposal doesn’t mean they suddenly have divine authority to bypass the Constitution to placate their political ambitions. ... c5d5&ei=30
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Post by thelivyjr »


"CNN hits Biden with 'horrible news' as poll shows 66% of Americans call a 2024 victory a 'disaster,' 'setback'"

Story by Joseph Wulfsohn

25 MAY 2023

CNN delivered "horrible news" for President Biden as the network's latest polling offered a grim forecast ahead of his 2024 reelection bid.

The poll released Thursday show a whopping 66% of Americans view a Biden victory in the upcoming presidential election as either a "disaster" or a "setback" for the United States.

"Horrible news, horrible for Joe Biden," CNN anchor Jake Tapper reacted to the poll.

"Those are some bad numbers," he later added.

CNN political director David Challian provided analysis of the poll that showed 41% of Americans specifically called a Biden win a "disaster," a slightly better figure than the 44% who said the same about former President Trump.

However, another 26% of Americans viewed a Biden win as a "setback" while just 12% said the same about a Trump win.

Both front-runners were tied at 27% among those who call each of their wins a "step forward" but Trump held a ten-point lead over Biden among those who would call it a "triumph."

"[Trump's] hardcore supporters are more into him than perhaps Biden's hardcore supporters are into him," Chalian said.

"Yeah, it's worse for Biden but for both of them, most of the American people think electing them would be a disaster or a setback for both Joe Biden and Donald Trump, the current Democratic and Republican frontrunner," Tapper told Chalian, to which he replied, "This is not an election the American people want."

The CNN poll showed Biden receiving a 35% approval rating, something Chalian commented was "remarkably low."

The breakdown of the data by party showed that while he has 79% support among Democrats, he just 26% of independents, a nine-point drop since December.

Trump had a slightly higher overall approval rating of 37%.

Things only got grimmer for Biden when polled against his Democratic primary challengers.

While he himself has earned 60% support, a stunning 20% threw their support behind Robert F. Kennedy Jr. while 8% backed spiritual guru and former 2020 presidential candidate Marianne Williamson and another 8% wanted someone else.

Within the breakdown between Democrats and Democrat-leaning independents showed 67% of party loyalists backing Biden while just 40% of the leaning independents doing the same.

But Chalian called RFK Jr.'s support a "potential warning sign" as a solid 32% of those leaning Americans back him while having only 15% of the party loyalists.

A Fox News poll released last month showed a similar landscape of the Democratic field with Biden earning 62% of support among primary voters while RFK Jr. received 19% and Williamson reaching 9%.

Polls continue to show low enthusiasm for the president with a high percentage of Americans concerned about his age, even among Democrats. ... c5d5&ei=47
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Post by thelivyjr »


"Oil Futures Settle on Second Weekly Gain"

by Bloomberg | Julia Fanzeres, Sri Taylor

Friday, May 26, 2023

Oil rose a second consecutive week as investors monitored progress made Friday on debt-ceiling talks to avoid a US default.

Republican and White House negotiators were moving closer to an agreement to raise the debt limit, according to people familiar with the matter.

Still, the agreed-upon details are tentative, and a final accord isn’t in hand.


WTI for July delivery rose 84 cents to settle at $72.67 a barrel in New York.

At that level, the contract is up about 1.6% for the week.

Brent for July settlement added 69 cents to settle at $76.95 a barrel.

Supply dynamics remain in focus, with Saudi Arabia and Russia offering conflicting statements on the potential for more cuts from OPEC and its allies.

Russian Deputy Prime Minister Alexander Novak said that OPEC+ wasn’t likely to take further measures at its gathering in Vienna in June, contrasting with Saudi Energy Minister Prince Abdulaziz bin Salman’s remarks earlier in the week that speculators should "watch out."

Crude has still sunk almost 10% this year amid the lackluster economic recovery in top importer China and the aggressive monetary tightening campaign by the US Federal Reserve.

More US rate increases may be in store, with traders pricing in another quarter-point hike within the next two meetings. ... 4-article/
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Post by thelivyjr »


"2-year Treasury yield rises as investors absorb key inflation data"



The 2-year Treasury yield rose Friday as investors awaited economic data that could affect Federal Reserve interest rate policy and as debt ceiling deal talks continued.

The 2-year Treasury yield was trading at 4.568% after rising 10 basis points.

The yield on the 10-year Treasury fell by 1 basis point to 3.810%.

Yields and prices move in opposite directions.

One basis point equals 0.01%.

Investors absorbed Friday’s release of the personal consumption expenditures price index for April, which is the Fed’s preferred inflation gauge.

Inflation rose 0.4% in April, stronger than the 0.3% expected by economists polled by Dow Jones.

On an annual basis, the measure rose 4.7% from a year ago, also higher than estimates.

In recent weeks, Fed officials have given mixed messages about what could be next for interest rates.

Some have indicated that they would prefer to pause the Fed’s rate-hiking campaign as they do not believe the full effect of elevated rates has filtered through to the economy yet.

Others appeared to believe further rate hikes may be necessary to bring inflation down, or said decisions would depend on upcoming economic data.

Investors continued to watch debt ceiling deal negotiations as the June 1 deadline at which the U.S. could default on its debt obligations draws closer.

Talks seemed to progress closer to a deal on Thursday, but “sensitive issues” were still being discussed, Republican negotiator Rep. Patrick McHenry said Thursday.

— CNBC’s Jeff Cox contributed to this report. ... -data.html
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Post by thelivyjr »


"Fed 'pause' on rate hikes in doubt after strong US data"

By Ann Saphir and Michael S. Derby

May 26, 2023

May 26 (Reuters) - Federal Reserve policymakers got a dose of unexpectedly strong U.S. economic data on Friday that bolstered the case for further monetary policy tightening to bring down persistently high inflation.

Consumer spending surging 0.8% last month from March was good news in showing the economy is not on the precipice of a recession, but discomforting for policymakers looking for a slowdown that could ease upward pressure on prices.

And an increase in underlying core inflation to 4.7%, up from a 4.6% pace in March, underscored the less-than-steady progress on the Fed's inflation fight.

The U.S. central bank targets a 2% inflation goal.

Coupled with what appeared to be some progress in Washington on a deal to raise the debt limit and avoid a catastrophic U.S. default, the latest clutch of data throws doubt on whether the Fed will indeed "pause" its rate-hike campaign, as Chair Jerome Powell signaled it might earlier this month.

"Right now, when I look at the data and when I look at what's happening with the inflation numbers, I do think we are going to have to tighten a bit more," Cleveland Fed President Loretta Mester told CNBC.

In March Mester had already expected the Fed to raise the policy rate beyond its current 5.00%-5.25% range.

But, in a tacit nod to the dovish wing of the Fed policysetting committee who favor a more wait and see approach, she also said it is too soon to precommit to a June hike.

"We've made progress; now it's this calibration exercise, and that's what's difficult," she said.

Interest-rate futures traders see less subtlety in the numbers and are now betting the Fed will deliver an 11th straight interest rate hike in June, a reversal from bets on a June pause as of earlier in the day and on most days since the Fed's last rate hike on May 3.

Analysts at LHMeyer, who previously figured the Fed was done raising rates, on Friday said they now see the Fed taking its benchmark up two more notches, to 5.6%, before stopping.


A rate hike next month is not a done deal: still to come before the Fed's June 13-14 meeting is a key read on the labor market due next Friday and fresh data on inflation expected on June 13.

Fed policymakers also say they are watching credit conditions closely, though Mester on Friday said that so far she's not seeing worrisome "extra" tightening from the recent regional bank failures.

Expectations are growing though that even if the Fed leaves rates unchanged in June, it will pull the trigger in July.

Odds in futures markets are running three to one in favor of a rate hike by then.

Fed Governor Christopher Waller - one of the Fed's more hawkish voices - teed up that notion earlier this week.

While key data in coming weeks as well as uncertainty over credit conditions could support temporarily leaving rates on hold, he said, the lack of progress on inflation points to the need for further tightening.

Other Fed policymakers have echoed that hawkish call. "Inflation so far doesn't show much signs of cooling, which all being said suggests maybe we have more work to do with monetary policy,” Minneapolis Fed President Neel Kashkari told Reuters on Monday.

Households do project inflation to ebb in the next year, to 4.2%, a University of Michigan survey showed Friday.

The Fed believes expectations about future price pressures exert a strong influence on current readings.

Reporting by Ann Saphir and Michael S. Derby with reporting by Shristi Achar; Editing by Jason Neely, Chizu Nomiyama and Andrea Ricci ... 023-05-26/
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Post by thelivyjr »


"Senators urge Commerce to prioritize national security in chips funding"

By David Shepardson

May 25, 2023

WASHINGTON, May 25 (Reuters) - Two key U.S. senators said on Thursday they want the Commerce Department to prioritize national and economic decisions in awarding $39 billion in semiconductor manufacturing subsidies rather than using the funds to aid ailing companies.

Senate Intelligence Committee chair Mark Warner and Republican Senator John Cornyn said in a letter the success of the program funded by Congress in August 2022 "depends on a strategic approach that aligns with our national priorities ..."

"We implore you to take time to go through every application and determine which ones are most worthy based on national security concerns."

The Commerce Department did not immediately comment on Thursday.

The department said last week it had received more than 300 statements of interest covering 37 states seeking incentives for facilities for commercial fabrication, packaging, and R&D, and from material suppliers and equipment manufacturers.

"The intent of the CHIPS Act is not to bailout the semiconductor industry that is currently experiencing a cyclical industry downturn," Warner and Cornyn wrote.

"Given that individual fabs can cost over $20 billion, we urge you to ... selectively provide incentives to projects deemed to be of national importance."

The Commerce Department plans to begin accepting applications in late June.

The CHIPS law also creates a 25% investment tax credit for building chip plants, estimated to be worth $24 billion.

They added that Commerce should seek "assurances that the recipient will secure supply chains and use domestic suppliers where possible" and noted some competitive applications "may not receive funding."

The Biden administration has proposed rules to limit recipients of U.S. funding from investing in the expansion of semiconductor manufacturing in foreign countries of concern such as China and Russia, and limits recipients of incentive funds from engaging in joint research or technology licensing efforts with a foreign entity of concern.

In October, the department issued new export controls to cut off China from certain semiconductor chips made anywhere in the world with U.S. equipment, vastly expanding its reach in its bid to slow Beijing's technological and military advances.

Reporting by David Shepardson in Washington; Editing by Matthew Lewis ... 023-05-25/
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