Aurelia Butler

Federal Reserve Governor Michelle Bowman was among a slew of Fed members on Tuesday to remind market participants that bets on the Fed not lifting rates again were premature. “I remain willing to support raising the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or is insufficient to bring inflation to 2% in a timely way,” Bowman said Tuesday. Federal Reserve Bank of Chicago President Austan Goolsbee, meanwhile, acknowledged the recent progress on inflation, but said in an interview with CNBC on Tuesday that getting inflation down was” the No. 1 thing.”The slew of remarks revived some investor attention on the prospect of a further rate hike, but with many still holding onto bets that the Fed hiking cycle is over, Treasury yields struggled to shake off their blues following the Fed’s decision to keep rates unchanged last week as well as Powell’s dovish press conference on Nov.1.”Powell was dovish – downplaying recent strong U.S. data. This suggests that the bar for further hikes is quite high – and thus it is likely the end of the rate hikes, in our view,” Nomura said in a note, ahead of remarks from the Fed chairman on Wednesday and Thursday.The prospect of rate hike at the December and January meetings are slum at 10% and 15% respectively, according to Investing.com’s Fed Rate Monitor Tool.The overarching message from Fed speakers on whether higher Treasury yields will help them in their mission to curb inflation was to underscore that ‘the why’ rates have moved higher.If higher Treasury yields are mostly tied to expectations of what the Fed will do next, then this isn’t likely to filter into the Fed’s thinking on future policy.”The rise in longer-term rates that have moved up, can’t simply be a reflection of expected policy moves from us,” Powell said on Nov. 1. “if we didn’t follow through on them, then the rates would come back down,” he added. Yet this appears to be scenario that is playing out. Chair Powell’s dovish ‘careful’ act is “leading to lower US bond yields, thus reducing market concerns of a hard landing in the future,” Nomura said. The yield on 10-year Treasury fell 9 basis point to 4.569%, slipping further away from 5.021% cycle high seen last month, while the yield on the 10-year Treasury fell 10 basis point to 4.727%. The somewhat hawkish push back from Fed members this week comes as some fear that the loosening in financial conditions, if sustained, could muddy the Fed’s job to bring inflation down to target. Powell, however, will have opportunity, if he wishes, to “clarify anything that he said this past week when his remarks prompted an easing of financial conditions, then this would be an opportunity to do so,” Scotiabank Economics said in a Tuesday note.Powell is set to deliver opening remarks before the Federal Reserve Division of Research and Statistics Centennial Conference at 9:15 ET on Wednesday and will participate in a panel discussion at 2pm on Thursday.   More

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(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Asian markets on Wednesday should be well-placed to bounce back from the previous day’s declines, supported by another positive showing on Wall Street that secured the S&P 500’s and Nasdaq’s longest winning streak in two years.Tuesday’s slide in U.S. Treasury yields will also support risk appetite in Asia, although some of that could be tempered by the dollar’s resilience.With little on the regional economic data and policy events calendar to give markets a steer, investors will probably take their cue from Wall Street. If so, a positive open to Wednesday’s session is in the cards.The Nasdaq rose for the eighth day in a row and the S&P 500 rose for a seventh, both marking their best runs in two years. But investors won’t be getting too carried away.The Nasdaq peaked in November 2021 and the S&P 500’s high watermark came a few weeks later. Between then and October last year, the Nasdaq lost as much as 35% of its value and the S&P 500 shed nearly 30%.The mostly cautious tone from U.S. policymakers on Tuesday should also help support sentiment in Asia on Wednesday. That said, no Fed official is closing the door to further rate hikes, so a good degree of two-way risk should be factored into emerging and Asian markets.Perhaps surprisingly, given the ongoing violence and tension in the Middle East, oil prices are now back at their lowest levels since July. Year-on-year, oil is down 15% – the inflationary burst of September has completely reversed.The news for investors in China over the last 24 hours, meanwhile, was fairly positive. The International Monetary Fund upgraded China’s growth outlook, and Beijing reported a surprise increase in imports last month.Although the IMF’s move can perhaps be seen as just lagging the private sector, it does come only a few weeks after it released its World Economic Outlook. The IMF now expects China’s economy to grow 5.4% this year and 4.6% next year, up from 5.0% and 4.2%, respectively.In currency markets, the yen has fallen back below the key 150.00 per dollar mark, while the biggest loser overnight was the Aussie dollar, down 0.9% for its biggest fall in a month.The Reserve Bank of Australia raised rates to a 12-year high, as expected, but left it open on whether further tightening would be needed to bring inflation to heel.On the corporate front, perhaps the most interesting of all Japanese corporate earnings reports on Wednesday will be technology group Softbank (OTC:SFTBY), after WeWork filed for bankruptcy. Softbank held a 60% stake in the flexible office space provider.Here are key developments that could provide more direction to markets on Wednesday:- Fed’s Powell, Williams, Barr, Jefferson, Cook all speak- Japan tankan manufacturing, services indexes (November)- Japan FX reserves (October) (By Jamie McGeever; Editing by Josie Kao) More

The company said it was cutting production forecast “to prudently align with deliveries”.Shares of the company fell 4% in extended trading.The company reported third-quarter revenue of $137.8 million compared with analysts’ estimates of $183.8 million, according to LSEG. More

WASHINGTON (Reuters) – Federal Reserve policymakers fresh from last week’s decision to hold the policy rate steady are weighing strong economic data, some signs of a slowdown, and the impact of higher long-term bond yields as they consider if they will need to hike rates further to bring down inflation.Third-quarter U.S. economic growth, at an annualized 4.9% rate, was a “blowout” performance that warrants “a very close eye when we think about policy going forward, Fed Governor Christopher Waller said on Tuesday. An ardent advocate of aggressive Fed rate hikes to battle high inflation, Waller did not include a policy recommendation in his remarks to an economic data seminar at the St. Louis Fed. His presentation also noted signs that job growth was slowing, and what he called the “earthquake” wrought by higher and potentially growth-dimming long-term bond yields.But in comments to the Ohio Bankers League, Fed Governor Michelle Bowman said she took the recent GDP number as evidence the economy not only “remained strong,” but may have gained speed and require a higher Fed policy rate.”I continue to expect that we will need to increase the federal funds rate further,” Bowman said.At yet another event, Dallas Fed President Lorie Logan noted that “all of us” have been surprised at how strong the economy has been, and that despite some progress inflation is trending toward 3% rather than the Fed’s goal of 2%. The labor market despite cooling remains “very tight,” she said, and longer-term bond yields, whose rise helped convince she and others to leave rates on hold last week, have fallen.”We’re going to continue to need to see tight financial conditions in order to bring inflation to 2% in a timely and sustainable way,” Logan said, adding that she’ll watch both economic and financial conditions as the Fed’s next meeting, in December, approaches.Explicit endorsements for higher rates have become rarer among Fed officials since July, when the Fed raised the benchmark rate by a quarter point, to the current 5.25% to 5.5% range, in what many analysts expect will prove the last move in a monetary tightening cycle that began in March of 2022. Indeed more recent data suggest the outsized pace of growth in the July-September period may prove an outlier for the year, with manufacturing and job growth both cooling in October, a bank loan officers survey showing continued credit tightening and a drop in loan demand in recent months, and a New York Fed report on Tuesday noting a rise in consumer loan delinquencies.That combination of data potentially shows the sort of economic slowing that Fed officials have expected as the sometimes slow-moving impact of central bank interest rate hikes is felt more broadly.Based on incoming economic data, the Atlanta Fed’s GDPNow model suggests fourth-quarter gross domestic product will grow at an annualized rate of just 2.1%, edging towards a pace Fed officials might view as allowing inflation to continue slowing to their 2% target. By the Fed’s preferred personal consumption expenditures price index inflation was 3.4% as of September. ‘CLEARLY CALMING DOWN’Many economists expect the Fed to hold interest rates steady at the upcoming Dec. 12-13 policy meeting, in part due to that anticipated slowdown and the ongoing tightening of borrowing and credit conditions.In comments on Monday, Fed Governor Lisa Cook took particular note of rising debt stress. While it was not broadly apparent among “resilient” U.S. households, she said, “we are seeing emerging signs of stress for households with lower credit scores, and individual borrowers may struggle with debt burdens in the face of economic hardships,” a dynamic that at the margin will begin to trim consumer spending and, in the extreme, could make banks even more reluctant to lend. In comments to CNBC on Tuesday, Chicago Fed President Austan Goolsbee noted that inflation has been slowing, and that the rise in market-based interest rates, “if … sustained at high levels” most likely represents a tightening of credit for families and businesses.The yield on the 10-year Treasury note, which had risen about a full percentage point since July, was still up about 75 basis points from then despite a drop since last week.”We have got to take that into account … We should expect to see that, with a lag, working its way through the economy. So we’re all paying attention and trying to figure out what the driver is,” Goolsbee said.However neither Goolsbee nor Minneapolis Fed President Neel Kashkari, who spoke to Bloomberg Television on Tuesday, ruled out further Fed rate increases.Noting, as Waller did, the recent “hot” readings on economic activity, Kashkari said “that makes me question if policy is as tight as we assume it currently is.””If you saw inflation tick back up and you saw continued very strong economic activity in the real side of the economy, that would tell me we might need to do more,” Kashkari added. More

WASHINGTON (Reuters) -The U.S. regulator charged with overseeing the Federal Home Loan Banks said in a report on Tuesday the system is overdue for an overhaul in its mission and structure.The Federal Housing Finance Agency emphasized in the report that there needs to be a clearer distinction between the purpose of the FHL banks and the Federal Reserve, which is the primary emergency lender for banks. The agency said FHL banks were created by Congress in 1932 to provide liquidity to banks for affordable housing and other economic development.Tuesday’s report was the culmination of a year-long project by the agency to review the FHL banks. It indicated that the FHL banks had shifted from that original mission over the years, and the system had not been updated to meet current realities.”For complex and varied reasons, there has been a decreased focus on housing-related activities by many institutions that are members of the FHLBank System,” the report stated. “These changes, taken together, highlight the need for (agency) to clarify the mission of the System so the FHLBanks are held accountable for serving their public purpose.”FHL Banks are 11 regional government-chartered institutions that raise money for low-cost lending to their members. They are a vital source of funding to regional banks, and had morphed over the years into a preferred final stop for cash before banks in need turn to the Federal Reserve itself as a last resort.As part of its recommendations, the agency said it would seek to refocus on the housing mission by proposing most banks be required to hold at least 10% of their assets in residential mortgages to retain access to FHL Banks.The agency also suggested it could consolidate the number of FHL banks in the system, noting it could shrink the numbers of banks to as little as eight without additional authority from Congress.In response to Tuesday’s report, the head of the FHL bank system said any overhaul would be part of a long process, and the firms would be focused on ensuring they can continue to serve members.”The overwhelming sentiment from (agency’s) review was that stakeholders want more, not less, from the FHLBank system,” said Ryan Donovan, head of the Council of Federal Home Loan Banks. More