Aurelia Butler

The U.S. Federal Reserve’s higher-for-longer interest rate environment has spurred customers into pursuing high-yielding alternatives to bank deposits, like money market funds. Texas-based Comerica sees its net interest income (NII) – the difference between interest banks earn on loans and pay out on deposits – to decline between 5% and 6% in the fourth quarter.The lender reported a $106 million decline in third-quarter NII to $601 million, compared with last year. Its net interest margin contracted to 2.84% from 3.51%, a year earlier.However, the bank managed to beat per-share profit estimates for the quarter as its non-interest income rose 6% to $295 million from the year-ago period. Comerica earned a profit of $1.84 per share in the quarter ended Sept. 30, compared with analysts’ estimates of a $1.69 per share profit, as per LSEG data.Its average deposits grew 2.4% to $65.88 billion in the quarter. Bank deposits have steadied recently as customers regained confidence in regional banks after a sector-wide crisis in March saw them move money away from smaller lenders seeking the security of large “too-big-to-fail” institutions.Peers Fifth Third Bancorp (NASDAQ:FITB) and Regions Financial (NYSE:RF) also forecast a decline in their fourth-quarter NII. (This story has been corrected to say that the Q3 NII declined by $106 million, not 106%, in paragraph 4; the non-interest income rose 6%, not 17%, in paragraph 5 and the average deposits amount was $65.88 billion, not $65.89 billion, in paragraph 7.) More

(Reuters) – BofA Global Research said on Friday it now expects the U.S. Federal Reserve to deliver a 25-basis-point rate hike in December instead of November.Economists at the brokerage believe that recent comments from policymakers at the central bank suggest “they will opt for one last hike in December”. More

(Reuters) -Wall Street’s main indexes were set for a lower open on Friday as U.S. Treasury yields hovered near multi-year highs following hawkish remarks by Federal Reserve Chair Jerome Powell, while the Middle East conflict kept investors jittery.Israel levelled a northern Gaza district on Friday and hit an Orthodox Christian church where others had been sheltering, as it made clear that a command to invade Gaza was expected soon.Speaking at the Economic Club of New York on Thursday, Powell said the U.S. economy’s strength and continued tight labor markets could require tougher borrowing conditions to control inflation.”It was good news that he insinuated that November is off the table for a rate hike,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.”But he left the possibility open for additional rate hike … the economy is still moving forward and inflation is still high so that’s what has the market on edge.”Fed Bank of Dallas President Lorie Logan, who is a voting member at this year’s rate-setting Federal Open Market Committee (FOMC), said on Thursday that recent data and higher borrowing costs gave the central bank space to deliberate on its next monetary policy move.BofA Global Research said it now expects the U.S. central bank to deliver a 25-basis-point rate hike in December instead of November.Comments from Philadelphia Fed President Patrick Harker and Cleveland Fed President Loretta Mester will also be on investor radar during the day as Fed officials will be entering a media blackout starting Saturday ahead of their meeting on Nov 1.The 10-year Treasury yield, which briefly crossed 5% on Thursday for the first time since July 2007, was last at 4.9734%.Traders see a near 99% chance the Fed will keep benchmark rates unchanged in November, while their bets for a pause in December stood at 75%, according to CME’s FedWatch Tool.All three major U.S. stock indexes, which ended nearly 1% lower on Thursday, were on course to log weekly declines.On the earning’s front, Oilfield services company SLB beat analysts’ estimates for quarterly profit, but its shares fell 2.6%. At 8:39 a.m. ET, Dow e-minis were down 110 points, or 0.33%, S&P 500 e-minis were down 16 points, or 0.37%, and Nasdaq 100 e-minis were down 68 points, or 0.46%.SolarEdge (NASDAQ:SEDG) slumped 30.1% after it warned of significantly lower revenue in the fourth quarter. Shares of solar firms Enphase Energy (NASDAQ:ENPH) and First Solar (NASDAQ:FSLR) were also down 14.9% and 3.6%, respectively.Intuitive Surgical (NASDAQ:ISRG) fell 5.5% after the medical device maker missed analysts’ estimates for quarterly sales.Comerica (NYSE:CMA) rose 1.2% after the regional bank said it expected net interest income to decline again in the current quarter as lenders looking to retain customers get squeezed by higher costs on deposits. More

LONDON (Reuters) – Red October rumbled on in world markets on Friday as the sight of U.S. government bond yields hitting 5% for the first time since 2007 amid an increasingly threatening conflict in the Middle East left investors searching for safety. The traditional driver of world borrowing costs – the 10-year U.S. Treasury yield – had retreated to 4.98% ahead of U.S. trading but with oil bounding back above $93 a barrel and Israel hinting at a full-scale invasion of Gaza, the mood was fraught.Europe’s share markets (EU) dropped 1%. Asia stocks had fallen to an 11-month low overnight and futures markets pointed to another slip on Wall Street, which has lost 2% over the last two days. [.N]The Bank of Japan had intervened in its bond markets too as the 10-year Japanese government bond yield touched a decade high, while the scramble for safety pushed gold to a 3-month top and kept both the dollar and Swiss franc well supported. [GOL/][/FRX] “The fact that there was little pullback in bond yields in the past 48 hours despite the S&P 500 slipping over 2% and the VIX Index closing at over 21 for the first time since March is very disconcerting in my view,” RBC Capital strategist Alvin Tan said, referring to one of main global market fear gauges.A slump in Tesla (NASDAQ:TSLA) shares, after Elon Musk warned of demand worries, and China curbing graphite exports weren’t helping the mood either in Europe, where shares were facing a 3% loss for the week (EU) and borrowing costs were heading for their steepest weekly rise since July. [GVD/EUR]The European Central Bank meets next week and is expected to keep its rates on hold after 10 consecutive increases but for now traders were just trying to make it to the end of the week.Federal Reserve chief Jerome Powell had said on Thursday that he agreed “in principle” that the recent jump in bond yields might “at the margin” lessen the need for more rate hikes, but also stressed the strength of the U.S. economy.Bank of America analysts pointed out that U.S. nominal GDP has risen by a “remarkable” 40% in the past three years, reaccelerating again in Q3 to a 7-8% annualised growth rate.”This market believes Fed “behind-the-curve” and avengers needed to curb DC’s non-stop enthusiasm for spending,” the analysts said, adding that the market selloff had left their in-house “Bull & Bear” gauge of market sentiment into “extreme bearish” territory, which they said was a “contrarian buy signal”.Next week is likely to be a major test though with Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) reporting their third quarter results on Tuesday, followed by Facebook (NASDAQ:META) owner Meta on Wednesday, and Amazon (NASDAQ:AMZN) on Thursday. Those stocks along with Apple (NASDAQ:AAPL), Nvidia (NASDAQ:NVDA) and Tesla combined have accounted for the bulk of the S&P 500’s 11% year-to-date gain, so any results disappointment could have broad fallout. SUBMERGING MARKETSThe Middle East troubles and rising global borrowing costs meant emerging market stocks were at an 11-month low as was MSCI’s main Asia-Pacific index. Tokyo’s Nikkei finished 0.5% lower on the day and down 3.2% for the week, which was only just short of being its worst of the year so far. (T)Data out of Japan showed that core inflation in September slowed below the 3% threshold for the first time in over a year.China’s blue chips and Hong Kong’s Hang Seng both dropped 0.7%. too. China on Friday held its benchmark lending rates steady following some signs of stabilisation in the economy this week. In the currency markets, the yen briefly revisited 150 to the dollar again although the greenback was flat against other major world currencies after a largely quiet week by its standards. [/FRX] Quincy Krosby, chief global strategist at LPL Financial (NASDAQ:LPLA), said the focus was now intensifying on the scale of the U.S. fiscal deficit because of Washington’s larger defence funding needs. U.S. President Joe Biden asked Americans on Thursday to spend billions more dollars to help Israel fight Hamas, amid mounting expectations that Israeli forces will imminently mount a ground invasion of Gaza.A U.S. Navy warship intercepted three cruise missiles and several drones launched by the Iran-aligned Houthi movement from Yemen potentially toward Israel. A U.S. base in Iraq also came under attack, Washington said.”There are several reasons why investors would want to sell this market, while very few to buy. That’s what we’ve seen today as risk sells off,” said Kyle Rodda, senior financial market analyst at capital.com.”To put it in simplest terms, market participants don’t want to be carrying risk into the weekend when hostilities could erupt.”Gold prices scaled a fresh 3-month peak of $1,990 per ounce, the highest since late July, as investors sought safe-haven assets in the turmoil. [GOL/]Oil prices were headed for the second weekly gain, due to fears of an escalating regional conflict in the Middle East, which would disrupt supplies.U.S. crude jumped 1% to $90.30 per barrel and Brent was at $93.50, up 1.2% on the day. [O/R] More

MUMBAI (Reuters) – India’s monetary policy committee (MPC) will remain focused on aligning inflation to its target of 4%, and only after it achieves that on a sustained basis, will its attention shift to the objective of growth, the October meeting minutes showed.”Our fundamental goal is to align inflation with the 4% target and anchor inflation expectations,” Reserve Bank of India (RBI) Governor Shaktikanta Das said in the minutes released on Friday.Recurring incidences of large and overlapping supply-side shocks bring with them the risks of generalisation of inflation impulses, possible loss of monetary policy credibility and de-anchoring of inflation expectations, he added.India’s retail inflation eased to a three-month low of 5.02% in September on the back of softer vegetable prices.”There is also growing evidence that inflation is undermining growth – people are not increasing discretionary spending in view of high inflation and this is slowing sales growth of corporations,” RBI Deputy Governor Michael Patra said.The MPC kept its key lending rate steady for a fourth consecutive policy meeting on Oct. 6, as widely expected, but signalled it would keep rates high and liquidity tight to bring inflation closer to its target.The MPC also retained its “withdrawal of accommodation” stance by a majority of five out of six votes.External MPC member Ashima Goyal explained that the current stance rules out a rate cut. “It allows a rise but that will not be required unless there are second round effects from the repeated supply shocks. So far, there are no signs of such pass through. The guidance, therefore, is that future moves will be data-dependent,” she said.A second external member, Jayanth Varma, who voted against the stance, said successive meetings that promise to withdraw accommodation while actually keeping rates unchanged do not enhance the credibility of the MPC.”It would be useful for the MPC to communicate its intention to keep real interest rates high enough for as long as is necessary to drive projected inflation close to the 4% target on a sustainable basis.” More

(Reuters) -French car parts maker Forvia on Friday posted solid organic sales growth for the third quarter, but warned that the spreading United Auto Workers strike will take a bigger bite out of revenue in October and could lead to layoffs.The world’s seventh largest automotive supplier said the impact of the UAW strikes on its U.S. sales was about 6 million euros ($6.34 million) in the past quarter, but that should rise to around 55 million euros in the month of October. In October 2022, its North American sales were around 600 million euros, with around half coming from Ford (NYSE:F), GM and Stellantis (NYSE:STLA).The UAW strike has hit the one-month mark, with more than 34,000 union members working at Ford, General Motors (NYSE:GM) and Chrysler parent Stellantis out on strike, including those who went out on strike at Ford’s cash-cow Kentucky pickup truck plant last week.”We are taking into account the new risk and large risk that is represented by the UAW strike, which is having a potentially larger impact than what was imagined before,” Forvia Chief Financial Officer Olivier Durand told analysts. The supplier is considering temporary layoffs and other ways to cut spending to counter the impact of UAW strikes, Durand told reporters.The company, which sells seats, dashboards, electronics, lighting and fuel systems to automakers, reported quarterly sales of 6.53 billion euros, up 10.7% organically from a year earlier and 700 basis points above global car production. “Given the organic growth out-performance across the regions (excluding North America) and continued execution of synergies, the outlook for 2024 organic growth and margin expansion looks intact,” Citi analysts wrote in a client note. Forvia, born from Faurecia’s takeover of Hella, also said it was starting another 1 billion euro asset disposal plan to reduce its debt and expenses amid persistent inflation and high interest rates.It reiterated a 2023 sales forecast of 26.5 billion to 27.5 billion euros and an operating margin target of 5.2% to 6.2%.($1 = 0.9456 euros) More