Aurelia Butler

In remarks scheduled for 12 p.m. (1600 GMT) at the Economic Club of New York, Powell will all but close out a frenetic month following U.S. monetary policymakers’ last meeting in mid-September, when they opted to leave their benchmark lending rate unchanged in a range of 5.25% to 5.50% to assess how the economy was evolving.Since then, data has shown U.S. job growth reaccelerating unexpectedly, retail sales defying predictions of a slowdown and varying measures of prices offering up inconsistent signals as to whether inflation is on track to return to the Fed’s 2% target in a timely manner.If that were not enough, the bond market is reeling and tightening financial conditions at a rapid clip. The most deadly Middle East conflict in years has erupted, with no swift resolution in sight and worries it may widen into a regional war with unknown economic consequences.Hours before Powell was due to speak, the latest read on the labor market showed new claims for unemployment benefits tumbling to the lowest since January, although the rolls of those on benefits for more than a week edged up to the highest since July.At the same time, the bond market sell-off continued, threatening to drive the yield on the 10-year Treasury note that is instrumental as a credit benchmark for households and businesses above the 5% threshold for the first time since 2007.The Fed chair must parse it all while walking a fine line between sounding too confident or too doubtful, with a lean too far in either direction having the potential to swing financial markets – and overall financial conditions in their wake – in unwanted directions.Powell’s appearance comes less than 48 hours before the beginning of the traditional quiet period ahead of the rate-setting Federal Open Market Committee’s meeting on Oct. 31-Nov. 1. While a handful of other Fed officials have appearances later on Thursday and Friday before blackout begins on Saturday, it is Powell’s remarks that will set the tone for policy expectations heading into that meeting, and financial markets will hang on every word.”We think the Fed chair will stick to the message delivered by Vice Chair (Philip) Jefferson that the data has been coming in stronger than expected, but there has also been a big move in yields, which has tightened financial conditions, so no urgency for a policy response in November and the Fed can adopt a wait-and-see approach,” Evercore ISI Vice Chairman Krishna Guha wrote.Indeed, another senior Fed official – Governor Christopher Waller – on Wednesday said he wants to “wait, watch and see” if the U.S. economy continues its run of strength or weakens in the face of the Fed’s rate hikes to date. It was a notable signal from one of the Fed’s more hawkish policymakers that rates for now look set to remain where they are, and it parallels recent commentary from other officials during the turbulent inter-meeting period.Should they leave rates unchanged in two weeks as is now widely expected, it would mark the first back-to-back meetings with no rate increase since the Fed kicked off its hiking campaign in March 2022.While inflation has abated significantly from its peak levels in June 2022, progress has been choppy and Fed officials like Waller are eager to see if the tightening they’ve delivered so far begins to “bite” and slow activity sufficiently to return inflation to target without causing a recession.A Reuters poll of more than 100 economists published on Wednesday showed more than 80% expect no rate hike at the next meeting, and most also believe the Fed is done with rate hikes even though a majority of policymakers at their September meeting projected one more quarter-point increase was likely to be needed by year end.Many in the poll offered the caveat that if progress on inflation stalls out or reverses, the Fed would not hesitate to resume raising rates.Waller said as much on Wednesday: “If the real economy continues showing underlying strength and inflation appears to stabilize or reaccelerate, more policy tightening is likely needed despite the recent run-up in longer-term rates.” More

The comments by Federal Reserve officials have had an impact on the housing market, with declining new mortgage applications observed as 30-year mortgage rates have hit 8%. The broad strengthening of the US dollar has also led to a downturn in equity markets. On Wednesday, the S&P, Stoxx 600, and Russell 2000 indices were lower due to rising yields. Industries such as materials and consumer discretionary notably underperformed, with firms like Boliden and SSAB experiencing a sell-off of 4-6%, despite steady industrial metal prices.In the bond market, a surge in UK inflation data drove GILT yields higher, affecting global bond markets. Smaller currencies such as SEK and NOK were impacted by higher US yields, dwindling risk appetite, and rebalancing needs. Despite the negative sentiment that widened credit spreads in equity markets, the primary credit market remained active with limited deal activity.In other news, the People’s Bank of China is expected to maintain unchanged Loan Prime Rates. Meanwhile, during his visit to Israel, President Joe Biden negotiated a $100 billion supplemental funding package for aid to Israel, Ukraine, and several domestic issues with Egyptian president Abdel Fattah El-Sisi. Today’s data releases will only include the US Philadelphia manufacturing index and weekly jobless claims. The Federal Open Market Committee’s (FOMC) blackout period is slated to start on Saturday.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

BEIJING (Reuters) – The Taliban administration wants to formally join Chinese President Xi Jinping’s huge ‘Belt and Road’ infrastructure initiative and will send a technical team to China for talks, Afghanistan’s acting commerce minister said on Thursday.Beijing has sought to develop its ties with the Taliban-run government since it took over in 2021, even though no other foreign government has recognised the administration.Last month, China became the first country to appoint an ambassador to Kabul, with other nations retaining previous ambassadors or appointed heads of mission in a charge d’affaires capacity that does not involve formally presenting credentials to the government.”We requested China to allow us to be a part of the China-Pakistan Economic Corridor and Belt and Road Initiative… (and) are discussing technical issues today,” acting Commerce Minister Haji Nooruddin Azizi told Reuters in an interview a day after the Belt and Road Forum ended in Beijing.The Pakistan “economic corridor” refers to the huge flagship section of the Belt and Road Initiative (BRI) in Afghanistan’s neighbour.Azizi said the administration would also send a technical team to China to enable it to “better understand” the issues standing in the way of it joining the initiative, but did not elaborate on what was holding Afghanistan back.Afghanistan could offer China a wealth of coveted mineral resources. Several Chinese companies already operate there, including the Metallurgical Corp. of China Ltd (MCC) which has held talks with the Taliban administration, as well as the previous Western-backed government, over plans for a potentially huge copper mine.”China, which invests all over the world, should also invest in Afghanistan… we have everything they need, such as lithium, copper and iron,” Azizi said. “Afghanistan is now, more than ever, ready for investment.”Asked about the MCC talks, Azizi said discussions had been delayed because the mine was near a historical site, but they were still ongoing. “The Chinese company has made a huge investment, and we support them,” he added. Investors have said security remains a concern. The Islamic State militant group has targeted foreign embassies and a hotel popular with Chinese investors in Kabul.Asked about the security challenges, Azizi said security was a priority for the Taliban-run government, adding that after 20 years of war – which ended when foreign forces withdrew and the Taliban took over – meant more parts of the country were safe.”It is now possible to travel to provinces where there is industry, agriculture and mines that one previously could not visit… security can be guaranteed,” Azizi added. Afghanistan and 34 other countries agreed to work together on the digital economy and green development on the sidelines of the Belt and Road Forum on Wednesday. More

BRUSSELS (Reuters) -Meta and TikTok have been given a week by the European Commission to provide details on measures taken to counter the spread of terrorist, violent content and hate speech on their platforms, a week after Elon Musk’s X was told to do the same.The European Union’s executive body said on Thursday it had sent a request for the information to the two companies as researchers point to the proliferation of disinformation following Hamas’ attack against Israel more than a week ago.The Commission can open investigations into the companies if it is not satisfied with their responses.Under new online content rules known as the Digital Services Act (DSA) that came into force recently, major online platforms are required to do more to take down illegal and harmful content or risk fines as much as 6% of their global turnover.”Meta (NASDAQ:META) must provide the requested information to the Commission by 25 October 2023 for questions related to the crisis response and by 8 November 2023 on the protection of the integrity of elections,” the Commission said. “TikTok must provide the requested information to the Commission by 25 October 2023 for questions related to the crisis response and by 8 November 2023 on the protection of integrity of elections and minors online,” it added. More

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Investors’ concerns include the end of the Fed’s rate hikes and Congress’s ability to avert a government shutdown. Amidst the Israel-Hamas conflict and an escalating macro environment, global markets remain stable, but US uncertainties could incite more market instability. The largest single-day sell-off of 30-year bonds since the pandemic onset occurred last week due to a hot inflation report, prompting more bets on another Fed rate hike.On the same day, Vice Chair Philip N. Jefferson will open the 18th Central Bank Conference on the Microstructure of Financial Markets, while Vice Chair for Supervision Michael S. Barr will later address the 2023 Federal Reserve Stress Testing Research Conference on sharp interest rate swings.Forecasts from CME Group’s (NASDAQ:CME) FedWatch suggest that the Fed will hold rates steady in its next policy meeting concluding on November 1, with about a 35% chance of a December rate hike. The odds shift notably into January, with nearly a 50% chance of at least a quarter-point rate hike. This expectation has caused the largest one-week rise in Treasury yields, particularly 10-year note yields, in over eighteen months.Powell’s signaling of a stricter Fed policy could intensify geo-political tensions, particularly the escalating Israel-Hamas conflict that risks involving the broader Middle East in prolonged military unrest. While market predictions suggest the Fed will maintain rates at their next meeting, recent Middle East events and their implications on oil markets might make Powell more cautious. With US headline inflation high at 3.7% and war in the Middle East adding further inflationary risks, bond markets cannot definitively mark an end to the Fed’s interest rate cycle. This uncertainty is reinforced by strong September retail sales data and solid industrial production data indicating healthy near-term growth for the domestic economy.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More