Aurelia Butler

U.S. new vehicle sales, including retail and non-retail transactions, are estimated to reach 1,309,900 units in September, a 13.8% jump from a year earlier, a joint report by J.D. Power and GlobalData showed on Thursday.The impact of the UAW strike has had negligible effect on September sales, according to the report. “However, depending on the duration and scope of the (work)stoppage, there could be disruption to sales results in October and beyond,” Thomas King, president of the data and analytics division at J.D. Power, said in a statement.The ongoing labor strike, which began on Sept 15, between the UAW and automakers Ford (NYSE:F), General Motors (NYSE:GM) and Chrysler parent Stellantis (NYSE:STLA), at some U.S. facilities of these companies, has threatened the supply of newer models.Retail inventories could see a 36.5% jump in September from a year earlier, but would be still well below the pre-pandemic levels.Dealer profits, squeezed by elevated interest rates, declined due to increased vehicle supply, with fewer vehicles being sold for higher than their sticker price. Global sales for 2023 are expected to reach 87.9 million units compared with the previous estimate of 86.8 million units.”The wildcards to the finish of 2023 are the U.S. market—which may be influenced by the ongoing UAW strike—and China, with a price war that is attracting more consumers into the new-vehicle market but is negatively affecting OEM margins,” said Jeff Schuster of GlobalData. More

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“The surge in demand for non-bank financing – an acceleration of a more than decade-long trend – underscores the need for private credit and magnifies already significant lending opportunities,” said Brad Bauer, partner & co-chief investment officer at Varde Partners.Loans from direct-lending funds often carry a higher interest rate than traditional bank debt, making them attractive for private capital providers. However, as credit conditions have tightened, and interest rates have risen, banks have also been seeking ways into the market.Earlier this week, Wells Fargo teamed up with private equity firm Centerbridge Partners to launch a fund with a capacity to lend more than $5 billion to North American middle-market companies.Varde provides loans and financing solutions for consumers, businesses and lenders. The firm invests across a range of industries, including specialty finance, commercial real estate and technology. More

LONDON (Reuters) – World stocks were on track for their longest losing streak in two years on Thursday as the sight of oil prices nearing $100 a barrel compounded concerns about persistently high global interest rates.There was brief respite from the dollar’s strength in currency markets [/FRX], but it was Wednesday’s big drop in U.S. crude stocks that heightened nerves about another supply-side shock just when the global economy needs it least. U.S. crude had hit $95 a barrel for the first time since August 2022 and while both it and $97 Brent prices eased fractionally in London trading they were 30% higher than at the end of June. Europe’s oil and gas stocks were up 0.5% and close to their highest since 2014, whereas the prospect of higher energy costs and sticky inflation piled more pressure on bond markets.Ten-year U.S. Treasury yields, which are the benchmark of global borrowing costs, were above 4.6% for the first time since 2007 having started September at 4%.Triple-A Germany’s 2.93% yields hit their highest in 12 years before news that inflation there had slowed, while Wednesday’s announcement that Italy’s budget deficit is now widening again pushed its 2-year yields briefly to a 11-year high. “What we have got is a beautiful inflection point,” Mizuho’s Head of Global Macro Strategies Trading, Peter Chatwell, said, explaining that markets were now sensing that both economic growth and inflation could stay strong next year. “The repricing is applying some stress to credit spreads as well as other things,” Chatwell said. “If the higher rate environment persists it is potentially much more difficult to keep debt levels stable.” Traders were also watching U.S. lawmakers’ efforts to avoid a government shutdown in Washington. With European stocks in and out of the red and U.S. S&P 500 futures barely budged, MSCI’s main global equities index which tracks 47 countries was in danger of a 10th straight daily fall, a losing streak not seen since 2021.MSCI’s index of Asia-Pacific shares outside Japan had ended near a 10-month trough, while Japan’s Nikkei fell 1.5% as investors there readied for the end of the quarter and offloaded stocks that went ex-dividend.The strong dollar has the Japanese yen within a whisker of 150-per-dollar, seen as a level likely to provoke an official response or intervention. Dollar/yen was hovering around 149.40 on Thursday. The euro was licking its wounds too at $1.0535, having dropped to a nine-month low of $1.0488 in the previous session. Institutes in Germany predicted its economy will shrink 0.6% this year and Spanish data showed headline inflation rose to 3.5% this month due to the soaring cost of energy.Focus in the U.S. session will be on the final reading of second-quarter GDP and weekly jobless claims data to gauge the strength of the U.S. labor market. A number of central bankers are also putting in an appearance, most notably Federal Reserve Chair Jerome Powell at 2000 GMT.CHINA BREAKChinese markets had limped toward a long holiday that begins on Friday. The break may be a welcome one for traders after weeks of bad news in the country’s struggling property sector.Shares in the poster child of the troubles, China Evergrande (HK:3333), had to be suspended in Hong Kong after a report that chairman Hui Ka Yan was under police watch. The stock, once worth more than HK$30, is now near HK$0.30.Investors worry a liquidation would further damage the tanking property market and stifle tentative green shoots elsewhere in the Chinese economy.”China’s property-sector stress will continue to pose cross-sector credit risks in the near term,” said Fitch Ratings on Thursday. “The government’s modest policy easing to date is unlikely to drive a sharp turnaround in homebuyers’ sentiment.”The Hang Seng fell 1% and is close to a 10-month low. The mainland CSI300 fell 0.2%.China’s yuan is also coming under pressure and only a very strong fixing of its trading band has held off sellers. The yuan last changed hands at 7.3057 per dollar, not far from the weaker extremity of its trading band.Higher energy prices helped the Australian dollar to stabilise at $0.6378. Gold, though, was heading for its worst week since February as the rise in Treasury yields drives investors out of the precious metal, which pays no yield. It nursed losses at $1,875 an ounce. More

Trading in the company’s shares was suspended earlier in the day after a report that its chairman had been placed under police watch. Evergrande said shares will remain suspended until further notice.With more than $300 billion in liabilities – roughly the size of Finland’s gross domestic product – Evergrande has become the poster child of a debt crisis in China’s property sector, which contributes to roughly a quarter of the economy.Evergrande grew rapidly through a land-buying spree backed by loans and by selling apartments quickly at low margins, making Hui Asia’s richest man in 2017, according to Forbes.But with its overall liabilities ballooning to more than $300 billion, it has come under pressure as the property market weakened and Chinese regulators cracked down on companies with high debt levels. More

Gross domestic product increased at an unrevised 2.1% annualized rate last quarter, the Commerce Department said in its third estimate of GDP for the April-June period on Thursday. Economists polled by Reuters had expected GDP for the second quarter would be unrevised. Growth for the first quarter was revised up to a 2.2% rate from the previously reported 2.0% pace.The government also revised GDP data from 2017 to incorporate new source information and made some statistical improvements such as the treatment of regulated investment companies and real estate investment trusts. GDP was revised down in each of the first quarters of 2020, 2021 and 2022 mostly due to downgrades to consumer spending growth. But the Bureau of Economic Analysis (BEA), the agency that constructs the GDP report, said there was no evidence that residual seasonality, which plagued the GDP data several years ago, was an issue. The government also introduced new price measures, the personal consumption expenditures (PCE) price index excluding food, energy and housing, and PCE services excluding energy and housing, or the so-called super core inflation.Federal Reserve officials are focused on the super core price measure as they try to gauge progress in their fight against inflation. Since March 2022, the U.S. central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.The economy is being underpinned by a resilient labor market, which is driving strong wage gains. Growth estimates for the July-September quarter are currently as high as a 4.9% rate.But a looming government shutdown amid bitter infighting among Republicans in the U.S. House of Representatives over spending could sap momentum in the fourth quarter.Hundreds of thousands of federal workers will be furloughed and a wide range of services, from financial oversight to medical research, will be suspended if Congress does not provide funding for the new fiscal year that starts Oct. 1. Also casting a shadow over the economy is an ongoing strike by the United Auto Workers union against General Motors (NYSE:GM), Stellantis (NYSE:STLA) and Ford Motor (NYSE:F), which is expected to depress motor vehicle production and raise automobile prices. The strike, which started almost two weeks ago, is already having ripple effects on the supply chains.The labor market has continued to hold its own so far. A second report from the Labor Department on Thursday showed initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 204,000 for the week ended Sept. 23. Economists had forecast 215,000 claims for the latest week.Claims have been in the lower end of their 194,000-265,000 range this year. The number of people receiving benefits after an initial week of aid, a proxy for hiring, increased 12,000 to 1.670 million during the week ending Sept. 16, the claims report showed. The so-called continuing claims covered the period during which the government surveyed households for September’s unemployment rate. Continuing claims were little changed between the August and September survey weeks. The unemployment rate increased to 3.8% in August from 3.5% in July. More

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In their spring forecast, the institutes had forecast gross domestic product (GDP) would contract by 0.3%. The new projection confirms a Reuters report from earlier this week. “The most important reason for this revision is that industry and private consumption are recovering more slowly than we expected in spring,” said Oliver Holtemoeller, head of the macroeconomics department at the Halle Institute for Economic Research (IWH).Business sentiment has recently deteriorated again and overall, the indicators suggest that production fell markedly in the third quarter, the economic institutes said.GDP is expected to shrink by 0.4% in the third quarter alone, after stagnating in the second quarter. However, price hikes have been followed wage increases, energy prices have fallen, meaning that purchasing power is returning, economists said. Therefore, the downturn is expected to subside by the end of the year.In the last quarter of the year, a modest 0.2% expansion is forecast. For 2024, the institutes – four German and one Austrian – forecast GDP growth of 1.3%, down from 1.5% previously, and for 2025, an expansion of 1.5%.In the following years, a decreasing potential growth rate due to the shrinking labour force will become more and more apparent, they said. Inflation – 6.9% last year – is expected to come in at 6.1% this year and fall to 2.6% next year and 1.9% in 2025.The institutes see core inflation at 6.1% in the current year and 3.1% in 2024, well above the 2% target of the European Central Bank. The economic institutes said the ECB’s series of interest rate rises had peaked, and that they expected rates to remain unchanged until the summer of 2024, as core inflation declined only slowly.They also accused the coalition government of being too short-sighted in its reactions to problems such as the recent energy crisis.”Political uncertainty is too high, that is the title of our report,” said Holtemoeller. “In many areas, there is a need for coherent, consistent and medium-to long-term policies.”Stefan Kooths, director of business cycles and growth at the IfW Institute, added: “Consistency should be the basic principle of economic policy.”The economics ministry usually updates its own predictions incorporating the results of the joint forecasts from the Ifo Institute, the IWH, the Kiel Institute for the World Economy (IfW), the RWI–Leibniz Institute for Economic Research and the Austrian Institute of Economic Research. More