Aurelia Butler

NEW YORK (Reuters) – Federal Reserve Bank of New York President John Williams said on Monday that financial system troubles that drove the central bank to provide large amounts of credit to banks is not collateral damage from the Fed’s aggressive effort to lower inflation. “I personally don’t think the pace of rate increases was behind the issues at the two banks back in March,” Williams said at an event held at New York University. The central banker, who is also vice-chairman of the rate-setting Federal Open Market Committee, was referring to the failures of Silicon Valley Bank and Signature Bank (OTC:SBNY), which kicked off market fears over the state of the financial system.Analysts say some of the issues faced by banks were due to not having properly prepared for an environment of rapidly rising rates, which has defined monetary policy over the last year as the Fed tried to bring down high levels of inflation.The banking sector stress drove the Fed to provide substantial amounts of liquidity to the financial system, even as officials have stressed repeatedly that by and large the banking system is safe and sound and abounding with liquidity. Recent data shows a slow move down in Fed emergency lending, but the absolute level of lending still remains very high. Williams said he viewed the trouble at the two banks as unique in nature and unlikely to reflect broader trends in the financial system. That said, Fed officials have said that banking sector stress will likely weigh on the economy, as financial firms pull back on lending. That in turn could result in lower activity levels while also helping to further cool price pressures. New York Fed data released earlier Monday said American households are facing greater headwinds in obtaining credit and foresee that challenge growing over time, even as they rate their personal financial conditions favorably.Williams said that while past episodes of financial sector stress point to tightening credit, as it now stands, “we haven’t seen clear signs yet of credit conditions tightening and we don’t know how big this effect will be” if it happens.In his speech, Williams also reiterated that he believes inflation, now at around 5%, will come down slowly over time and will ease to 3.75% this year and will likely ebb to the 2% target by 2025. Williams said that he also sees a gradual rise over time in unemployment from the current low 3.5% to between 4% and 4.5%. Williams said he is not concerned by market expectations of rate cuts even though the Fed currently has penciled in an additional rate rise this year. Instead, he said he was cheered by what he sees as market participants reacting to incoming data.    “I don’t really worry about” the divergence, Williams said. “I think part of it is because there is an expectation among many market participants and economists that the economy’s going to slow even more than I expect.” More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.Asian market trading volumes should return to more normal levels on Tuesday as investors around the world return from the Easter break, with Chinese inflation and an interest rate decision in South Korea the key events in a pretty packed regional calendar.Australian consumer confidence will also be released on Tuesday, along with unemployment and trade data from the Philippines, and trade and inflation reports from Taiwan.There was nothing from U.S. or global equities on Monday for traders in Asia to hang their hats on, although U.S. bond yields and implied rates continue to inch higher on the view that the Fed will raise rates by a quarter point on May 3.There was more movement in currency markets, where the dollar rose across the board and the yen sank. The Japanese currency slumped 1% to a four-week low against the dollar following the first public remarks from new Bank of Japan (BOJ) governor Kazuo Ueda.Ueda said it was appropriate to maintain the bank’s ultra-loose monetary policy for now as inflation has yet to hit 2% as a trend, suggesting he will be in no rush to dial back its massive stimulus.At the same time, the BOJ must also avoid being too late in normalizing monetary policy, a sign he will be more open to tweaking its controversial ‘yield curve control’ policy than his dovish predecessor Haruhiko Kuroda.He has his work cut out. GRAPHIC: Dollar/yen hits 4-week high(https://fingfx.thomsonreuters.com/gfx/mkt/akpeqnmzzpr/USDJPY.png)GRAPHIC: Chinese consumer price inflation (https://fingfx.thomsonreuters.com/gfx/mkt/zgvobjkmwpd/ChinaCPI.jpg) Chinese stock markets, meanwhile, get a chance to recover from Monday’s 0.5% fall – the steepest in three weeks – now that Beijing has completed its military drills around Taiwan.Investors can turn their attention back to the economic data, specifically inflation on Tuesday. Producer price inflation is expected to have fallen further in March, according to analysts’ estimates of a year-on-year decline of 2.5%, which would be the fastest pace of deflation since June 2020.The annual rate of consumer price inflation is expected to remain unchanged at 1.0%, the slowest in a year, and the monthly rate is expected to rise to 0% from -0.5% in February.If these forecasts are broadly accurate, price pressures in China would appear to be extremely benign, giving the central bank room to loosen policy and stimulate the economy.In South Korea, the central bank looks to have ended its tightening cycle and will likely keep its main interest rate on hold at a 15-year high of 3.50% on Tuesday. With the economy on the brink of recession, it could well cut rates later this year.Here are three key developments that could provide more direction to markets on Tuesday:- IMF/World Bank spring meetings in Washington- China PPI and CPI (March)- South Korea interest rate decision (seen on hold) (By Jamie McGeever; Editing by Josie Kao) More

WASHINGTON (Reuters) – International Monetary Fund (IMF) Managing Director Kristalina Georgieva said on Monday that 44 countries have expressed interest in borrowing from its $40 billion Resilience and Sustainability Trust after an initial five had arranged loans.The facility was created last year to help channel excess IMF Special Drawing Rights reserves from wealthier countries to poor and vulnerable middle-income countries to provide long-term concessional financing for needs such as climate change adaptation and transitioning to cleaner energy sources.Georgieva told a Bretton Woods Committee event at the start of IMF and World Bank spring meeting week that the “healthy queue” of countries was a sign that the resilience facility resources needed to be scaled up to much higher levels.Georgieva said the facility’s current resources of around $40 billion were “modest in size.” Rwanda, Barbados, Costa Rica, Bangladesh and Jamaica have reached agreements for loan programs from the facility, which come with certain economic policy requirements such as meeting fiscal targets.Her comments come as IMF and World Bank member countries will discuss this week ways to dramatically scale up climate-related lending and private sector investment to meet needs estimated in the trillions of dollars a year to meet emissions reduction targets. “So $40 billion is not a solution on its own, but it is a contribution to a solution, if it helps remove barriers for massively scaling investment, especially private investment, in emerging markets and developing economies,” Georgieva said. More

(Reuters) -Executives from more than 300 biotech and pharmaceutical industry companies, including Pfizer Inc (NYSE:PFE) and Biogen Inc (NASDAQ:BIIB), signed an open letter on Monday calling for reversal of a federal judge’s decision to suspend sales of the abortion pill mifepristone.A U.S. judge on Friday suspended the U.S. Food and Drug Administration’s 2000 approval of the drug, effectively banning sales while a case brought by anti-abortion groups before him continues in the Northern District of Texas.Last week’s ruling by Judge Matthew Kacsmaryk undermines the FDA’s authority, the letter’s authors wrote, adding that it ignores decades of scientific evidence and legal precedent.”We call for the reversal of this decision to disregard science, and the appropriate restitution of the mandate for the safety and efficacy of medicines for all with the FDA, the agency entrusted to do so in the first place,” they wrote.Pfizer Chief Executive Albert Bourla was the first leader of a major pharmaceutical company to add his name to the letter, which also bore the signatures of more than 300 executives from smaller U.S. biotechnology companies. Biogen President Alisha Alaimo has since also signed it.The White House welcomed the move, issuing a statement drawing attention to and quoting from the letter. The Department of Justice appealed the decision in a filing with the 5th U.S. Circuit Court of Appeals on Monday. It asked that the decision be stayed by April 13, and that a stay remain in place until all appeals, including if necessary to the Supreme Court, are resolved.The letter was written by ReCode Therapeutics CEO Shehnaaz Suliman, Blackfynn co-founder Amanda Banks, and Ovid Therapeutics (NASDAQ:OVID) CEO Jeremy Levin, who is also a former chairman of biotech industry lobbying group BIO. The decision puts the entire industry at risk, the letter says, and sets a precedent for undermining the agency’s authority to approve drugs, adding regulatory uncertainty that they warned would disincentivize investment in new treatments.”You have the real potential of having medicines not being developed because it’s far too expensive, or medicines that are currently approved being withdrawn because they are political,” Levin told Reuters.The FDA approved mifepristone, part of a two-drug regimen that accounts for more than half of U.S. abortions, more than 20 years ago and has determined its safety several times since.Health policy and legal experts have said that if Kacsmaryk’s unprecedented ruling is allowed to stand it could undermine confidence in FDA’s authority to regulate drugs, severely weaken the agency, and hinder access to new treatments. “If courts can overturn drug approvals without regard for science or evidence, or for the complexity required to fully vet the safety and efficacy of new drugs, any medicine is at risk for the same outcome as mifepristone,” the letter said.The ruling could open the possibility of the banning of vaccines and contraception for women, said Levin.”This is a nightmare scenario for the industry,” he said. “It’s the single worst threat to the industry in over 50 years.” More

(Reuters) – The founder of Infinity Q Management, which once claimed to manage $3 billion, was sentenced to 15 years in prison for misleading investors about the value of assets the New York firm managed, U.S. Attorney Damian Williams said on Monday.U.S. District Judge Denise Cote sentenced James Velissaris, 38, on Friday after rejecting his recent request to withdraw his guilty plea, which he entered in November.”We hope this lengthy sentence resonates in the financial sector and deters anyone who may be tempted to lie to investors,” Williams said in a statement.A spokesperson for Velissaris declined to comment.Prosecutors said Velissaris misled investors and regulators by promising to fairly value over-the-counter derivative positions that comprised much of a mutual fund and hedge fund he ran.Velissaris instead mismarked many holdings, sometimes inflating values to “impossible” levels and concealed the mismarking from auditors, to increase management fees and retain investors, they said.In requesting to withdraw his guilty plea, Velissaris argued that he did not commit a crime because Infinity Q had disclosed it might value assets differently than an independent pricing service it used.Velissaris also said his plea was involuntary as he was affected by depression and “overwhelmed by pressure” from prosecutors and his former lawyers to take a plea deal.In a ruling denying the request, Cote said Velissaris had said under oath that he was entering his plea voluntarily.His decision to plead guilty to one count of securities fraud instead of going to trial on multiple charges “makes rational sense,” the judge said.Velissaris also said he had evidence he argued showed his innocence at the time he pleaded guilty, the judge said.Prosecutors had asked for a “substantial” prison sentence without recommending a specific term. Velissaris had asked for home confinement, saying it would allow him to receive comprehensive mental health treatment.The case is U.S. v. Velissaris, U.S. District Court, Southern District of New York, No. 22-00105. More