Aurelia Butler

NEW YORK (Reuters) – Retailers have a new sweet spot: products that cost $3 to $5. Target (NYSE:TGT) said on Tuesday that it would be stocking its shelves with more products priced under $10 as the retailer tries to appeal to more cost-conscious consumers dealing with once-in-a-generation inflation.This comes a little more than a year after dollar store chain Dollar Tree (NASDAQ:DLTR) said it would launch more discretionary products including seasonal items and apparel priced between the $3 and $5.Americans are shifting their shopping habits and hunting for bargains in the face of unrelenting inflation. Many, including high-income households, are buying more store-label brands as budgets stretch in the face of higher interest rates.Minneapolis-based Target, which has nearly 2,000 stores, reported a quarterly profit that beat Wall Street’s expectations for the first time in a year, as it shifted its focus to selling more food and lower-priced items under its higher-margin private-label brands including Favorite Day, Good & Gather and Mondo Llama. Target generates more than $30 billion in sales from its 48-owned brands, the company disclosed in a presentation on Tuesday adding that these brands grew faster than overall sales in 2022. Now it plans to double down on its in-house products. Target said it plans to launch or expand more than 10 owned brands, adding thousands of new products. The majority of these items will be sold for $3, $5, $10 and $15, according to the retailer.The move comes after Target saw higher sales of $3 ornaments, $5 candles and $10 throw pillows, Christina Hennington, the company’s chief growth officer, said on a call on Tuesday.It also follows discount chain Five Below (NASDAQ:FIVE) Inc’s plans to open more than 200 new stores in 2023 and convert 400 existing stores to its “Five Beyond” format, which sells items priced above its $5 threshold. CFRA Research analyst Arun Sundaram said Target’s motive to lower prices was to drive more traffic to its stores. “It is nice to see Target invest in own brands and use that as a way to keep differentiating themselves against Walmart (NYSE:WMT) and Kroger (NYSE:KR),” he said.Consumer prices rose at a more rapid monthly pace in January, the Labor Department reported earlier this month.  The Consumer Price Index rose 0.5% in January, as prices for food, fuel and apparel accelerated at a more rapid rate. In the 12 months through January, inflation was 6.4%, compared to 6.5% in December.Walmart executives said last week that they have seen stretched consumers gravitate towards private label, such as its Great Value and Equate brands. Target’s private-label brands are generally more expensive than at Walmart, a Reuters review of their online prices showed. In one example, a 64-ounce Great Value bottle of orange juice sells for $2.98 on Walmart.com compared with $3.69 for Good & Gather orange juice in the same size. Dollar Tree, which dropped its long-standing $1 policy in November 2021, said last year its focus to offer more $3 to $5 items was working for its products that competed against those in grocery and drugstores, and led to its first traffic increase in three years during its third-quarter ended October 29 last year. The Virginia-based chain said it was planning on adding more $3 and $5 items to its fleet of 16,000 stores in the years ahead.  More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.A bumper data dump on Wednesday kicks off the new trading month in Asia, with China’s manufacturing PMI report for February and fourth quarter Australian GDP among the most important releases for investors. Market sentiment going into these and a host of other numbers from across the continent is likely to be fairly neutral after Wall Street closed February with a lackluster performance on Tuesday.To recap, the S&P 500 closed February down 2.6% and the Nasdaq lost 1%, but that wasn’t bad – the MSCI World Index fell 3% and MSCI Asia ex-Japan lost 7%, erasing almost all of January’s gains. Asian stocks have only risen two months out of the last 14.Traders in Asia will be hoping for some encouraging signs in the economic data to get markets off to a positive start for the month. Assuming ‘good news is good news’, that is.How is China’s economic reopening from zero-COVID policies progressing? Purchasing managers index figures will give the most up-to-date snapshot of the huge manufacturing sector, and economists polled by Reuters reckon growth is picking up pace. (Graphic: China manufacturing PMI – https://fingfx.thomsonreuters.com/gfx/mkt/dwvkdzkakpm/ChinaPMI.jpg) The latest manufacturing PMI data from Japan, India, Australia and several other countries across the region will also be released on Wednesday.Another Reuters poll suggests the quarterly pace of GDP growth in Australia accelerated to 0.8% in the October-December period last year, but the annual pace more than halved to 2.7%. International trade is expected to have been a major driver thanks to a boom in resource exports.Australian and Indonesian inflation figures for January are expected to be a mixed bag. In the current climate of markets repricing the global rate outlook significantly higher, mixed or forecast-matching numbers may not be enough to keep the hawks at bay. The annual rate of Australian consumer inflation is expected to slow, but tick higher in Indonesia. Current rates pricing points to the Reserve Bank of Australia raising interest rates by another 100 bps this year, while Bank Indonesia policymakers indicated in February that their hiking cycle is over. (Graphic: Australia inflation & interest rates – https://fingfx.thomsonreuters.com/gfx/mkt/zjpqjyneavx/AussieCPI1.jpg) Here are three key developments that could provide more direction to markets on Wednesday:- Manufacturing PMIs across Asia (February)- Australia GDP (Q4)- Australia inflation (January) (By Jamie McGeever; Editing by Josie Kao) More

Biden said in November he was confident the plan is legal, and announced new, temporary relief for borrowers that may mean their next loan payment is not due until August 2023. WHAT IS THE LATEST NEWS?The U.S. Supreme Court’s nine justices are hearing arguments in the Biden administration’s appeal of the two lower court rulings today. The court is expected to rule on this case this Spring. The court said on Dec. 1 it would hear Biden’s bid to reinstate his plan, after a challenge by six states that have accused his administration of exceeding its authority.On Nov. 22, Biden said he would extend the COVID-19 pandemic-era pause in student loan payments until no later than June 30, 2023, to allow the court to review his administration’s requests.Payments will resume 60 days after the pause ends, Biden said. WHAT HAPPENS NEXT WITH THE COURT CASES? The Supreme Court has agreed to hear the Biden administration’s bid to put on hold a Nov. 14 decision by the St. Louis, Missouri-based 8th U.S. Circuit Court of Appeals, which granted an injunction request by Republican-led states Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina.The administration on Dec. 2 also asked the justices to put on hold a separate Nov. 10 ruling by a Texas judge appointed by Republican former President Donald Trump that declared the debt forgiveness plan unlawful. The administration did so after the New Orleans-based 5th U.S. Circuit Court of Appeals earlier that week declined to stay the judge’s ruling.WHO IS ELIGIBLE FOR LOAN FORGIVENESS?The program forgives $10,000 of debt held by the federal government for individuals who make less than $125,000. It also forgives $10,000 of debt for couples that make less than $250,000, and it forgives up to $20,000 of debt held by Pell Grant holders, who are mostly lower-income borrowers. WHAT IS THE STATUS OF APPLICATIONS? About 26 million Americans have applied for student loan forgiveness since August, and the U.S. Department of Education has already approved requests from 16 million. The government stopped taking new applications Nov. 11, after the Texas judge blocked Biden’s order.Borrowers who have not yet applied can subscribe for updates by email. WHAT DO VOTERS SAY?American voters support debt forgiveness by a narrow margin; about 15% of voters say they could be impacted by the plan, an Economist/YouGuv poll found. The six Republican-led states that have sued to block Biden’s executive order argue he skirted congressional authority and the plan threatens future tax revenues and money earned by state entities that invest in or service student loans.Deep South states will get the greatest benefits per borrower from the Biden order, New York Federal Reserve research shows, including South Carolina, one of the six behind the lawsuit: A handful of states may consider the student loan debt that is forgiven as taxable income, financial advisers warn.WHY IS U.S. STUDENT DEBT SO HIGH?The cost of higher education has skyrocketed in the United States in the past three decades, doubling at private four-year colleges and universities and rising even more than that at public four-year schools, according to research from the nonprofit College Board. The outstanding balance of student loans nearly quadrupled from 2006 to 2019. U.S. borrowers hold about $1.77 trillion in student debt, according to the latest Federal Reserve figures. The vast majority of that is held by the federal government.Biden’s student loan forgiveness plan could add $300 billion to $600 billion to the federal debt, economists estimate. More

WASHINGTON (Reuters) – U.S. companies with the highest credit ratings sold a record $144 billion of debt securities so far in February to get ahead of further potential interest rate hikes, meeting strong demand from investors looking to capitalize on a spike in yields.Investment-grade rated corporate bond issuance in February has been the busiest ever for the month with the tally as of Monday already some $20 billion ahead of the now second-heaviest February in 2021, said BMO Capital Markets’ fixed income strategy director Dan Krieter in a report.Companies have been rushing to issue bonds as yields spiked to touch new highs with the Federal Reserve looking to keep interest rates higher for longer. Traders now expect the Fed to raise rates to about 5.4% in July, with only a minor decline by December, futures markets show. In early February, the market envisaged rates rising to a peak under 5.0%, with several rate cuts by year’s end.The average yield on U.S. investment grade bonds rose to 5.55% on Monday from just 4.94% on Feb. 1..”There’s much more yield now to be had in corporates,” said David del Vecchio, co-head of the U.S. investment grade corporate bond team at PGIM Fixed Income. February’s bonds were oversubscribed by 3.64 times on average, data from Informa Global Markets said. Investors still had plenty of cash, despite the flurry of issuance, said Blair Shwedo, head of IG corporate bond trading at U.S. Bank. Analysts expect $160-165 billion of new bond supply in March.”With more volatility, you may see some short term negative returns but overall, we’re well positioned to have a very nice positive total return in investment grade credit in 2023,” said Natalie Trevithick, head of investment grade credit strategy at investment management firm Payden & Rygel. More

BENGALURU (Reuters) – New Zealand house prices are set to fall further this year than previously thought, according to a Reuters poll of property analysts who forecast a peak-to-trough slump of over 20% as the central bank continues to hike interest rates aggressively.Average house prices peaked in November 2021, having risen more than 40% in just two years during the worst of the COVID-19 pandemic, as home buyers took advantage of near-zero interest rates, making New Zealand one of the least affordable markets among developed nations.Since October 2021, the Reserve Bank of New Zealand has raised its policy rate 450 basis points to a 14-year high of 4.75%. The central bank is expected to raise the rate as high as 5.50% later this year, which is likely to keep pressure on the retreating housing market.Average home prices were expected to decline 8.9% this year, according to the Feb. 17-27 Reuters poll of 10 property analysts, compared to a 6.0% fall in a November poll.Analysts predicted a small 2.8% rise next year, a downgrade from the 4.0% increase forecast in the previous poll.”The reason for falling house prices is the very sharp increase in interest rates, which is making affordability of repayments quite substantially worse,” said Brad Olsen, principal economist at Infometrics.Asked how much average house prices would fall from peak to trough, analysts who answered an additional question gave a median estimate of 21.8%, with forecasts in a 19%-25% range.A like-for-like analysis of the latest poll and the previous survey showed over 80% of respondents, six of seven, now expected a bigger peak-to-trough home price fall. The other analyst left his forecast unchanged from the previous poll. Given house prices have nearly doubled in the last seven years, the relatively small decline expected along with sharply higher borrowing costs, means entering the market will remain challenging for first-time homebuyers.”The decline in house prices is one thing, but if you have got a cheaper house but no mortgage to afford it, you still haven’t got a house under your own name. It still means affordability is out of reach for many,” added Olsen.Miles Workman, senior economist at ANZ, said house prices will fall more if “inflation remains a lot higher for longer than expected, requiring the Reserve Bank to be more aggressive with interest rate hikes. If that were to happen, mortgage rates would be higher.”(For other stories from the Reuters quarterly housing market polls:) More