Aurelia Butler

According to Refinitiv Lipper data, U.S. investors offloaded $5.52 billion worth of bond funds in a 17th straight week of net selling. Graphic: Fund flows: US equities, bonds and money market funds – https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwgeggvo/Fund%20flows%20US%20equities%20bonds%20and%20money%20market%20funds.jpg The U.S. benchmark 10-year Treasury yield hit nearly a 3-1/2-year high of 3% this week after reports last week showed rising U.S. consumer spending in March and surging labour costs in the first quarter.After an expected 50-basis-point hike to the central bank’s benchmark overnight interest rate on Wednesday, Fed Chair Jerome Powell ruled out raising rates by 75 basis points in a coming meeting, although he made clear the rate increases the Fed already has in mind were “not going to be pleasant.”Investors sold U.S. taxable bond funds worth $3.82 billion and municipal funds worth $1.75 billion.U.S. short/intermediate investment-grade funds witnessed net selling of $5.46 billion in a 17th straight week of outflows. Loan participation funds, however, obtained inflows of $0.83 billion, the largest amount in three weeks.Graphic: Fund flows: US bond funds – https://fingfx.thomsonreuters.com/gfx/mkt/byvrjnaomve/Fund%20flows%20US%20bond%20funds.jpgMeanwhile, U.S. equity funds’ weekly outflows eased to a four-week low of $3.76 billion.U.S. value funds posted their first weekly inflow in seven weeks, worth $854 million, while growth funds saw net selling of $3.93 billion, although that was the lowest outflow in four weeks.Graphic: Fund flows: US growth and value funds – https://fingfx.thomsonreuters.com/gfx/mkt/akpezyrdovr/Fund%20flows%20US%20growth%20and%20value%20funds.jpg Among sector funds, tech and financials lost $724 million and $593 million, respectively, in net selling, while utilities saw net buying of $542 million. Graphic: Fund flows: US equity sector funds – https://fingfx.thomsonreuters.com/gfx/mkt/zgvomleqkvd/Fund%20flows%20US%20equity%20sector%20funds.jpg U.S. money markets drew net purchases of $2.63 billion, although there was a 94% drop in inflows compared with the previous week. More

(Reuters) – Wall Street’s main indexes were set for a lower open on Friday as a stronger-than-expected jobs data amplified investor concerns over bigger interest rate hikes by the Federal Reserve to tame surging prices.The Labor Department’s report showed nonfarm payrolls increased by 428,000 jobs last month, while economists polled by Reuters had expected 391,000 job additions.Unemployment rate remained unchanged at 3.6% in April, while average hourly earnings increased 0.3% against forecast of a 0.4% rise. The data underscored the economy’s strong fundamentals despite a contraction in gross domestic product in the first quarter.”Certainly if you are sitting there worrying about a recession, at least initially, I don’t think there’s anything in here that would say the economy is in the tank,” said Matthew Tuttle, chief investment officer, Tuttle Capital Management in Greenwich, Connecticut”The unemployment rate being 3.6% after 12 months in a row of adding over 400,000 jobs, to me that’s an economy that’s cranking. I’m in the camp of ‘worried about a recession'”.The main indexes plunged on Thursday, reversing all gains from a relief rally on Wednesday, as investors feared bigger rate hikes might be needed as inflation runs at a four-decade high. Traders see 83% chance of a 75 basis point hike at the Fed’s June meeting, despite Fed chief Jerome Powell ruling out such a rate hike.[IRPR]The Nasdaq tumbled 5%, its biggest one-day percentage decline since June 2020, as rate-sensitive growth stocks were hammered.The S&P 500 growth index is down nearly 20.3% year-to-date as compared to a 4.9% fall in its value counterpart, which houses economy-sensitive sectors like energy, banks and industrials.Megacap stocks were mixed on Friday, with Microsoft Corp (NASDAQ:MSFT) down 0.6% in premarket trading. Wells Fargo (NYSE:WFC) led declines among big banks with a 0.4% fall. At 9:01 a.m. ET, Dow e-minis were down 174 points, or 0.53%, S&P 500 e-minis were down 27.75 points, or 0.67%, and Nasdaq 100 e-minis were down 120 points, or 0.93%.Among stocks, DoorDash Inc rose 3.4% as the food delivery firm raised its full-year forecast for core growth target after reporting upbeat quarterly revenue. Under Armour Inc (NYSE:UAA) slumped 16.0% after the sportswear maker forecast downbeat full-year profit, as it grapples with higher transportation costs and a hit to its business from renewed COVID-19 curbs in China.Shares of rival Nike Inc (NYSE:NKE) slipped 2.3%. More

WASHINGTON (Reuters) – U.S. job growth increased more than expected in April, underscoring the economy’s strong fundamentals despite a contraction in gross domestic product in the first quarter.Nonfarm payrolls rose by 428,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Data for March was revised slightly lower to show 428,000 jobs added instead of 431,000 as previously reported. Economists polled by Reuters had forecast payrolls rising by 391,000 jobs. Estimates ranged from as low as 188,000 to as high as 517,000. The unemployment rate was unchanged at 3.6%.”It is ambiguous whether larger employment gains would be a cause for concern for the Fed or a source of relief,” said Lou Crandall, chief economist with Wrightson ICAP (LON:NXGN) in Jersey City.”Stronger growth that reflects a willingness by individuals to return to the workforce would tend to dampen labor costs, while growth induced by higher wage offers by employers pinched by labor shortages would have the opposite effect.” The Federal Reserve is trying to tighten monetary policy to bring down inflation without tipping the economy into recession.The U.S. central bank on Wednesday raised its policy interest rate by half a percentage point, the biggest hike in 22 years, and said the Fed would begin trimming its bond holdings next month. It started raising rates in March. Fed Chair Jerome Powell told reporters that “the labor market is extremely tight, and inflation is much too high.”Last month’s job gains underscored the economy’s strong fundamentals despite output shrinking in the first quarter under the weight of a record trade deficit.There were a record 11.5 million job openings on the last day of March, which widened the jobs-workers gap to an all-time high of 3.4% of the labor force from 3.1% in February. Average hourly earnings increased 0.3% after advancing 0.5% in March. That lowered the year-on-year increase in wages to a still-robust 5.5% from 5.6% in March. Compensation for American workers logged its largest increase in more than three decades in the first quarter, helping to keep domestic demand supported.Though Powell on Wednesday said a 75 basis points rate hike was not on the table, some economists believe the Fed could raise its benchmark interest rate above its neutral rate, estimated between 2-3%. More

BEIJING/SHANGHAI (Reuters) -Beijing residents fretted on Friday over tightening COVID curbs in its biggest district and dozens of new cases reported daily as China’s leaders reiterated their resolve to battle the virus and threatened action against critics of their strict measures. Incurring a heavy economic cost and facing rare public criticism on its tightly-policed internet, China is increasingly out of step with the rest of the world where COVID restrictions are being abandoned and vaccines relied on to protect people.Internationally, industry organisations have complained that China’s ‘zero-COVID’ policies have global economic reverberations. At home, the population worries about painful, long-term restrictions.In the latest ratcheting up of restrictions, Beijing authorities on Friday said all non-essential services in its biggest district Chaoyang, home to embassies and large offices, would shut. Mass testing will also resume in at least four districts over the weekend. Meanwhile, organisers of the Asian Games, scheduled to take place in September in Hangzhou, southwest Shanghai, postponed them until 2023, because of COVID, defying a global sporting calendar that has largely returned to normal.The Chinese capital is racing to avoid an explosion in cases like the one that forced the commercial hub of Shanghai into an almost complete lockdown for more than a month, taking a financial and psychological toll on its residents.”We will try to cooperate,” said 42-year-old Beijing finance worker Hu, giving only her surname.”But I also hope that the government can introduce some policies that will not affect the overall life of citizens. After all, we all have mortgages and car loans.”After a meeting of the highest decision-making body, the Standing Committee of the Communist Party’s politburo, state media reported late on Thursday that China would fight any comment or action that distorted, doubted or repudiated its COVID policy.Relaxing COVID controls, which are in place in dozens of cities across the world’s second-largest economy and affecting hundreds of millions of people, would lead to large-scale infections, it warned.On Friday, the Communist Party’s official People’s Daily newspaper hit out in an editorial against accusations China’s COVID policy was disrupting the global economy and trade.”Some U.S. politicians have frequently attacked and smeared China’s epidemic prevention and control measures and tried to throw the blame on China for the so-called disruption of global supply chains,” it said without identifying anyone.’PERSISTENCE IS VICTORY’China was putting “life first”, and although pressure on its economy has increased, it could overcome difficulties, it said.China’s yuan weakened to its lowest level against the dollar since November 2020, while stocks slumped. Iron ore prices also fell on fears about the impact of the restrictions on demand from China, the world’s top consumer of the steel-making ingredient.The government and central bank have promised more policy support for the economy.Shanghai vice-mayor Wu Qing said “the epidemic has come under effective control” but warned of risks of a rebound and promised the city would not deviate from a zero-COVID strategy, which involves mass testing, mandatory quarantine and sweeping lockdowns.”We cannot relax, we cannot slack off: persistence is victory,” he said.Despite the announcement that the outbreak was under control, most of the city’s 25 million people are unable to leave their housing compounds or are allowed out only briefly.Many residents grumble about different community officials applying rules in different ways.One large, central residential complex announced on Friday that it was relaxing curbs within the compound and scaling back the number of volunteers helping to deliver food. But its residents could still not get out through its locked gates.’ISN’T THAT INSANE?’The capital has reported dozens of new cases a day for about two weeks since its outbreak emerged, faring better than Shanghai was on the 14th day of its outbreak.But getting around the city is cumbersome with weekly COVID tests now needed to get into offices and public venues and take subways or buses, the state-backed Beijing Daily reported.Some residents complained they never received test results on a mobile app that tracks their COVID tests, while others were inexplicably prompted by the app to re-take theirs.”I couldn’t enter the office building … even though I tested negative within 24 hours. Isn’t that insane?” said a resident surnamed Wang. Goldman Sachs (NYSE:GS) analysts said regular testing could be a compromise to allow cities to identify and isolate cases quickly with much lower costs than city-wide lockdowns.It “would not be a panacea, but would help limit disruption to a large part of China’s manufacturing and overall economic activity for a protracted period”, they said. More