Aurelia Butler

NEW YORK (Reuters) -Yum Brands Inc’s KFC restaurants will start selling plant-based fried “chicken” from Beyond Meat (NASDAQ:BYND) Inc across the United States on Jan. 10 for a limited time, KFC said on Tuesday.Beyond shares rose more than 7% in after-market trading. KFC, Yum’s biggest brand, had nearly 4,000 restaurants in the United States at the end of 2020, according to a regulatory filing.KFC started testing Beyond’s plant-based chicken in August 2019 in Atlanta and expanded to more areas the following year.In February 2021, Yum and Beyond announced a global partnership to create plant-based menu items for Yum’s KFC, Taco Bell and Pizza Hut over “the next several years.”Major fast-food chains have been vying for partnerships with faux meat makers as they add vegan and vegetarian menu options. Beyond rival Impossible Foods Inc is working with Burger King, a unit of Restaurant Brands International (NYSE:QSR) Inc.Prices for the Beyond Fried Chicken at KFC will start at $6.99 in most places but will vary by location. More

WASHINGTON/SAN FRANCISCO (Reuters) – Alarmed by the persistence of uncomfortably high inflation, even the most dovish of U.S. central bankers now agree that they will need to tighten policy this year; the debate is no longer about whether, but how quickly.St. Louis Fed President James Bullard on Thursday said the Federal Reserve could raise interest rates as soon as March and is now in a “good position” to take even more aggressive steps against inflation, as needed. San Francisco Fed President Mary Daly, long a dovish counterpoint to Bullard’s hawkishness, reiterated at a separate event that she too expects interest rate increases this year, even as she warned that overly aggressive tightening could hurt the job market.And speaking earlier this week, Minneapolis Fed President Neel Kashkari said he now expects two rate hikes this year, a reversal from his long-held view that the Fed should hold off on rate hikes until 2024. Fed policymakers are now effectively in two groups: “those who want to tighten policy, and those who want to tighten policy even faster,” wrote Bill Nelson, a former Fed economist who is now chief economist at the Bank Policy Institute. While most Fed policymakers remain in the first group, he said, “such a distribution would result in upside but not downside risks to policy (barring major economic surprises, of course).” It is a big shift from just a few months ago, when Fed policymakers could be roughly divided into three: those supporting faster tightening, those who embraced a slower approach, and a contingent against rate hikes for a year if not more. But inflation is running at more than twice the Fed’s target of 2% and there is waning conviction at the Fed that the millions of workers sidelined by COVID-19 will quickly return to the labor force or that supply-chain constraints pushing up on prices will ease soon. So the appetite for patience has given way to an eagerness to move that is at odds with the Fed’s continued, if slowing, purchases of Treasuries and mortgage-backed securities whose purpose is to stimulate the economy. Last month U.S. central bankers agreed to end their asset purchases in March and laid the groundwork for what most of them see as at least three interest rate hikes this year. Minutes of the meeting released on Wednesday showed that some Fed policymakers want to move even faster to tighten policy, including by shrinking the Fed’s $8 trillion-plus balance sheet. On Thursday Bullard said he and his colleagues had been surprised at how widespread inflation had become, and laid out the case for a more aggressive path to combat it. “It makes sense to get going sooner rather than later so I think March would be a definite possibility based on data that we have today,” Bullard told reporters after a talk at the CFA Society of St. Louis. “This is not a situation where a particular price will go back to the pre-pandemic level and we won’t have to worry about this. This is an issue where Fed policy will have to influence where inflation goes.”He added that “credibility is more at risk today than at any time” in his 30 years at the Fed. The Fed, he said, “is in good position to take additional steps as necessary to control inflation, including allowing passive balance sheet runoff, increasing the policy rate, and adjusting the timing and pace of subsequent policy rate increases.”Speaking at an Irish central bank event, Daly for her part also said the Fed should raise interest rates this year, in the face of a “very strong” labor market and to rein in high inflation that acts as a “repressive tax.”Still, she said, the U.S. central bank’s approach ought to be “measured.””If we act too aggressively to offset the high inflation that’s caused by the supply and demand imbalances, we won’t actually do very much to solve the supply chain problems, but we will absolutely bridle the economy in a way that will mean less job creation down the road,” Daly said.With interest rates as low as they are – the Fed has kept its benchmark overnight interest rate pinned near zero since March of 2020 – “raising them a little bit is not the same as constraining the economy,” she said. Daly added that it is a “very different conversation” from reducing the balance sheet, as doing so would only come after the Fed has begun normalizing interest rates. More

NEW YORK (Reuters) – Twenty months after a global health crisis hobbled the U.S. economy, recent data – along with a hawkish turn from the Federal Reserve – is implying the labor market is approaching a complete recovery from the pandemic.That recovery has contradictory implications for the stock market. On the one hand, it could mean the labor drought, which has jacked up wages and cut in to profit margins, could be on the wane. Conversely, it could help hasten the Fed’s timeline for hiking the Fed funds target rate, which could be a boon for interest rate-sensitive financials, but a headwind for sectors such as tech, which have benefitted from near-zero interest rates. Wall Street gyrated this week, stumbling on signs from the Fed on Wednesday that it is considering bringing forward its monetary tightening schedule. Now focus turns to Friday’s January payrolls report at 8:30 a.m. EST (1330 GMT), to resolve whether stocks resume last year’s record rally or pull back more on rate hike fears. After the labor market hemorrhaged more than 22 million jobs in the pandemic’s opening months, recent indicators are suggesting the Fed’s “full employment” condition for reversing its COVID-era monetary accommodation could be here sooner than expected.This week the Institute for Supply Management’s PMI reports indicated continued employment expansion and the Labor Department’s JOLTS data showed job openings backing down from an all-time high and hiring on the upswing. (Graphic: JOLTS, https://graphics.reuters.com/USA-STOCKS/myvmnboenpr/jolts.png) More glaringly, payrolls processor ADP’s national employment index showed private employers added 807,000 jobs last month, more than double the consensus estimate. (Graphic: ADP, https://graphics.reuters.com/USA-STOCKS/lgpdwjlaavo/adp.png) Add to that Thursday’s report that jobless claims unexpectedly edged up last week to the lower end of the range associated with healthy labor market churn. Additionally, Challenger Gray’s December planned layoffs rose 28.1% from the previous month, capping the lowest annual total on record.The jobless claims trend “bodes well for December payrolls which will be released tomorrow,” wrote Jefferies economist Thomas Simons. (Graphic: Jobless claims and Challenger layoffs, https://graphics.reuters.com/USA-STOCKS/gkplgbdaqvb/joblesschallenger.png) But the Fed’s rate hike timeline largely depends on Friday’s December employment report, which economists polled by Reuters expect will show a nonfarm payrolls gain of 400,000 and an unemployment rate inching down to 4.1%.As of November, the U.S. economy had yet to recover 3.9 million of the 22.4 million jobs lost in March and April 2020.On Wednesday, minutes released from the U.S. Federal Reserve’s most recent policy meeting indicated its members had taken a more hawkish pivot than many anticipated, signaling that it may shorten its timelines for tapering and inflation-taming interest rate hikes as labor market conditions continue to improve.The S&P 500 fell almost 2% and Nasdaq about 3% on the appearance that the Fed could be whisking away the punch bowl sooner than many investors have hoped. Many investors and analysts believe that among the most significant indicators to watch on Friday will be the labor market participation rate, which remains well below pre-pandemic levels, and wage growth, as employers struggle to attract and retain workers.”The participation rate is really important and can affect employment numbers,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “If you’re not participating, you’re not in the data. From the Fed’s perspective it’s not so much low unemployment it’s getting more people working.” (Graphic: Labor market participation, https://graphics.reuters.com/USA-STOCKS/jnvwejxknvw/participation.png) Should Friday’s report suggest that hourly earnings growth is beginning to cool as U.S. companies grow less frantic in their efforts to hire and retain workers, that would be a good sign for profit margins.”From a broader perspective, strength in wages is driving a reversal in labor(‘s) share of corporate income that has fallen sharply over the past two decades,” wrote Ellen Zentner, chief U.S. economist at Morgan Stanley (NYSE:MS) in a research note.What’s more, year-on-year wage growth, which held steady at 4.8% in November, is part of the larger inflation picture being closely watched by the Fed.As illustrated by the graphic below, wages, along with other major indicators, continue to soar well above the Fed’s average annual 2% target rate, a state of affairs that has helped prompt the central bank’s increasing hawkishness: (Graphic: Inflation, https://graphics.reuters.com/USA-STOCKS/akvezemjdpr/inflation.png) The release of the monthly employment report often adds volatility to the stock market that day, but not always as expected.Over the last year, February’s print, reported on March 5, delivered the biggest upside surprise, coming in 340,000 above consensus. The S&P 500 jumped 1.5% that day.But the biggest miss occurred when April’s 269,000 job adds fell short of estimates by 709,000. On May 7, the day of that report’s release, the S&P 500 counterintuitively rose 0.9%. More

(Reuters) – U.S. Treasuries are facing a perfect storm that could send benchmark yields to their highest level in almost two years, as investors fret over a more hawkish Federal Reserve, surging inflation and a deluge of supply.Benchmark 10-year yields on Thursday jumped to 1.753%, up from a low of 1.491% at year-end and 1.353% on Dec. 20. The yields are now holding just below the 1.776% level reached in March 2021, which was the highest yield since February 2020.Analysts say a definitive break above technical resistance up to around 1.79% would likely signal further gains to the 2% area.The latter half of 2021 saw several rallies in the benchmark yield, which moves inversely to bond prices, fail around current levels as markets were hit by worries over COVID-19, economic growth and as investors sought out U.S. debt for its relatively higher yields. Investors increasingly believe this time may be different, not least because a hawkish Fed appears ready to pull out the stops in its fight against surging inflation.Yields took an extra leg higher after minutes from the Fed’s December meeting released on Wednesday showed that officials had discussed shrinking the U.S. central bank’s overall asset holdings as well as raising interest rates sooner than expected to fight inflation.“This talk about letting the balance sheet runoff and envisaging a future where there are no more Fed purchases… people are going to prepare for that now,” said Tom Simons, a money market economist at Jefferies.Other factors pressuring yields include corporate debt issuers locking in rates as they rush to beat rate hikes, and a broad market repricing of bonds after safe-haven demand helped to push yields too low relative to fundamentals at year-end.Demand for bonds relative to supply is also expected to worsen this year as central banks pare back purchases. The Fed only two months ago was buying an extra $120 bln a month in bonds.HAWKISH FEDThe Fed is under pressure hasten the removal of its extraordinary accommodation as surging price pressures prove more stubborn than previously thought. The rapid spread of the Omicron coronavirus variant may also add to supply disruptions, potentially increasing upward pressure on inflation.A surprisingly strong ADP National Employment Report on Wednesday also suggests that the labor market recovery may justify raising rates. The U.S. government will release its highly-anticipated jobs report for December on Friday.“It looks like the conditions for Fed rate hikes have pretty much been met with the labor market now pretty robust,” said Kim Rupert, managing director in global fixed income analysis at Action Economics, though she noted that holiday-season could have created data anomalies.Fed funds futures are now fully pricing in three rate hikes by the end of 2022, with the first increase likely as soon as March.SUPPLY-DEMAND BALANCEA rush by corporates to borrow in the bond markets before the Fed hikes rates is adding to Treasury weakness as issuers enter into agreements to lock in rates for the sales.”It looks like companies are trying to raise debt as soon as possible. As rates rise, there’s going to be more and more discussions of issuing debt now rather than wait to do it at a better level,” said Tom di Galoma, a managing director at Seaport Global Holdings in New York.The global bond supply-demand balance is also set to worsen this year as central banks, including the Fed and the European Central Bank (ECB), continue to reduce bond purchases, which could put more upward pressure on yields.JPMorgan (NYSE:JPM) analysts including Nikolaos Panigirtzoglou said in a report on Wednesday that if the Fed begins winding down its balance sheet after just two hikes in September, the market might need to absorb an additional $150 billion of net Treasury issuance in the last quarter of 2022.If Congress passes new spending in the form of the Build Back Better Act, net issuance could further climb by around $200 billion this year, which accounts for $250 billion in new spending, and $50 billion in taxes.JPMorgan is forecasting a deterioration of $1.1 trillion in global bond supply and demand this year relative to 2021, which could push yields in the Bloomberg Barclays (LON:BARC) Global Aggregate index upwards by 30 basis points. More

LONDON (Reuters) – European bank shares rose further above a three-year high on Thursday, boosted by the U.S. Federal Reserve’s signal that it could raise rates faster than expected, which lifted some of the December gloom hanging over the sector.European banking stocks benefitted from a sharp rise in borrowing costs on Thursday after minutes of a December Fed meeting released on Wednesday showed officials might be keen to raise interest rates sooner than expected.The European bank index jumped 1% to touch its highest level since October 2018, outperforming substantially the pan-European index which fell 1.3%. Profitability for banks typically increases when central banks hike interest rates. But only a move from the European Central Bank (ECB), which is seen as the last major central bank to raise interest rates, would generate a significant earnings increase for the banks across the region, Max Anderl, a portfolio manager at UBS Asset Management, said of the reaction.Anderl said the early 2022 rally could still have legs, with banks likely to profit from “the move from growth to value rather than a real improvement of underlying fundamentals”.Standard Chartered (OTC:SCBFF) climbed around 4% to its highest level in two months, Deutsche Bank (DE:DBKGn) rose 3% to a seven month high, while Spain’s Caixabank gained 2.5% to its highest level since late October. European bank stocks had lost steam in December after climbing a 70% in one year to November 2021, more than twice as much the 30% growth of the STOXX 600 index as banks restored dividends and got a boost from Europe’s growth rebound. (Graphic: Banks top sectoral performer in Europe, https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwjngkpo/Banks%20top%20sectoral%20performer%20in%20Europe.png) And with a resurgence in COVID-19 cases, the expectation for growth for the European financial sector in the last quarter of 2021 is the weakest of all STOXX 600 sectors.Refinitiv data showed that financial sector has the lowest year-on-year expected revenue growth rate at 3.5% compared to the 64.2% growth rate for the utilities sector and an overall 17.2% estimated revenue growth rate for the STOXX 600.Bank stocks are generally strongly correlated with bond yields and BofA analysts expect 23 billion euros of revenues for European banks for a 100 basis points upward shift in yield curves. That would represent 4% of the estimated industry revenues for 2022 and 15% on profit before tax.Another factor supporting European bank stocks are their relatively low valuations. Europe’s bank sector is trading at 8.8 times forward earnings. That compares to 16.8 times for the STOXX 600 benchmark and 12.9 times for the U.S. banking sector. Barclays (LON:BARC) analysts said the outlook for banks for 2022 remains overall positive as demand for credit is rising across Europe and stock valuations are still attractive. (Graphic: European banks vs U.S., https://fingfx.thomsonreuters.com/gfx/mkt/zjpqknwmnpx/European%20banks%20vs%20U.S..png) More

The paper reported that this would likely not be the last capital issue as the airline would need another 4 billion to 6 billion euros to remain a top industry player. The airline has already received more than 14 billion euros ($15.81 billion) in support from the French and Dutch governments since the start of the COVID crisis. A spokesman for the group could not immediately be reached.In December, Air France-KLM redeemed 500 million euros ($565 million) from an earlier French state loan issued to help the airline cope with the fallout from the pandemic, and said it could also raise new equity.($1 = 0.8856 euros) More