Aurelia Butler

NEW YORK (Reuters) -U.S. consumers remain resilient with solid spending in the third quarter, two of the country’s biggest lenders said on Friday, although there are signs higher inflation has stretched some Americans on lower incomes. Strong earnings from JPMorgan Chase (NYSE:JPM) and Wells Fargo and upbeat comments from their top executives should further ease investor worries that elevated borrowing costs were weighing on consumers and pushing the economy to the cusp of a downturn, even as JPMorgan hiked provisions for soured loans.JPMorgan’s shares were up nearly 5% in afternoon trading, while Wells Fargo’s were up more than 6%.”Overall, we see the spending patterns as being sort of solid,” said Jeremy Barnum, chief financial officer of JPMorgan, the country’s largest lender and a bellwether for the U.S. economy, adding spending had normalized from a post-pandemic bounce when Americans splurged on travel and eating out.Weakening job market data had sparked concerns that Federal Reserve interest rate hikes aimed at taming inflation may tip the United States into a recession or “hard landing.” But speaking to analysts, Barnum said spending patterns were “consistent with the narrative that consumers are on solid footing and consistent with a strong labor market and the current central case of a kind of ‘no-landing’ scenario economically.” Wells Fargo Chief Financial Officer Michael Santomassimo told reporters that spending on credit and debit cards, while down a little from earlier this year, was still “quite solid.” The bank reported debit card purchase volumes and transactions were up nearly 2% year-on-year, while credit card point-of-sale volumes were up 10%. At JPMorgan, year-on-year debit and credit card sales volumes were up 6%.The market will get a fuller picture when Bank of America and Citigroup, the country’s other two major consumer banks, report next week and retail sales data is released. Several investors said Friday’s earnings were so far a positive sign. “The read on the consumer from JPM and Wells is very healthy in my opinion. It seems like there’s more of a normalization in consumer spend than a decrease in spend, and that’s healthy for the broad economy,” said Dave Wagner, head of equities at Aptus Capital Advisors, which owns several bank stocks.Still, Santomassimo warned that the cumulative impact of higher inflation was stretching lower-income consumers and the bank was watching to see if that pattern spread to higher-income customers.  Consumer sentiment also slipped in October amid lingering frustration over high prices, a University of Michigan survey showed on Friday.”When you look at the overall average, it looks good, but I think it’s being skewed more by the higher-income, higher-net-worth consumer,” said Paul Nolte, senior wealth advisor and market strategist for Murphy & Sylvest in Elmhurst, Illinois.”For those around the lower end, it’s been a little bit tougher. We’re seeing delinquencies and car loans pick up. We’re seeing smaller deposits, more credit card balances,” he added. Both banks set aside cash to cover potential soured loans. JPMorgan set aside $3.11 billion, a jump on the $1.38 billion it put aside a year ago, predominantly driven by potential credit card loan losses. Wells Fargo, meanwhile, set aside $1.07 billion, down slightly from the $1.2 billion it provisioned this time last year, although it noted it had increased its allowance for credit card loans as balances had risen.More than decade-high credit card delinquencies had also stoked fears earlier this year that Americans were becoming overstretched, but that picture improved in the second quarter, the Federal Reserve Bank of Philadelphia said on Wednesday. Impaired borrowing between one month and longer horizons marked its biggest retreat in three years, although it would be premature to declare a turning point for credit performance, the Philadelphia Fed said. In a note on Thursday, analysts at Barclays said they expected to see “continued normalization of credit card loan losses, but at a slower pace than in previous months.” More

(Reuters) -JPMorgan Chase shares rose nearly 5% on Friday after profit beat expectations in the third quarter, fueled by gains in investment banking and rising interest payments.The prospect of further monetary easing by the Federal Reserve spurred an equities rally during the third quarter, prompting companies to issue debt and equity. Improving economic confidence underpinned earnings at JPMorgan, the largest U.S. lender, and rival Wells Fargo, which also surpassed profit estimates. JPMorgan’s stock, trading around $223, was on course for its biggest daily percentage gain in 1-1/2 years.JPMorgan’s investment-banking fees surged 31%, doubling guidance of 15% last month. Equities propelled trading revenue up 8%, exceeding an earlier 2% forecast.”These earnings are consistent with the soft-landing narrative” of modest U.S. economic growth, Chief Financial Officer Jeremy Barnum told reporters.”In light of the positive momentum throughout the year, we’re optimistic about our pipeline for mergers and acquisitions,” Barnum later told analysts.Net interest income – the difference between what the bank earns on loans and pays on deposits – grew 3% in the quarter. JPMorgan raised its annual NII forecast to $92.5 billion from $91 billion. The new estimate was higher than the $91.05 billion analysts polled by LSEG had forecast. The move surprised analysts who had expected third-quarter NII to decline after President Daniel Pinto warned last month that forecasts were too optimistic. After fielding several questions from analysts parsing the guidance, CEO Jamie Dimon said: “I don’t want to spend all the time on this call guessing what the NII number is going to be next year.”The results highlighted the benefits of JPMorgan’s diversified business, as growth in its commercial and investment bank offset declines in its consumer unit, said Peter Nerby, a senior vice president in the financial institutions group at Moody’s Ratings.The results underscore JPMorgan’s track record of generating capital to protect its bondholders from economic, geopolitical and regulatory uncertainty, Nerby said.Dimon reiterated his warning that escalating global conflicts could disrupt economic activity.”We have been closely monitoring the geopolitical situation for some time, and recent events show that conditions are treacherous and getting worse,” Dimon said in a statement.Tensions in the Middle East have escalated this month, with Israel clashing with Iran and the Lebanese group Hezbollah, while it battles Hamas in Gaza.As the Nov. 5 presidential election nears, Dimon has been floated for senior positions on U.S. economic policy, such as Treasury secretary. He has been praised by former President Donald Trump and spoke to Vice President Kamala Harris last month.”I’ve always been an American patriot and my country is more important to me than my company,” Dimon, who has not publicly endorsed a presidential candidate, told analysts.When asked if he would consider a government role, Dimon said: “the chance of that is almost nil. And I probably am not going to do it. But I always reserve the right” to reconsider.Dimon, who has run the bank for 18 years, has emphasized that he and the rest of the board will “do the right thing” on succession when he eventually leaves, without specifying details. PROVISIONS JUMPBanks are building stockpiles of money to cover loans that may not be repaid. The provisions are rising to more typical levels as consumers deplete the savings they built up during the pandemic.JPMorgan set aside $3.11 billion in the quarter for likely credit losses, compared with $1.38 billion a year earlier, largely because it had expanded lending, Barnum said. Still, consumer finances and spending remain resilient in a strong job market, Barnum said, and late payments on loans are normalizing from historically low levels.Overall, profit fell 2% to $12.9 billion for the three months ended Sept. 30. Earnings per share of $4.37, however, exceeded expectations of $4.01, according to estimates compiled by LSEG.”Relative to the uncertainty going into the quarter JPM reported strong third-quarter results,” said Gerard Cassidy, an RBC Capital Markets analyst. He cited the bank’s better-than-expected non-interest income and NII.Dimon said the bank was awaiting new draft proposals, known as Basel III Endgame, which would increase capital requirements for large U.S. lenders.”We believe rules can be written that promote a strong financial system without causing undue consequences for the economy, and now is an excellent time to step back and review the extensive set of existing rules.”The Fed is watering down the contentious proposal after months of industry push back. The draft rules would raise big banks’ capital requirement by 9% instead of 19% under the original proposal.(Reporting Nupur Anand in New York and Niket Nishant in Bengaluru; Editing by Lananh Nguyen, Arun Koyyur and Rod Nickel) More

(Reuters) -The International Monetary Fund on Friday approved measures that will reduce its members’ borrowing costs by about $1.2 billion annually, the fund’s Managing Director Kristalina Georgieva said.”The approved measures will lower IMF borrowing costs for members by 36%, or about $1.2 billion annually,” Georgieva said in a statement. “The expected number of countries subject to surcharges in fiscal year 2026 will fall from 20 to 13.”This year, the IMF decided to review its policy on charges and surcharges for the first time since 2016, as higher interest rates globally have pushed borrowing costs higher.The fund charges regular interest, plus surcharges for loans above a certain threshold or duration, and commitment fees for precautionary arrangements.The IMF said the charge above the fund’s interest rate will be lowered, while the amount and duration thresholds will rise, as will the threshold for commitment fees.”While substantially lowered, charges and surcharges remain an essential part of the IMF’s cooperative lending and risk management framework, where all members contribute and all can benefit from support when needed,” Georgieva said.The changes will take effect on Nov. 1.The five countries paying the highest surcharges are Ukraine, Egypt, Argentina, Ecuador and Pakistan according to research from Boston University’s Global Development Policy Center.Argentina, currently the IMF’s largest debtor, will save over $3 billion with the changes, according to Finance Secretary Pablo Quirno.Friday’s announcement falls short of calls by academics, non-profit groups and other economists, who have argued for a full cancellation of IMF surcharges, which they say place extra burdens on borrowing countries at a time when they are in dire economic circumstances and counteract the impact of IMF lending. More

WASHINGTON (Reuters) -The United States expanded sanctions against Iran’s petroleum and petrochemical sectors on Friday in response to an Iranian missile attack on Israel, the administration of President Joe Biden said.The U.S. move adds petroleum and petrochemicals to an executive order that targets key sectors of Iran’s economy with the aim of denying the government funds to support its nuclear and missile programs.”The new designations today also include measures against the ‘Ghost Fleet’ that carries Iran’s illicit oil to buyers around the world,” Jake Sullivan, the national security adviser, said in a statement. “These measures will help further deny Iran financial resources used to support its missile programs and provide support for terrorist groups that threaten the United States, its allies, and partners.” Israel is vowing to respond to Iran’s Oct. 1 missile attack, launched in retaliation for Israeli strikes in Lebanon and Gaza and the killing of a Hamas leader in Iran.The U.S. Treasury can now “impose sanctions on any person determined to operate in the petroleum and petrochemical sectors of the Iranian economy,” it said in a statement.Biden has said Israel should seek alternatives to attacking Iran’s oil fields. Gulf states are lobbying Washington to stop Israel from attacking oil sites because they are concerned their own facilities could come under fire from Tehran’s proxies if the conflict escalates, three Gulf sources told Reuters.The Treasury Department also said it was designating 16 entities and identifying 17 vessels as blocked property, citing their involvement in shipments of petroleum and petrochemical products in support of the National Iranian Oil Company.Concurrently, the State Department took steps to disrupt the money flow into Iran’s weapons programs and support for “terrorist proxies and partners.”It imposed sanctions on six entities involved in Tehran’s petroleum trade and identified six ships as blocked property.Iran’s oil exports have risen under Biden’s tenure as Iran succeeds in evading sanctions and as China has become Iran’s major oil buyer.The Eurasia Group risk consultancy said on Friday the U.S. could cut Iran’s oil exports through tighter enforcement of previously imposed sanctions, for instance through satellite imaging for stricter monitoring of tankers that have turned off transponders. The U.S. could also pressure countries to support enforcement efforts such as Malaysia, Singapore and the United Arab Emirates, it said. But that approach “would require strong diplomatic pressure on two partners, Malaysia and UAE, which are both reluctant to support efforts favoring Israel,” it said. Tougher enforcement of sanctions would likely require targeting Chinese firms shipping Iranian crude, it said, as China buys nearly 90% of Iran’s crude-oil exports. More

WASHINGTON (Reuters) – Republican presidential candidate Donald Trump and members of his party running for the U.S. Senate are blaming immigrants for the rising cost of housing, though a review of economic data and independent research suggests their effect is limited.In making the argument, former President Trump and his allies are seizing on housing costs – a major economic concern of U.S. voters – as a reason to crack down on immigration, one of his core campaign issues.Unaffordable housing was registered voters’ second-biggest concern about the U.S. economy in an August Reuters/Ipsos poll. One in three voters cited housing costs, second only to the 56% who cited worries about income lagging inflation.Vice President Kamala Harris, Trump’s Democratic rival in the Nov. 5 election, has put housing at the center of her economic pitch to voters. She plans to spur new construction and reduce costs for renters and home buyers, largely through tax incentives.Over the past decade the U.S. has built new homes and apartments at about a 30% slower annual pace than before the 2008 financial crisis, leaving the market 1.5 million units shy of what would be needed to balance supply and demand, according to Freddie Mac estimates. Other forecasters, notably Moody’s (NYSE:MCO) Analytics, put the shortfall closer to 2.9 million units.That shortage plus COVID-fueled inflation have driven average rents up about 23% compared with 2020, estimates by Apartment List show. U.S. home prices have risen 50% in the last five years and rents have risen 35%, according to real estate firm Zillow (NASDAQ:ZG).Immigration “is driving housing costs through the roof,” Trump told a rally in the battleground state of Arizona in late September, standing in front of a backdrop that read: “Make housing affordable again.”Speaking in Tucson, Trump pointed to the number of immigrants who have entered the United States in recent years compared to the number of houses built, two statistics also used by Kari Lake, the Republican Senate candidate in that state, as proof of their argument.”It’s just basic common sense,” Lake said in an interview. “These people have to live somewhere, and this is basic supply and demand.”    In Wisconsin, Republican U.S. Senate candidate Eric Hovde told a local news outlet that closing the border would ease economic pain points.”We’re already having a hard time providing affordable housing and healthcare to our own citizens,” Hovde said. His campaign did not respond to a request for comment.LIMITED LINK, ACADEMICS SAYAcademics who study the intersection of immigration and housing say migrant inflows have a small effect on prices, with a 1% increase in a city’s population typically pushing rents and housing prices up by a corresponding 1%.Overall consumer prices have risen 21% since 2020, according to federal data. At the Massachusetts Institute of Technology’s Urban Economics Lab, Director Albert Saiz said his research indicates that rise has been the main driver of home prices and rents, followed by the rise in remote work leading to demand for larger homes with office space and more homes outside major coastal cities.The effect of immigration trails those factors, he said.”Quantitatively I don’t think it’s even close to explaining what’s happened,” Saiz said. “Clearly the other issues are more important.”Madeline Zavodny, a professor of economics at the University of North Florida, co-authored a recent paper released by the Federal Reserve Bank of Dallas that listed immigration as one force driving up rents. She said workers who entered the country illegally could contribute to that.But she also noted that because migrants, and specifically migrants who enter illegally, make up a large share of construction workers, they are likely “having a bigger impact on housing supply than on demand,” which works to bring down housing prices overall.  The Trump campaign did not immediately respond to a request for comment about economists’ findings.The idea that immigrants are fueling a nationwide housing shortage comes from a false impression of the economy that there are a fixed number of houses, Julia Gelatt, of the nonpartisan Migration Policy Institute, said. “Immigrants fill housing units, but because immigrants work at high rates in construction and remodeling, they also help to increase the housing supply.”That fact is likely understood in a border state like Arizona, where immigration has been a top issue for decades, said Barrett Marson, a Republican strategist based in the state.”Most voters are smart enough to know that … immigrants who are day laborers are not moving into the home in my price range,” he said. But in an election where cost of living is a major issue on voters’ minds, Marson said, “the fear-mongering doesn’t have to be true to be effective.” More

NEW YORK (Reuters) -Global stocks rose on Friday, lifted by U.S. bank earnings, and on track for a weekly gain while U.S. Treasury yields were mostly lower after inflation and consumer confidence reports solidified expectations for the path of Federal Reserve rate cuts.The U.S. producer price index for final demand was unchanged in September, slightly below the forecast of economists polled by Reuters for a gain of 0.1%. It followed an unrevised 0.2% increase in August, indicating inflation continues to cool and giving the Fed leeway to continue cutting interest rates.In the 12 months through September, the PPI increased 1.8% versus the 1.6% estimate.On Thursday, the consumer price index turned out to be slightly higher than expected as goods costs increased.The University of Michigan’s preliminary reading on the overall index of consumer sentiment came in at 68.9 this month, compared with a final reading of 70.1 in September and below the 70.8 estimate as high prices discouraged shopping.On Wall Street, U.S. stocks advanced, with the Dow and S&P 500 closing at record highs, as bank shares jumped 4.21%, its biggest daily percentage gain since May 2023, at the start of the quarterly earnings season. JP Morgan rose 4.44% and Wells Fargo shot up 5.61%.”As we get to the latter part of this year and into next year, you’re going to see earnings growth in the broader market and not just a small group of stocks and what the banks are telling us today is that’s happening,” said Craig Sterling, head of U.S. equity research at Amundi U.S. in Boston. “Banks have been as big a question mark as anybody – the level of rates, the yield curve, capital markets activity, et cetera – and two of our biggest banks today are saying well everything’s going to be pretty good.”S&P 500 earnings growth is expected to be 4.9%, LSEG data showed, down slightly from 5.2% at the start of October. The Dow Jones Industrial Average rose 409.74 points, or 0.97%, to 42,863.86, the S&P 500 rose 34.98 points, or 0.61%, to 5,815.03 and the Nasdaq Composite rose 60.89 points, or 0.33%, to 18,342.94. Gains were capped, however, by an 8.78% tumble in Tesla (NASDAQ:TSLA) shares as the electric vehicle maker promised much at its robotaxi event with few practical details.MSCI’s gauge of stocks across the globe rose 4.56 points, or 0.54%, to 852.75 and was on track for its fourth weekly gain in five weeks. In Europe, the STOXX 600 index closed up 0.55% as investors shifted their focus to China’s fiscal stimulus, corporate earnings seasons and the European Central Bank’s (ECB) expected rate cut next week.Bets that the Fed will cut rates by 25 basis points at its November meeting have been choppy in recent sessions, and stand at 88.4%, with markets pricing in a 11.6% chance of no change in rates, CME’s FedWatch Tool showed.Markets had been fully pricing in a cut of at least 25 basis points, with a chance for another outsized 50 bps cut last week, until a strong U.S. payrolls report prompted investors to dial back expectations.Comments from Fed Chair Jerome Powell and other central bank officials have signaled a shift in focus from combating high inflation to labor market stability.On Thursday, several policymakers said the data gives the Fed room to continue cutting rates, but Atlanta Federal Reserve Bank President Raphael Bostic told the Wall Street Journal he was open to skipping a rate cut.U.S. yields were choppy around the data as investors gauged the Fed’s rate path before heading lower. The benchmark U.S. 10-year note yield 0.5 basis point to 4.089% while the 2-year note yield, which typically moves in step with interest rate expectations, declined 5 basis points to 3.949%.The 10-year yield is up about 11 bps for the week, poised for its fourth straight weekly advance. The 2-year yield is nearly 7 bps on the week, on track for a second straight weekly climb.In currency markets, the dollar index, which measures the greenback against a basket of currencies, edged up 0.05% to 102.94, with the euro down 0.03% at $1.0932. The greenback is up 0.44% on the week, on track for a second straight weekly gain after four straight weeks of declines.Against the Japanese yen, the dollar strengthened 0.4% to 149.15. Sterling strengthened 0.05% to $1.3065 but remained near a one-month low after data showed Britain’s economy grew in August after two consecutive months of stagnation.Crude prices slipped, but secured a second straight weekly climb, as investors weighed the impact of hurricane damage on U.S. demand against any broad supply disruption if Israel attacks Iranian oil sites.U.S. crude settled down 0.38% to $75.56 a barrel and Brent fell to settle at $79.04 per barrel, down 0.45% on the day. More

NEW YORK/LONDON (Reuters) -The U.S. dollar was flat against major currencies on Friday as markets digested a slew of economic data that supported the Federal Reserve’s current monetary policy path.A gauge of U.S. producer prices was unchanged in September, the Labor Department reported, the latest economic data to indicate the Fed will likely cut rates again next month.Consumer prices in September rose 0.3%, according to data released on Thursday, slightly hotter than expected, while weekly jobless claims surged, pointing to labor-market weakness. The weekly jobless claims data was skewed by Hurricane Helene. Next week’s data will be affected by Hurricane Milton, the second hurricane in two weeks to hit the southeast U.S.The euro was flat at $1.1093, the pound was up 0.08% at $1.3072, while the dollar was up 0.35% against the Japanese yen at 149.12. The dollar index was flat at 102.91, taking a breather after a recent steady climb that took it above 103 on Thursday, its highest since mid-August on the back of traders reducing bets on further jumbo interest-rate cuts by the Federal Reserve at its remaining meetings this year. Markets are betting a nearly 91% chance of a 25-basis-point cut at the Fed’s next meeting and 9% probability of no cut, according to the CME’s Fedwatch tool.”That slightly higher inflation print has really backed the market away from being overly aggressive on how deep they were looking for the interest-rate cuts to go by the end of the year,” said Amarjit Sahota, executive director at Klarity FX in San Francisco. “So there was already an overprice in there and that’s basically unwound this week.”Britain’s economy grew in August after two consecutive months of stagnation, providing some relief to finance minister Rachel Reeves ahead of the new Labour government’s first budget later this month.However, in addition to being broadly steady on the dollar the pound was little changed on the euro at 83.67 pence to the common currency. Traders are also watching French politics, after the government on Thursday delivered its 2025 budget with plans for 60 billion euros ($65.5 billion) worth of spending cuts and tax hikes on the wealthy and big companies to tackle a soaring fiscal deficit. The budget is unlikely to pass until December, as French Prime Minister Michel Barnier and his allies in President Emmanuel Macron’s camp lack a majority by a sizeable margin and will have little choice but to accept numerous concessions. Markets are also awaiting a news conference from China’s finance ministry on fiscal policy on Saturday. The Chinese yuan strengthened 0.22% against the greenback to 7.067 per dollar. The Australian dollar strengthened 0.22% versus the greenback to $0.6753, while the New Zealand dollar was at $0.611 after the central bank on Wednesday slashed rates by a half point and hinted at further cuts to come.In cryptocurrencies, bitcoin gained 5.38% to $62,930.00. Ethereum rose 3.8% to $2,456.70.”The market is satisfied because there’s nothing there that really tells against the narrative that the Fed is cutting; the only debate is how fast they’re going to cut,” said Steven Englander, head of Global G10 FX Research at Standard Chartered (OTC:SCBFF) in New York.”Overall, the data have been slightly encouraging to that narrative and none of the data have been discouraging to the narrative that the Fed is cutting rates.”Currency bid prices at 11 October​ 07:51 p.m.               GMT Description RIC Last U.S. Close Previous Session Pct Change YTD Pct High Bid Low Bid Dollar index 102.91 102.89 0.02% 1.52% 102.99 102.76 Euro/Dollar 1.0935 1.0938 -0.02% -0.93% $1.0953 $1.0927 Dollar/Yen 149.13 148.58 0.36% 5.72% 149.28 148.51 Euro/Yen 1.0935​ 162.48 0.37% 4.79% 163.4 162.32 Dollar/Swiss 0.8572 0.8563 0.11% 1.86% 0.8585 0.856 Sterling/Dollar 1.3068 1.3061 0.08% 2.72% $1.3082 $1.3042​ Dollar/Canadian 1.3759 1.3742 0.13% 3.8% 1.3785 1.3726 Aussie/Dollar 0.6753 0.6742 0.19% -0.93% $0.6759 $0.6726 Euro/Swiss 0.9374 0.9364 0.11% 0.95% 0.9387 0.9363 Euro/Sterling 0.8367 0.8373 -0.07% -3.47% 0.8383 0.8365 NZ Dollar/Dollar 0.611 0.6095 0.27% -3.29% $0.6119 0.6072 Dollar/Norway 10.6961​ 10.7222 -0.24% 5.54% 10.7637 10.6837 Euro/Norway 11.6971 11.7412 -0.38% 4.22% 11.772 11.694 Dollar/Sweden 10.3693 10.3744 -0.05% 3% 10.4157 10.355 Euro/Sweden 11.3402 11.3617 -0.19% 1.93% 11.3883 11.3336 More