Economy

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FLAT ROCK, North Carolina (Reuters) -The Southeastern U.S. began a huge cleanup and recovery effort on Sunday and the death toll climbed towards 100 after Hurricane Helene knocked out power for millions, destroyed roads and bridges and caused dramatic flooding from Florida to Virginia.The storm’s winds, rain and storm surge killed at least 90 people in North Carolina, South Carolina, Georgia, Florida, Tennessee and Virginia, according to a Reuters tally of state and local officials.Officials feared more bodies would be discovered. With cellphone towers down across the region, hundreds of people had yet to make contact with loved ones and were listed as unaccounted for. Damage estimates ranged from $15 billion to more than $100 billion, insurers and forecasters said over the weekend, as water systems, communications and critical transportation routes were affected. Property damage and lost economic output will become clearer as officials assess the destruction.In North Carolina, nearly all the deaths were in Buncombe County, where 30 people died, Sheriff Quentin Miller told a video conference call with reporters.County Manager Avril Pinder said she was asking the state for emergency food and drinking water. Streets in the picturesque city of Asheville were submerged in floodwater.”This is a devastating catastrophe of historic proportions,” Governor Roy Cooper told CNN. “People that I talk to in western North Carolina say they have never seen anything like this.”Search and rescue teams from 19 states and the U.S. government have converged on the state, Cooper said, adding that some roads could take months to repair.In Flat Rock, North Carolina, there were widespread blackouts, and people waited hours in line for gas.”Grocery stores are closed, cellphone service is out,” Chip Frank, 62, said as he entered his third hour waiting in line. “It all depends on these gas stations. You’re not going to be able to go nowhere, and it’s just a scary feeling.”Roughly 2.7 million customers throughout the South were without power on Sunday, a U.S. Energy Department official said, down 40% from Friday after unprecedented storm surges, ferocious winds and perilous conditions extended hundreds of miles inland.South Carolina reported 25 dead, Georgia 17 and Florida 11, according to the governors of those states. CNN reported a total of 93 dead across the South, citing state and local officials.President Joe Biden plans to visit affected areas this week, once he can do so without disrupting emergency services, the White House said.”It’s tragic,” Biden told reporters on Sunday, pledging recovery assistance after declaring major disasters in Florida and North Carolina and emergencies for Florida, North Carolina Tennessee, South Carolina, Georgia, Virginia, and Alabama. “You saw the photographs. It’s stunning.”Vice President and Democratic presidential candidate Kamala Harris planned to cut short a campaign trip in Nevada on Monday to take part in briefings in Washington on the hurricane response and will visit the region when doing so won’t impede the response, a White House official said. Republican presidential candidate Donald Trump will visit Valdosta, Georgia, on Monday to receive a briefing on storm damage and “facilitate the distribution of relief supplies,” his campaign said.Helene slammed into Florida’s Gulf Coast on Thursday night, triggering days of driving rain and destroying homes that had stood for decades. In Horseshoe Beach, on Florida’s Gulf Coast about 70 miles (120 km) west of Gainesville, Charlene Huggins surveyed the debris of her blown-out house, pulling a jacket out of the rubble on Saturday.”Five generations lived in this house, from my grandmother, my father, myself, my daughter, son and my granddaughter,” Huggins said, holding a chipped glass cake stand. “So there’s a lot of memories here. It just breaks your heart.”Not far away, James Ellenburg stood on the property where his own family has lived for four generations. “I took my first step right here in this yard.”The roof of one home sat flat in the dirt, its walls blown away.   In coastal Steinhatchee, a storm surge – a wall of seawater pushed ashore by winds – of eight to 10 feet (2.4 to 3 meters) moved mobile homes, the weather service said. Other areas saw a storm surge of 15 feet (4.5 meters).In the nearby tiny community of Spring Warrior Fish Camp, people were surveying the damage on Saturday and still waiting for emergency or first responder aid.”No one thinks of us back here,” said David Hall, as he and his wife dug through seagrass and dead fish in the office of the hotel they owned. Many of the community’s homes are built on stilts because of a local ordinance and survived heavy damage. Kristin Macqueen was helping friends clean up after their house was destroyed in nearby Keaton Beach. “It’s complete devastation,” she said. “Houses have just been ripped off their slabs.” More

OTTAWA (Reuters) – Buying a house may remain out of reach for many Canadians for the foreseeable future, with mortgage costs unlikely to fall enough to offset lofty home prices and weak spending power, economists and real estate agents say. Even with expectations that Bank of Canada will keep cutting rates in the coming months, the issue of home affordability – which has strangled Prime Minister Justin Trudeau’s poll numbers – is unlikely to fade before the next election. The mandate for the Liberal minority government ends at the end of October 2025, but an election could come well before then, with the Conservative opposition spoiling to end Trudeau’s nine-year run at the top. “You won’t get back to an affordable range for housing on a sustained basis for a decade,” Tony Stillo, director at forecasting and analysis group Oxford Economics, said last week at a conference.Many Canadians have been priced out of the housing market since interest rates started rising two years ago. At the same time, a huge influx of immigrants has pushed Canada’s population to record levels, further boosting housing demand and prices.With interest rates now starting to ease, the cheapest mortgage interest rate – the five-year fixed – now carries a rate of about 4.75%, down 150 basis points from a year ago. Even so, the decline – and expectations of further easing – has failed to trigger an uptick in home buying.For “the majority of potential buyers who are on the sidelines, if it means $50 or even $100 less a month thanks to lower interest rates, it’s still unaffordable,” said Robert Hogue, assistant chief economist at the Royal Bank of Canada.In the most expensive markets of Toronto and Vancouver, many potential buyers are still priced out, he said. Some of them should be able to buy a house next year, but not enough to restore balance.Housing affordability is a function of house prices, interest rates and a borrower’s income. For prospective buyers, those metrics have skewed unfavorably since the start of the pandemic. Canadian house prices on average have increased by more than 30% since April 2020 while interest rates soared by 4.75 basis points until they started coming down in June.Calculations based on average house prices from the Canadian Real Estate Association show that monthly interest payments on a five-year fixed rate mortgage are still 40% higher than in January 2020, even after a drop in mortgage costs from last year’s highs.During the same period, real or inflation-adjusted household income has risen by 2.3%, while nominal income has increased by 21%, according to estimates from Statistics Canada.For affordability to return to pre-pandemic levels, house prices would need to come down by at least 10% and mortgage interest costs would have to drop by half from current levels.NO CRAZY MARKETHome sales in Toronto – often considered the bellwether of the Canadian real estate market – are at about 20-year lows due to sky-high prices, said John Pasalis, president of Realosophy Realty, a Toronto-based real estate brokerage. “It’s unbelievably unaffordable,” he said, adding that activity would likely pick up as interest rates keep coming down, but it would not be a “crazy market.”The cheapest five-year mortgage rates have come down substantially, but many borrowers, especially those with higher risk profiles, only qualify for mortgages carrying higher rates that are still hovering between 6% and 7%, Pasalis said. Earlier this month the government changed one of its rules on mortgage payments, allowing first-time buyers or people purchasing a newly-built home to take loans with 30-year amortizations, instead of 25 years. Although the move is intended to lower monthly payments and make home ownership affordable to more people, critics say it may have opposite effect by boosting demand and raising prices.At a conference on last week, Finance Minister Chrystia Freeland disputed that claim. She said the measure would support supply by encouraging builders to construct more homes to meet a rising demand of new homes. More

China’s long-dated bond yields reversed sharply last week, after touching record lows, after the central bank and government authorities announced massive stimulus and other plans to revive a moribund economy.The People’s Bank of China (PBOC) said the operation was to “strengthen counter-cyclical adjustment of monetary policy and keep banking system liquidity reasonably ample”.The bank did not specify whether it bought or sold short-term or long-dated bonds as it did last month. Until last week, China’s bond market had seen a prolonged record-breaking rally as banks and investors sought safer assets in a flailing economy. The central bank warned market participants for weeks about the inflated prices of bonds and sold long-dated bonds last month to cool a feverish market. “Ultimately, the PBOC’s goal of maintaining an upward-sloping yield curve supports lower short-term yields to stimulate economic growth and higher long-term yields to encourage investment,” said Wei Li, multi-asset quant solutions portfolio manager at BNP Paribas (OTC:BNPQY) Asset Management.Last week, China rolled out its most aggressive stimulus package since the pandemic, spurring record gains in the stock market. But bond prices dropped sharply.”It’s possible that some funds may shift from bonds into equities, especially as market participants anticipate stronger growth prospects and higher returns from stocks. However, this shift may not be dramatic,” Li said. “The key factor will be how sustainable and impactful these policy measures are in driving economic recovery and investor sentiment.” Ten-year and 30-year bond yields have jumped 13 and 22 basis points, respectively, since Wednesday last week. The spread or gap between 1-year and 10-year bonds widened by 15 basis points, suggesting a steeper yield curve.Assets of Chinese bond mutual funds dropped for the first time this year in August, to 6.55 trillion yuan, down 6% from the previous month, official data showed.The swift reversal in yields suggests the PBOC could begin purchasing long-term bonds, a significant departure from its earlier actions. The PBOC said in August that it bought short-dated bonds and sold long-dated bonds during the month, the first such disclosure in a new open market operation column.($1 = 7.0120 Chinese yuan renminbi) More

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Highlighting the economic calendar this week will be the latest US nonfarm payrolls report, which may offer a glimpse into the health of the labor market.In a note to clients on Sunday, the BofA analysts said they anticipate that the figures could “add fuel” to expectations that the Federal Reserve was on course to quell inflation without sparking a broader downturn in the labor market or wider economy — a scenario known as a “soft landing.”Economists expect the US economy to add 144,000 jobs in September, up slightly from 142,000 in the prior month. The unemployment rate, meanwhile, is seen matching August’s level of 4.2%.In August, payrolls rose from a downwardly revised reading of 89,000 and were below forecasts of 164,000, while the jobless rate ticked down from 4.3%.As a whole, the numbers indicated a downshift in labor demand — a trend identified recently by several Fed officials as a key driving force behind their decision to announce a jumbo 50-basis point interest rate reduction earlier this month. The Fed had previously raised rates to a more than two-decade high in a bid to combat price pressures.Ahead of Friday’s non-farm payrolls report, markets will have the chance to parse through job openings and private sector hiring figures as well.Meanwhile, investors will also be scrutinizing the September reading of the Institute for Supply Management’s manufacturing and services purchasing managers’ indices for further signals on the momentum of the American economy.The BofA analysts projected that the ISM surveys will suggest weakness in the manufacturing sector but “an expanding services sector.”The ISM manufacturing PMI, due out on Oct. 1, is seen coming in at 47.6, up from 47.2 in August but still below the 50-point mark separating contraction from expansion. Non-manufacturing PMI on Oct. 3 is tipped to edged up to 51.6 from 51.5 in the prior month.”In short, we think the data will reinforce outlook for a soft landing,” the BofA analysts said.”Economic momentum is cooling, not crumbling.” More