Economy

NEW YORK (Reuters) – The New York City Council voted on Thursday to delay its new pay transparency law by six months to Nov. 1, when employers will be required to include salary ranges in job advertisements.The law, passed in January, is intended to close wage gaps in which women and non-white employees are paid less than white men. Some businesses had argued the city needed more time to advise more than 200,000 businesses affected by the law about compliance and to address unintended consequences.”Salary transparency is incredibly critical in ensuring that we are closing the wage gap,” Council Member Nantasha Williams said in a statement about amendments to the law including the delay.In 2019, the most recent year for which data is available, the median earnings in New York State for men working full-time was $60,813, nearly $9,000 more than the median earnings for women of $51,922. A 2021 study of New York City municipal employees found that the median white employee’s salary was $27,800 higher than a Black employee’s salary and $22,200 higher than a Latino employee’s salary.The city’s five chambers of commerce said local businesses supported the goals of the law but called for more time before enforcement began.Some business leaders said in an open letter the law may make it harder for small businesses owned by women and members of minority groups to attract talented candidates if wealthier employers could outbid them after seeing their salary offer.”As a woman, yeah, I want to be paid the same as a man,” Lisa Sorin, president of the Bronx Chamber of Commerce, said in an interview. “But will you limit the (pool of) potential candidates if I can’t pay as much as somebody else?” The law is similar to state transparency laws in California and Colorado. New York City’s amended law applies to employers with four or more employees and to both hourly wage earners and workers on annual salaries, so long as the job is performed at least partly in the city. The council rejected business leaders’ efforts to exclude many smaller employers. More

European shares rose on Friday after Chinese authorities pledged to safeguard the world’s second-largest economy from coronavirus shutdowns, lifting sentiment after disappointing updates from Apple and Amazon. The regional Stoxx 600 share index added 0.8 per cent in early dealings while London’s FTSE 100 rose 0.4 per cent and Germany’s Xetra Dax advanced 0.8 per cent. Hong Kong’s Hang Seng index climbed 3.2 per cent and Japan’s Nikkei 225 equity gauge moved 1.8 per cent higher. Those gains came after a statement from China’s politburo, the Communist party’s decision-making body, promised to “strengthen macro adjustments” and “achieve full-year economic and social development goals”. Meanwhile, as the quarterly earnings season approaches the halfway stage in Europe, nearly 75 per cent of companies have beaten profit expectations, according to Barclays. The Stoxx is on track this month to beat the performance of US indices, which have been dragged sharply lower by expectations of the Federal Reserve raising interest rates. Frankfurt-listed shares of Amazon and Apple were down 8 per cent and 1.8 per cent on Friday.Apple warned on Thursday after US markets closed that it could take a hit of up to $8bn in the quarter to June from supply chain shortages and factory shutdowns in China. Amazon reported its slowest quarterly revenue growth. Futures trading implied the benchmark S&P 500 share index would open 0.5 per cent lower in New York, as it heads towards a more than 5 per cent loss for the month. The technology-heavy Nasdaq Composite is on track to fall more than 9 per cent in April, in what would be its worst monthly performance since March 2020.The dollar index fell 0.4 per cent after the gauge, which measures the currency against six others, hit a 20-year high on Thursday. The yield on the 10-year US Treasury note, a benchmark for debt costs worldwide, edged 0.02 percentage points lower on Friday but remained around its highest level since the end of 2018.Brent crude, the international oil benchmark, added 0.8 per cent to $108.45 a barrel and US marker West Texas Intermediate rose 0.5 per cent to hit $105.86. More

The central government recorded a primary budget deficit of 6.3 billion reais ($1.27 billion) in March, the Treasury said on Thursday, smaller than the median forecast of a 13.6 billion reais deficit in a Reuters poll.In the first quarter, the primary surplus reached 49.6 billion reais, more than doubling the amount seen a year earlier.In a statement, the Treasury pointed out that the results seen so far “suggest that the annual balance could be better” than what the Economy Ministry had previously calculated in its bi-monthly revenue and expenditure report from March.The ministry forecast in the document that the primary deficit would end the year at 66.9 billion reais, significantly lower than the official deficit target of 170.5 billion reais.But the Treasury said on Thursday that data to March had shown a nominal increase in net revenue well above what was considered in the report. In the 12 months to March, the central government primary deficit reached 15.5 billion reais, worth 0.17% of the country’s gross domestic product.”The good results recorded at the beginning of 2022 point to the continuity of the fiscal consolidation process, result of the good moment of revenues and control of expenses,” said the Treasury.According to Brazil’s Treasury Secretary Paulo Valle, tax revenue has been boosted by higher commodities and companies’ and investments’ income, partly because of higher interest rates, while the central bank commands an aggressive monetary policy cycle to tame the country’s double-digit inflation.($1 = 4.9769 reais) More

WASHINGTON (Reuters) -U.S. President Joe Biden said on Thursday that he will make a decision on whether to forgive some federal student loan debt and announce his plans soon.”I am considering dealing with some debt reduction,” Biden told reporters.”I am not considering $50,000 debt reduction, but I’m in the process of taking a hard look at whether or not there will be additional debt forgiveness, and I’ll have an answer on that in the next couple of weeks.”Student debt cancellation has become a priority for many liberals and one that could shore up popularity with younger and more highly educated voters, who lean Democratic, ahead of November’s critical midterm elections.But the Biden administration has been reluctant to unilaterally make an unprecedented cancellation of college debt owned by the U.S. government, a move that would test his legal authority.Instead, Biden has asked Congress to pass a bill forgiving debt that he could sign.The federal government has let 43 million borrowers stop paying on a total of $1.6 trillion in student loans since the onset of the COVID-19 pandemic in 2020. More

The rule changes, which cleared the commission unanimously, are called telemarketing rules but much of the discussion during the open meeting, which was livestreamed, appeared to be about robocallers peddling scams.The FTC has enforced telemarketing rules for decades, and one proposed change would include business-to-business schemes under the rule. Currently, protections only exist for calls made by marketers to consumers.”It’s clear that times have changed and the rise that we’ve seen in telemarketing fraud, targeting small business in particular, really invites us to be revisiting this exemption and looking into whether we should really be expanding the coverage,” FTC Chair Lina Khan said.In an advance notice of proposed rule-making, the agency also said it wanted public comment on whether they should also tackle tech-support scams, where consumers are enticed to call the fraudulent company, and a rule that would require companies to allow consumers to easily cancel unwanted subscription plans.Both the FTC and Federal Communications Commission have been battling robocalls, many of which originate outside the United States. More

(Reuters) – Canada’s most populous province of Ontario on Thursday forecast steadily declining deficits over the medium term helped by a strong economic recovery, and projected a return to surplus by 2027-28, two years earlier than forecast in the previous budget.The province, which goes to the polls in June, projected a 2022-23 deficit of C$19.9 billion ($15.5 billion), dropping to C$12.3 billion in 2023-24 and C$7.6 billion in 2024-25.Ontario, home to just under 40% of Canada’s 38.2 million population, is one of the world’s largest sub-sovereign borrowers.The government of Premier Doug Ford will not be able pass this financial plan as there was not enough time for it to go through the process before next Wednesday, when the legislature is dissolved and the election campaign officially begins. If the ruling party is re-elected on June 2, they will be able to bring this budget back to the legislature and pass it then. Ford’s Progressive Conservative party swept to power in the elections in 2018, ending 15 years of Liberal rule.The budget also focused on building infrastructure like highways and hospitals with a plan of spending C$159 billion over 10 years.Of that planned spending, C$25 billion would be for highway projects’ planning and construction, Ontario Finance Minister Peter Bethlenfalvy said while presenting the budget.The net debt to gross domestic product ratio is projected to be 40.7% in 2021–22, 8.1 percentage points lower than the forecast presented in the 2021 budget.With an election looming, Ontario is aiming to rein in surging home prices with populist measures like a bigger foreign-buyer tax. Ford recently laid out plans to “cut red tape” on new home construction and boost the foreign-buyer tax to 20% from 15%, while also expanding it to cover the entire province.Ontario will spend C$4 billion to support high‐speed internet access to every community by the end of 2025 and nearly $14 billion in capital grants over 10 years for schools and child care spaces. More

NEW YORK (Reuters) – The 40-year bull market in U.S. bonds is dead. Long live the bond bull market. The U.S. Treasuries market began 2022 with one of its biggest slides in history. Some bond investors are again worried that the end is at hand for the decades-long run in U.S. debt, which took yields on the benchmark 10-year note from a high of 15.3% in 1981 to 0.54% in March 2020.But U.S. Treasury bears have a spotty track record on Wall Street. The bond market has invariably bounced back from past selloffs thanks in part to modest economic growth rates and a comparatively dovish Fed. The bearish view has gained traction now, however, as the Federal Reserve signals it is ready to employ big rate hikes and a speedy unwind of its balance sheet to bring down inflation from 40-year peaks. “Bonds were the bull market for the last 40 years, but they will be one of the bear markets of the 2020s,” said Michael Hartnett, chief investment strategist at Bank of America Global Research. GRAPHIC: Bond bull market done? https://fingfx.thomsonreuters.com/gfx/mkt/zjpqkmnompx/Pasted%20image%201651078621646.png Yields on the 10-year benchmark US Treasury – which move inversely to prices – are up 136 basis points this year at 2.87%. The ICE (NYSE:ICE) BoFA US Treasury Index has dropped near its lowest levels since May 2019. Bonds were one of the largest short positions among global fund managers in a recent Bank of America Merrill Lynch (NYSE:BAC) survey. Investors have pulled money from bond funds on net for the last 10 weeks, the longest losing streak since the end of 2013, ICI data showed. The iShares 20+ Year Treasury Bond (NASDAQ:TLT) ETF, the most heavily traded bond-focused exchange traded fund, is down 18% this year. Hartnett believes 10-year yields could hit 5% in coming years, noting there may be tactical buying opportunities despite the bearish secular outlook. Such a move would put yields at their highest level since 2007. Deutsche Bank (ETR:DBKGn) analysts echoed the forecast of a 5% Treasury yield peak in a note earlier this week, which also said aggressive Fed tightening could send the economy into a “significant recession” next year.Another red flag: comments from Fed Chair Jerome Powell earlier this month on “front-end loading” the Fed’s hiking cycle. Some investors have now penciled in 75 basis point increases at the Fed’s June and July meetings, following an expected 50 basis point hike at next week’s Fed meeting.[L2N2WK1MC] A sustained period of bond weakness could have far reaching effects, from weighing on companies’ borrowing costs to hurting investors’ portfolios.Treasury holdings among individual investors and mutual funds stood at $4.39 trillion at the end of 2021, data from Securities Industry and Financial Markets Association showed. Bonds overall make up some 20% of 401(k) accounts, according to Morningstar. “People are going to face for the first time in decades what it means to have significant declines in their bond portfolios,” said Jim Paulsen, chief investment officer at the Leuthold Group. “It’s unique, it’s outsized, and it hurts.”For stocks, the impact of higher Treasury yields has depended on whether they are accompanied by rising consumer prices, a study by LPL Financial (NASDAQ:LPLA) showed – potentially spelling troubling for equities in today’s super-charged inflationary environment.Stocks notched an average gain of 6.4% in 13 periods of rising bond yields between 1962 and 2016, compared to the index’s long-term average of 7.1% during that period, the 2021 study showed.When yields rose and inflation was high, however, the average annual return fell to -0.4%.The view that bonds are headed for years of losses is far from universal. Some investors believe the Fed will successfully tame inflation, allowing them to eventually pull back on monetary policy tightening. [L2N2WJ0W3] Andy McCormick (NYSE:MKC), head of Global Fixed Income at T. Rowe Price, said his funds have been buying 10-year Treasuries, gauging that much of the Fed’s tightening is already priced in. The selloff may also be attracting foreign buyers into Treasuries, potentially helping stabilize prices – at least in the short term. A NatWest’s report said the 3% mark – which yields have failed to breach – may be a “psychological level” that draws foreign buyers. Demand from foreign buyers at the two-year Treasury auction earlier this week was the second highest ever in percentage terms, said Lou Brien, a strategist at DRW Trading Group. GRAPHIC: Foreign holdings of Treasury securities https://graphics.reuters.com/USA-BONDS/lbvgnyjjwpq/chart.png Ash Alankar, Head of Global Asset Allocation at Janus Henderson, plans to buy bonds when real yields – a measure of Treasury yields adjusted for inflation — turn positive for a sustained period.“Bonds won’t have the same historic return in the decade ahead, but they will still be attractive,” he said. More

Gross domestic product in the U.S. declined at a 1.4% pace in the first quarter, below analyst expectations of a 1% gain.
Declines in fixed investment, defense spending and the record trade imbalance weighed on growth.
Consumer expenditures rose 2.7%, but that came amid a 7.8% increase in prices.
“This is noise; not signal. The economy is not falling into recession,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.

Gross domestic product unexpectedly declined at a 1.4% annualized pace in the first quarter, marking an abrupt reversal for an economy coming off its best performance since 1984, the Commerce Department reported Thursday.
The negative growth rate missed even the subdued Dow Jones estimate of a 1% gain for the quarter, but the initial estimate for Q1 was the worst since the pandemic-induced recession in 2020. GDP measures the output of goods and services in the U.S. for the three-month period.

Despite the disappointing number, markets paid little attention to the report, with stocks and bond yields both mostly higher. Some of the GDP decline came from factors likely to reverse later in the year, raising hopes that the U.S. can avoid a recession.
“In retrospect, this could be seen as a pivotal report,” said Simona Mocuta, chief economist at State Street Global Advisors. “It reminds us of the reality that growth has been great, but things are changing and they won’t be that great going forward.”
A plethora of factors conspired to weigh against growth during the first three months of 2022, which fell off a cliff following the 6.9% gain to close out last year.
Rising Covid omicron infections to start the year hampered activity across the board, while inflation surging at a level not seen since the early 1980s and the Russian invasion of Ukraine also contributed to the economic stasis.
Prices increased sharply during the quarter, with the GDP price index deflator rising 8%, following a 7.1% jump in Q4.

A deceleration in private inventory investment weighed on growth after helping propel GDP in the back half of 2021. Other restraints came from exports and government spending across state, federal and local governments, as well as rising imports.
An 8.5% pullback in defense spending was a particular drag, knocking one-third of a percentage point off the final GDP reading.
But consumer spending, which accounts for about two-thirds of the economy, held up fairly well for the quarter, rising 2.7% as inflation kept pressure on prices. However, a burgeoning trade deficit helped shave 3.2 percentage points off growth as imports outweighed exports.
“This is noise; not signal. The economy is not falling into recession,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Net trade has been hammered by a surge in imports, especially of consumer goods, as wholesalers and retailers have sought to rebuild inventory. This cannot persist much longer, and imports in due course will drop outright, and net trade will boost GDP growth in Q2 and/or Q3.”
While recession expectations on Wall Street remain low, there’s further trouble ahead for the economy: In an effort to combat burgeoning price increases, the Federal Reserve plans to enact a series of rate hikes aimed at slowing growth further.
The personal consumption expenditures price index excluding food and energy, a preferred inflation measure for the Fed, rose 5.2% in the quarter, well above the central bank’s 2% inflation target.
Current market pricing indicates the equivalent of 10 quarter-percentage point interest rate moves that would take the Fed’s benchmark interest rate to about 2.75% by the end of the year. That comes after two years of near-zero rates aimed at allowing a recovery from the steepest recession in U.S. history.
Along with that, the Fed has halted its monthly bond-buying program aimed at keeping rates low and money flowing through the economy. The Fed will start shrinking its current bond holdings as soon as next month, slowly at first then ultimately at a pace expected to hit as high as $95 billion a month.
While economists still largely expect the U.S. to skirt an outright recession, risks are rising.
Goldman Sachs sees about a 35% chance of negative growth a year from now. In a forecast that is an outlier on Wall Street, Deutsche Bank sees the chance of a “significant recession” hitting the economy in late 2023 and early 2024, the result of a Fed that will have to tighten much more to tamp down inflation than forecasters currently anticipate.
That all comes after a year in which GDP rose at a 5.7% pace, the fastest since 1984. While consumer expenditures, which account for nearly 70% of the U.S. economy, drove growth in the first half of 2021, an inventory rebuild from the depleted pandemic levels accounted for almost all the growth in the final two quarters of the year.
Sustaining that growth into 2022 will require an easing in clogged supply chains and some resolution in Ukraine, both of which will face pressures from higher interest rates from not just the Fed but also global central banks that are engaged in a similar struggle against inflation.
Correction: The decline in growth came due to a deceleration in private inventory investment, which helped propel growth in the back half of 2021. An earlier version misstated the year.

WATCH LIVEWATCH IN THE APP More