Economy

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After the hearing, the presiding judge can decide whether to keep Salameh in detention, the sources said, adding that no decision had yet been taken. One of them said the judge was expected to schedule a hearing for early next week.Reuters could not immediately reach a lawyer for Salameh. Salameh, 73, was the bank governor for 30 years but his final years were marred by the collapse of Lebanon’s financial system along with charges of financial crimes, including illicit enrichment through public funds, by authorities in Lebanon and several Western countries.The state-owned National News Agency said prosecutor Ali Ibrahim, to whom the case was referred by public prosecutor Jamal al-Hajjar on Wednesday, charged Salameh with “embezzlement, theft of public funds, forgery, and illicit enrichment”, before referring the case to investigating judge Bilal Halawi, who will set the date for the hearing. The authorities have not published the charges against him.Two judicial sources told Reuters on Tuesday that Salameh had been held on charges of accruing more than $110 million via financial crimes involving Optimum Invest, a Lebanese firm that offers income brokerage services. Optimum Invest said in a statement it was “fully assisting the judicial authorities in their investigation and provided them with all the information and documents previously requested”.The firm said its dealings with the Lebanese central bank “were conducted in full compliance with applicable laws and regulations.”Neither Salameh nor his lawyer responded to requests for comment on Tuesday. Salameh has previously denied all accusations of financial crimes.Tuesday’s charges are separate from previous charges of financial crimes linked to Forry Associates, a company controlled by Salameh’s brother, Raja. The brothers – who deny any wrongdoing – were accused of using Forry to divert $330 million in public funds through commissions. More

A trader signals an offer in the Standard & Poor’s 500 stock index futures pit at the CME Group in Chicago on Dec. 14, 2010.
Scott Olson | Getty Images News | Getty Images

The relationship between the 10- and 2-year Treasury yield briefly normalized Wednesday, reversing a classic recession indicator.
Following economic news that showed a sharp decline in job openings and dovish remarks from Atlanta Fed President Raphael Bostic, the benchmark 10-year yield inched above the 2-year for the first time since June 2022.

The respective yields were both around 3.79% on the session, with just a few thousandths of a percentage point separating them.

Stock chart icon

10-year yield vs. the 2-year

An inverted yield curve, in which the nearer-duration yield is higher, has signaled most recessions since World War II. The reason why shorter-duration yields rose above their longer-duration counterparts is essentially the result of traders pricing in slower growth out into the future.
However, a normalization of the curve does not necessary signal good times ahead. In fact, the curve usually does revert before a recession hits, meaning the U.S. could still be in for some rough economic waters ahead.
“If you don’t have any sense of history regarding the economy, needless to say it would be positive,” said Quincy Krosby, chief global strategist at LPL Financial. “However, statistically the yield curve will normalize as the economy actually does go into a recession or is in a recession simply because the Fed is going to be cutting rates” in response to a slowing economy.
The price action followed a Labor Department report showing that job openings unexpectedly slid below 7.7 million in July, bringing supply and demand almost even following a severe imbalance since the Covid crisis. Job openings had exceeded labor supply by more than 2 to 1 at one point, aggravating inflation that had been at its highest level in more than 40 years.

At the same time, Atlanta Federal Reserve President Raphael Bostic released comments, around the same time the job openings report dropped, indicating that he’s ready to start reducing rates even with inflation running above the central bank’s 2% goal.
Lower rates are seen as a boost for economic growth; the Fed has held its benchmark rate at its highest level in 23 years since July 2023, targeted in a range between 5.25%-5.5%.
While the market most closely watches the relationship between the 2-year and 10-year, the Fed more closely observes the relationship between the 3-month and 10-year. That part of the curve is still steeply inverted, with the difference now at more than 1.3 percentage points.

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Job openings slumped to their lowest level in 3½ years in July, the Labor Department reported Wednesday in another sign of slack in the labor market.
The department’s closely watched Job Openings and Labor Turnover Survey showed that available positions fell to 7.67 million on the month, off 237,000 from June’s downwardly revised number and the lowest level since January 2021.

Economists surveyed by Dow Jones had been looking for 8.1 million.
With the decline, it brought the ratio of job openings per available worker down to less than 1.1, about half where it was from its peak of more than 2 to 1 in early 2022.
The data likely provides further ammunition to Federal Reserve officials who are widely expected to begin lowering interest rates when they meet for their next policy meeting on Sept. 17-18. Fed officials watch the JOLTS report closely as an indicator of labor market strength.
“The labor market is no longer cooling down to its pre-pandemic temperature, it’s dropped past it,” said Nick Bunker, head of economic research at the Indeed Hiring Lab. “Nobody, and certainly not policymakers at the Federal Reserve, should want the labor market to get any cooler at this point.”
While the job openings level declined, layoffs increased to 1.76 million, up 202,000 from June. Total separations jumped by 336,000, pushing the separations rate as a share of the labor force up to 3.4%. However, hires rose as well, up 273,000 on the month, putting the rate at 3.5% or 0.2 percentage point better than June.

The professional and business services sector showed the biggest increase in openings with 178,000. On the down side, private education and health services fell by 196,000, trade, transportation and utilities declined 157,000 and government, a leading source of job gains over the past few years, was off by 92,000.
Though the report adds to concerns that the economy is slowing, it “does not suggest any rapid deterioration in the labor market,” Krishna Guha, head of the Global Policy and Central Bank Strategy Team at Evercore ISI, said in a client note.
“The still low level of layoffs and tick up in hires suggests the labor market is not cracking. But demand for workers continues to soften relative to the supply of workers, and a forward perspective suggests this is likely to continue under restrictive policy,” he added.
The report comes two days ahead of the pivotal August nonfarm payrolls count that the Labor Department will release Friday. The report is expected to show an increase of 161,000 and a tick down in the unemployment rate to 4.2%.

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Atlanta Fed President Raphael Bostic signaled Wednesday that he is ready to start lowering interest rates even though inflation is still running above the central bank’s target.
The comments come with markets already widely expecting the Fed to cut its benchmark borrowing rate by at least a quarter percentage point when it meets Sept. 17-18.

speaking at Jackson Hole on August 23, 2024.  
David A. Grogan | CNBC

Atlanta Federal Reserve President Raphael Bostic signaled Wednesday that he is ready to start lowering interest rates even though inflation is still running above the central bank’s target.
Previously one of the more hawkish policymakers, or in favor of tighter policy to fight inflation, Bostic noted that his focus is shifting more toward the employment side of the Fed’s mandate as signs increase of labor market softening.

“I believe we cannot wait until inflation has actually fallen all the way to 2 percent to begin removing restriction because that would risk labor market disruptions that could inflict unnecessary pain and suffering,” he wrote in a message posted on the Atlanta Fed’s website.
The Fed’s preferred measure showed inflation running at a 2.5% rate in July, and just a slightly higher 2.6% core rate when excluding food and energy. Bostic did not specify how much or when he thinks the Fed should start easing.
However, the missive comes with markets already widely expecting the central bank’s Federal Open Market Committee to cut its benchmark borrowing rate by at least a quarter percentage point when it meets Sept. 17-18.
As an FOMC voting member this year, Bostic’s views carry extra weight and add another level of assurance that the Fed will enact its first easing since the emergency measures it took more than four years ago in the early days of the Covid crisis.
His comments also come two days before what is expected to be a pivotal nonfarm payrolls report as most economists see the labor market losing momentum. Bostic said his experiences with business leaders in the Atlanta area reflect that concern.

“Rest assured, I do not sense a looming crash or panic among business contacts. However, the data and our grassroots feedback describe an economy and labor market losing momentum,” he said. “The upside to this is that the slowdown in activity is feeding a continuing, welcome decline in the pace of inflation.”
Indeed, he cited multiple factors indicating that inflation is progressing convincingly back to the Fed’s target as the labor market moderates.
“Given the circumstances before us — eroding pricing power and a cooling labor market — I’ve rebalanced my focus toward both sides of the dual mandate for the first time since early 2021,” he said.

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.US job openings fell to the lowest level in more than three years in July, keeping the Federal Reserve on track to lower interest rates later this month.There were 7.7mn job vacancies in July, according to the labour department’s Job Openings and Labor Turnover Survey released on Wednesday. That was down from 7.9mn in June, and the lowest total since January 2021. Economists, who consider job openings to be a proxy for labour demand, had been expecting 8.1mn openings, according to a Reuters poll.Job openings have trended downward from their 2022 peak as the labour market has slowed, dropping 13 per cent over the past year. Lay-offs also rose slightly to 1.8mn, the highest level since March 2023, further indicating that demand for workers is slowing.Daniel Zhao, lead economist at jobs site Glassdoor, said the report “reaffirms that the pandemic job market is over”. “Job market measures have largely normalised from their 2021-2022 extremes, if not moved past ‘normal’ and into weaker territory,” he added. The job openings figures come after last month’s weaker than expected payrolls report and annual revisions to previous reports showed jobs growth had slowed. Investors are eagerly awaiting August’s non-farm payrolls data, which will be released on Friday. Forecasts suggest that job gains will rebound from 114,000 to 160,000.US government bond yields dropped sharply in response to Wednesday’s labour market data. The two-year Treasury yield, which is highly sensitive to changes in monetary policy expectations, dropped 0.1 percentage points to 3.79 per cent following the release of Wednesday’s data. The yield on the benchmark 10-year note fell 0.06 percentage points to 3.79 per cent.The drop in jobs openings also raises expectations that the Fed will cut interest rates from their current 23-year high of 5.3 per cent at the US central bank’s next meeting later this month. Futures pricing indicated that traders were betting on at least a quarter-point interest rate cut when Fed policymakers meet later this month, with a total of more than one percentage point worth of cuts priced in for the rest of the year. Officials have said they do not need to see additional weakness across the labour market to feel confident that inflation, which surged to the highest level in roughly four decades in the aftermath of the pandemic, is coming under control. With fears about price pressures easing, Fed officials have turned their focus to maintaining a healthy jobs market. The fear is that the slowdown will morph into a recession that puts millions of Americans’ jobs on the line. So far, officials maintain that there is a path to bringing inflation back down to the 2 per cent target without hurting the job market, but economists warn that will hinge on the Fed getting its timing right about when and how quickly to lower interest rates. More

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