Debt Derivatives Are So Tight Even Trump's Tariff Talk Can't Shift Them
JPMorgan analysts compile basket of corporates facing risk
Credit has 'most stretched valuations,' fund manager Foa says
Even US President Donald Trump's tariff rhetoric can't rattle credit markets, a sign to some money managers and strategists that the market is too complacent.
Prices on credit default swaps barely moved on Monday amid the prospect of levies being introduced on Mexican and Canadian goods, even as trading volume in the derivatives more than doubled from the previous week's daily average. By Tuesday, activity had returned to more typical levels.
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Yahoo
14 minutes ago
- Yahoo
‘No doubt Americans are paying the tariffs': Rising wholesale inflation is a warning sign
The economic forecast is getting bleaker by the month. In July, wholesale inflation rose at the fastest monthly pace since June 2022. The producer price index jumped 0.9% from June to July – more than four times what economists expected. These are all signs that domestic producers, manufacturers, and business owners are beginning to feel the effect of Donald Trump's tariffs – and consumers may start feeling it soon too. 'There is no doubt Americans are paying the tariffs at this point,�� Solve the daily Crossword
UPI
16 minutes ago
- UPI
Air Canada ordered to resume operations during binding arbitration
An Air Canada plane is pictured at a gate at Montreal-Trudeau International Airport, in Montreal. On Saturday morning, all flights were cancelled after flight attendants went on strike. Photo Graham Hughes/EPA Aug. 16 (UPI) -- Hours after Air Canada flight attendants went on strike and the airline indefinitely paused all flights, the Canadian government intervenued Saturday and ordered operations to resume. Jobs Minister Patty Haju ordered the company's management and the union back to participate in binding arbitration to hash out their differences on wages and compensation. It wasn't known when flights will resume after opereations were paused early Saturday. "After eight months of negotiations by the parties, and after meeting with both parties last night and urging them to work hard to reach a deal, it is disappointing to have to conclude today that Air Canada and CUPE flight attendants are at an impasse and remain unable to resolve their dispute," she said in a statement released Saturday aftetnoon Eastern time. "The government firmly believes that the best deals are reached by the parties at the bargaining table. It has now become clear that this dispute won't be resolved at the table. Canadians are increasingly finding themselves in very difficult situations and the strike is rapidly impacting the Canadian economy." She invoked Section 107 of the Canadian Labor Code, which directs the Canadian Relations Board to arbitrate the dispute. "I am exercising this authority because it is critical to maintaining and securing industrial peace, protecting Canadians and promoting conditions to resolve the dispute," she said. "Despite the parties' resolution of several key differences, the CIRB is best positioned to help them find a solution on the outstanding items." Also, she extended the terms of the existing agreement until a new one is determined by an arbiter. "This decision will help make sure that hundreds of thousands of Canadians and visitors to our country are not impacted because of cancelled flights," she said. "Further, the shipments of critical goods such as pharmaceuticals and organ tissue, over 40% of which are moved by Air Canada, should continue to reach their destinations." The Air Canada union asked her to direct the parties to enter into binding arbitration. More than 130,000 travelers worldwide fly on the airline daily. Canada's largest airline has more than 1,000 flights, including 170 international ones, and from 50 Canadian airports. Between more than 50 U.S. airports and Canada, there are 430 daily flights. Locked out at 1:30 a.m. EDT were 10,000 flight attendants at Air Canada and Air Canada Rouge represented by the Canadian Union of Public Employees. Air Canada Express, with regional 300 flights and operated by Jazz Aviation and PAl Airlines, is not affected. The flight attendants went on strike at 12:58 a.m. EDT. Picket lines had been set up at airports throughout Canada, the CBC reported. The last negotiations were on Friday night and no new talks were scheduled. On Wednesday, the airline served the union a statutory 72-hour lockout notice in response to the union's 72-hour strike notice. Air Canada was canceling flights ahead of the work stoppage. "The carriers have since been gradually reducing their schedules of about 700 daily flights to manage the labour disruption created by CUPE's strike notice," the airline said. "Some 130,000 customers will be impacted each day that the suspension continues. At this time, Air Canada remains engaged and committed to negotiate a renewal to its collective agreement with CUPE." The airline said it "deeply regrets the labor disruption is having on customers." Wesley Lesosky, president of the Canadian Union of Public Employees' Air Canada component, told the CBC it is up to the airline when they would be back on flights. The airline hadn't responded to the media site. Air Canada Chief Operating Officer Mark Nasr earlier said after an agreement, it could take up to a week to fully restart operations. The carrier advised people not to go to the airport if they are booked on the airline. "Air Canada will notify customers with imminent travel of additional canceled flights and their options," the airline said. "For those customers due to travel soon whose flights are not yet cancelled, Air Canada has put in place a goodwill policy to allow them to rebook their travel or obtain a credit for future travel." Compensation differences Flight attendants want to be compensated for work before the flights take off and after they land. Typically with most airlines, they get paid only for the hours they are in the air. The airline, in its latest offer, proposes a 38% increase in total compensation that "would have made our flight attendants the best compensated in Canada." The union said a proposed 8% raise in the first year is offset by inflation. Hajdu told The Canadian Press on Friday that it is "critical" for the two sides to return to the negotiating table. "It's very important that we stay focused on the two parties," Hajdu said. "They have the primary responsibility to solve this. This is a corporation and a union who have all the tools they need, as well as tools from the federal mediation service, to get this deal done." On Friday, the minister said she wasn't ready to intervene in the dispute, and saw a path forward to a deal because most issues have been resolved. The union accused her of speaking "on behalf" of the company. "Every party has expressed support for our effort to end unpaid work, except for the governing Liberal Party," Lesosky said during a news conference Thursday. Hajdu posted Friday on Facebook that she met with both sides. "It is unacceptable that such little progress has been made. Canadians are counting on both parties to put forward their best efforts." Travel options The carrier advised people not to go to the airport if they are booked on the airline. "Air Canada will notify customers with imminent travel of additional cancelled flights and their options. For those customers due to travel soon whose flights are not yet cancelled, Air Canada has put in place a goodwill policy to allow them to rebook their travel or obtain a credit for future travel," the airline posted. Air Canada is partnered with Star Alliance, which includes more than 20 airlines, including Lufthansa and United Airlines. Code-sharing flights might be affected. The New York Times listed ideas for travelers. Travelers can change flight dates and receive a one-time $50 credit per passenger or opt for an airline credit equal to the value of the ticket for one year. Travelers are eligible for a full refund requested through the app or website. The airline said it will attempt to rebook travelers on other airlines. Canada's second-biggest airline is WestJet Airlines, though it has many fewer international destinations. Because of peak summer travel, options may be limited. Keelin Pringnitz and her family were returning from a European vacation to Ottawa, but were left stranded at Heathrow Airport in London. "It was an end of my maternity leave kind of trip," Pringnitz told CBC. "We went to the Faroe Islands and Norway, travelling through Air Canada to London." She said they could fly to the United States, but no assistance once they land there. "It didn't go over well with the line," she said. "Nobody really seemed interested. Everybody seemed a little bit amused almost at the suggestion, or exasperated, because it is a bit ridiculous to offer to take stranded passengers to a different country to strand them there." For those with travel insurance, some plans include trip cancellations, including a strike. The U.S. Department of Transportation, which has jurisdiction over Air Canada flights that depart from the U.S., has a similar policy like the Canadian government. Refunds must be given within 30 days and rebooked if possible. There is no mandatory compensation for delays. "For U.S. travellers, the key now is to think strategically," Anton Radchenko, AirAdvisor's founder, said in a statement to USA Today. "Don't just look for the fastest alternative route; look for the most stable one. This may mean flying via smaller, less congested hubs like Detroit or Minneapolis, where rerouting is easier, or securing refundable one-stop connections through partner airlines before seats vanish. "Keep all receipts, track your communications with the airline, and, if possible, pay with a credit card that includes trip interruption coverage. Above all, treat this strike as a high-impact event that demands proactive planning, not reactive scrambling."
Yahoo
25 minutes ago
- Yahoo
Shock jobs report stirs recession fears: 5 takeaways
The disappointing July jobs report threw a bucket of cold water on an economic outlook that appeared to be holding up surprisingly well despite President Donald Trump's high import tariffs, immigration crackdown and widespread federal layoffs. Not only did employers add a disappointing 73,000 jobs – well below the 105,000 expected – but payroll gains for May and June were revised downward by a whopping 258,000. That left May's additions at 19,000 and June's at 14,000, the weakest performance since the nation was climbing out of the COVID-19 recession in December 2020. By late afternoon Aug. 1, Trump announced he ordered the firing of Erika McEntarfer, the U.S. commissioner of Labor Statistics. The president in a social media post accused McEntarfer of manipulating figures for "political purposes," though he did not provide any evidence. In early afternoon trading, the Dow Jones Industrial Average was down about 607 points and the benchmark S&P 500 index was off 1.5% Over the past three months, the economy has averaged just 35,000 employment gains. Here are a few takeaways: This was no blip The poor showing likely wasn't an outlier that will be followed by a resumption of healthy job gains in the months ahead, economists said. Consumers have reined in their spending somewhat, amid worries about Trump's tariffs pushing up prices, and are pulling back on travel and recreational activities. As more of the import charges hit store shelves, Americans will likely restrain their outlays further, Pantheon Macroeconomics wrote in a note to clients. That should translate into weaker job gains, especially in sectors such as manufacturing, retail, trucking and warehousing, the research firm said. And on July 31, Trump escalated his global trade fight with a sweeping new round of import levies. Meanwhile, executives' confidence in the business outlook has been shaken in recent months by the tariffs – which are squeezing profit margins – and that's expected to spell a more pronounced decline in business investment, Pantheon said. 'Sadly, employment appears set for a further summer slowdown as firms, facing renewed cost volatility from escalating trade tensions, remain focused on managing labor costs through reduced hiring, performance-based layoffs, restrained wage growth, and lower entry-level wages,' Gregory Daco, chief economist of EY-Parthenon, wrote to clients. Also, after the Supreme Court recently lifted a stay on mass federal layoffs, 'the decline in federal employment likely will gather more momentum over the coming months,' Pantheon said. The Labor Department has tracked 84,000 federal job losses this year, but the number of buyouts and job cuts announced was much larger. Hiring across the economy hit a 12-month low in June, Labor Department figures show. Will there be a recession in 2025? The dreaded word has slipped back into the conversation after fading the past couple of months as Trump delayed many tariffs and reached deals with several countries. 'To me, today's jobs report is what entering a recession looks like,' Josh Bivens, chief economist of the left-leaning Economic Policy Institute, said in a statement. 'Could we pull up? Sure. But if we look back and end up dating an official recession that starts 3-6 months from now, this is what it would look like today – rapid softening/deterioration in the labor market.' A recession now appears 'very, very likely' unless Trump lowers the tariffs by Labor Day, said Mark Zandi, chief economist of Moody's Analytics. Could a skidding economy and stock market lead Trump to reverse course? A darkening economic outlook and tumbling stock market could well prompt Trump to try to soften the import fees, Zandi said. 'He's going to try to pull it back,' he said. But if he doesn't act before Labor Day, 'It will be too late,' Zandi said, adding the duties will start to ripple too dramatically into retail prices and consumer and business sentiment for the effects to be undone. A September fed rate cut likely At a July 30 news conference following the Fed's decision to hold rates steady for a fifth straight meeting, Fed Chair Jerome Powell described the labor market as solid and balanced. He also said officials would focus primarily on the unemployment rate as they decide whether to lower rates in September. The jobless rate edged up to 4.2% in July. It's still historically low because Trump's immigration constraints, particularly deportations, shrank the labor force – the pool of people working or looking for jobs – even as demand for employees has waned. In other words, the supply of job seekers has contracted at the same time hiring has declined, keeping the unemployment rate roughly stable. But Morgan Stanley suggested the feeble job gains of the past three months would spur the Fed to act in September despite stable unemployment. 'The slower payroll pace keeps downside risks elevated and a September cut on the table,' Morgan Stanley said in a research note. Fed fund futures markets are now putting the chances of a September rate decrease at 85%, up from 45% after Powell's July 30 remarks. AI is starting to crimp job gains Professional and business services shed 14,000 jobs in July and payroll gains in the sprawling white-collar sector have been stagnant for more than two years. July's showing included job losses in computer and technical roles. Staffing executives say companies are replacing many entry-level information technology workers with artificial intelligence. 'It is happening,' Goldman Sachs chief economist Jan Hatzius said on CNBC after the release of the July jobs report. 'This is not the main thing driving the labor market... But we're seeing early signs.' (This story was updated to add new information) This article originally appeared on USA TODAY: July jobs report takeaways: Weakening labor market, recession fears Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
