Latest news with #AndrzejSkiba
Forbes
03-04-2025
- Business
- Forbes
Has The Stock Market Bottomed Out Yet Or Will Tariff Threat Keep It In The Red?
U.S. stocks posted their biggest one-day loss since 2020 on Thursday following President Trump's announcement of reciprocal tariffs on 180 countries. The S&P dropped 4.8% in Thursday trading while the Dow Jones Industrial Average fell 3.98% and the Nasdaq plummeted nearly 6%. 'Investors were shocked by the extent of the tariffs, and particularly looking at individual countries that were hit with tariffs well in excess of 20-30%,' explained Andrzej Skiba, Head of BlueBay U.S. Fixed Income at RBC Global Asset Management, in a ForbesTV interview Thursday. 'That really played with investor imagination. We're seeing a pretty sharp response in the markets today as many ponder whether this is a big enough hit to the U.S. economy, to the U.S. consumer to start talking about recessionary risk ahead.' To hear Skiba's full investment thesis and economic outlook—and whether he and his team at RBC think the U.S. could fall into a recession—click through here or watch the video above.
Wall Street Journal
03-04-2025
- Business
- Wall Street Journal
New Tariffs to Push Inflation up 1%: BlueBay
Tariffs will result in a 1% increase in the headline CPI, or consumer-price index, according to Andrzej Skiba, BlueBay Asset Management's head of fixed income. That will prevent the Fed from cutting interest rates in coming months regardless of likely slowing in economic activity, he said. The new measures will deliver a 10% increase 'end state' after accounting for retaliation by targeted countries and unwinds of some levies, he said. Gross-domestic product growth will likely slow to 1.5% but the economy is unlikely to fall into recession, according to BlueBay, which is a unit of RBC Global Asset Management. The combination of higher inflation and slower growth will suppress any temporary relief from the arrival of the long-awaited tariffs, Skiba said.
NBC News
14-03-2025
- Business
- NBC News
Federal Reserve is likely to hold interest rates steady next week. But some consumer loans are getting cheaper.
The Federal Reserve is expected to hold interest rates steady at the end of its two-day meeting next week, despite some encouraging news on inflation. Although inflation receded last month, an escalating trade war threatens to cause prices to rise on a wide range of consumer goods going forward. 'This is likely just the beginning with tariffs on Europe and universal ones to follow suit over the coming weeks,' Andrzej Skiba, head of U.S. fixed income at RBC Global Asset Management, said in an email. 'This will be inflationary, and the Fed won't likely be able to cut rates in this environment.' The federal funds rate sets what banks charge each other for overnight lending, but also affects many of the borrowing and savings rates Americans see every day. 'Consumers are stretched and stressed,' said Greg McBride, chief financial analyst at Once the federal funds rate comes down, consumers may see their borrowing costs decrease across a variety of consumer debt such as auto loans, credit cards and mortgages, making it cheaper to borrow money. But even with the Fed on the sidelines for now, households could see some relief. Already, rates for mortgages, auto loans and credit cards are edging lower. Still, these rates remain relatively elevated compared to recent highs, with credit card APRs down only slightly from an all-time record. Here's a look at where consumer borrowing costs stand. Mortgages Although 15- and 30-year mortgage rates are fixed, and largely tied to Treasury yields and the economy, rates have been trending lower for weeks. Worries about a possible recession and increased uncertainty over President Donald Trump 's tariff plans have soured consumers' outlook and dragged down rates, according to the Mortgage Bankers Association. 'The good news is that even though the Fed has taken its foot off the gas when it comes to rate cuts, mortgage rates have fallen,' said Matt Schulz, chief credit analyst at LendingTree. The average rate for a 30-year, fixed-rate mortgage is now 6.77%, down from 7.04% at the beginning of the year, according to Bankrate. Credit cards Most credit cards have a variable rate, so there's a direct connection to the Fed's benchmark. But even though the central bank held rates at the last few meetings, the average annual percentage rate has moved lower too — it's currently, down to 20.09%, from 20.27% at the start of the year, thanks to the lingering effects of last year's rate cuts. 'March was the sixth straight monthly decline, but the decreases have slowed as Fed rate cuts get further back in the rearview mirror,' Schulz said of credit card APRs. In the meantime, credit card debt continues to be a pain point for consumers struggling to keep up with high prices. Revolving debt, which mostly includes credit card balances, is up 8.2% year over year, while nonrevolving debt, such as auto loans and student loans, is 3% higher, according to the Federal Reserve's latest consumer credit report. Auto loans Although auto loan rates are fixed, those payments continue to grow because car prices are rising, in addition to pressure from trade policy uncertainty. 'That's troubling news for potential car buyers, who are already beset on all sides by high rates and high prices and also face the possibility of tariffs pushing car costs even higher,' Schulz said. However, auto loan rates have also backed down from recent highs. The average rate on a five-year new car loan is now 7.42%, down from 7.53% in January, according to Bankrate. Student loans Federal student loan rates are fixed, as well, so most borrowers are somewhat shielded from Fed moves and recent economic turmoil. Undergraduate students who took out direct federal student loans for the 2024-25 academic year are paying 6.53%, up from 5.50% in 2023-24. Interest rates for the upcoming school year will be based in part on the May auction of the 10-year Treasury note. Private student loans tend to have a variable rate tied to the prime, Treasury bill or another rate index. Savings On the upside, top-yielding online savings accounts have offered the best returns in more than a decade and currently pay 4.4%, on average, according to Bankrate. While the Fed holds rates steady, 'savings rates really haven't changed all that much, that's the good news,' said Bankrate's McBride. 'Savings rates are still at attractive levels and the top yields are still well in excess of inflation.'
Reuters
12-03-2025
- Business
- Reuters
US corporate bond spreads hit widest in about 6 months on recession fears
March 12 (Reuters) - The spreads between the yields on corporate bonds and U.S. Treasuries hit their widest since September this week, pointing to mounting investor worries about recession and a global trade war. U.S. investment-grade bond spreads hit 94 basis points on Tuesday, their widest level since Sept. 18, according to the ICE BofA Corporate Index (.MERC0A0), opens new tab. Junk bond spreads widened to 322 bps, also their widest since Sept. 18, according to Tuesday's late update of the ICE BofA High Yield Bond Index (.MERH0A0), opens new tab. Investors consider U.S. corporate bond spreads a good gauge of financial market stress, especially the gap between yields on bonds issued by companies with poor credit ratings and ultra-safe U.S. government debt. When the gap widens it shows less willingness to hold riskier "junk" bonds. The widening in spreads comes as the latest sign of growing anxiety about the economic outlook following a series of import tariffs imposed by the Trump administration that raised the specter of a global trade war. "This will be inflationary, and the Fed won't likely be able to cut rates in this environment," said Andrzej Skiba, head of BlueBay U.S. fixed income at RBC GAM. "This could put pressure on fixed income assets, and we see more spread widening and risk ahead." A Reuters poll last week found 95% of economists across Canada, the U.S. and Mexico said the risk of a recession in their respective countries had increased following Trump's chaotic tariff implementation. "The escalation of tariff hostilities and re-rating in Tech sector valuations is causing contagion from stocks to credit in a way not observed in a while and is stoking fears that the economy could veer off the tracks," Societe Generale analysts wrote in a Wednesday note. The junk bond spread has opened up by 59 bps since a recent low on Feb. 18, JPMorgan analysts noted on Wednesday. They added that junk spreads are "biased wider" over the coming months, due to "vast macro uncertainty" surrounding trade policy, inflation and recession. Corporate bond spreads are still tight on a historical basis, the analysts noted. Junk spreads late last year contracted to around 250 basis points, the lowest since 2007, before the Financial Crisis, during which they blew out to more than 2,000 basis points or twenty percentage points. They were well above 350 bps for the majority of 2022 and 2023, according to the ICE BofA High Yield Index. Nicholas Elfner, co-head of research at asset manager Breckinridge Capital Advisors, said that as the impacts of President Trump's potentially inflationary economic and fiscal policies become clearer, U.S. corporate bond spreads are expected to widen further. This should bolster the yield allure of corporate debt for investors, including from foreign investors, who overtook insurers and pension funds in 2024 in demand for corporate bonds, Elfner said.
