Latest news with #Hammack
Axios
20-05-2025
- Business
- Axios
Exclusive: Cleveland Fed official's three scenarios for tariff-hit economy
The traditional way to approach projecting the economy is to describe a baseline scenario — what seems like the most likely trajectory — with risks on either side. That may not be the best way to think of the outlook right now, a top Fed official tells Axios. The big picture: With uncertainty around both what trade and other policy changes will bring, and how they will affect employment and inflation, Cleveland Fed president Beth Hammack is thinking about a range of distinct economic scenarios, rather than one base case. She and other leaders of the central bank will submit their projections for GDP, inflation, interest rate policy and more next month. It's an especially fraught time to be doing so, given complex policy crosscurrents around trade, tax and other policies. The so-called Summary of Economic Projections will be published when the Fed's next two-day meeting concludes on June 18. What they're saying:"I'm grateful that I have four weeks to work on coming up with a modal case, because right now I haven't really been operating with a base case," Hammack said. "I've been operating in a couple different scenarios." "To come up with a modal case that you have a lot of confidence in, I think at this particular moment is going to be really challenging," Hammack says. Scenario 1: Tariffs have a one-off price effect, but economic growth takes a hit from policy uncertainty. The possibility that tariffs bring up price levels, but don't do so consistently, results in a one-time increase in prices. But Hammack says this might come alongside a "tremendous amount of uncertainty that weighs on economic activity," with growth declining and the labor market falling off. "In that situation, we'd want to be attentive to the employment side of our mandate and potentially ease policy — and potentially very quickly, if we had the evidence that this is what was happening," she says. Scenario 2: The labor market holds up, but tariffs are inflationary. It's possible that businesses hold the line on their workforces, a pandemic-era fear that they might not be able to replace staff when the economy bounces back. "Because it took them so long and it was so difficult to hire and train their staff over the past several years, it could be the case that they hold on to people for a really long time," Hammack says. She adds that in this scenario, price pressures from tariffs become sticky because of the way the levies have been rolled out. "It becomes more persistent and more inflationary because the tariffs are layered in — the announcement, the withdrawal, and then the possibility of new announcements," Hammack says. Scenario 3 is what Hammack sees as most likely: a stagflationary outcome where the economy slows alongside higher inflation. "That's where it's really difficult for monetary policy," Hammack says. "We're going to have to have good insights and good understanding of how much we're missing each side of the mandate and how long those misses persist — and then we can decide what the right course of action is." Yes, but: Hammack says there are other factors — including the White House tax bill or its deregulatory efforts — that complicate the forecast.
Globe and Mail
28-04-2025
- Business
- Globe and Mail
Dollar Gains on Hopes of De-Escalation of US-China Trade Conflict
The dollar index (DXY00) today is up by +0.25%. The dollar is trading higher today in hopes of de-escalating the US-China trade war. Bloomberg reported that the Chinese government is considering suspending the 125% tariffs on some US imports, including medical equipment and industrial chemicals like ethane. The dollar also garnered support after the University of Michigan US Apr consumer sentiment index was unexpectedly revised upward. Gains in the dollar are limited as T-note yields are lower after Thursday's dovish Fed comments from Cleveland Fed President Hammack and Fed Governor Waller bolstered speculation the Fed could cut interest rates as soon as June. The University of Michigan US Apr consumer sentiment index was unexpectedly revised upward by +1.4 points to 52.2 from the previously reported 50.8, stronger than expectations of 50.5. The University of Michigan US Apr 1-year inflation expectations indicator was revised lower to +6.5% from the previously reported +6.7%, weaker than expectations of an upward revision to +6.8%. The markets are discounting the chances at 8% for a -25 bp rate cut after the May 6-7 FOMC meeting, down from a 30% chance last week. EUR/USD (^EURUSD) today is down by -0.21%. The euro is under pressure today from a stronger dollar. Also, dovish comments today from ECB Governing Council member Holzmann weighed on the euro and boosted the chances for an ECB rate cut to 100% at its June meeting when he said he sees a disinflationary impact in the Eurozone from US tariffs. ECB Governing Council member Holzmann said that "so far, the net impact from the US tariff announcements seems to be rather deflationary than inflationary." Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at the June 5 policy meeting. USD/JPY (^USDJPY) today is up by +0.72%. The yen fell to a 1-1/2 week low against the dollar today on signs of de-escalation of the US-China trade war, which reduced safe-haven demand for the yen after Bloomberg reported that the Chinese government is considering suspending the 125% tariffs on some US imports. Also, today's rally in the Nikkei Stock Index to a 3-1/2 week low curbed safe-haven demand for the yen. Losses in the yen are limited after today's news that Japan's Tokyo Apr CPI rose more than expected, a hawkish factor for BOJ policy. Also, lower T-note yields today are limiting losses in the yen. Japan Apr Tokyo CPI rose +3.5% y/y, stronger than expectations of +3.3% y/y and the biggest increase in 2 years. Apr Tokyo CPI ex-fresh food and energy rose +3.1% y/y, stronger than expectations of +2.8% y/y and the biggest increase in 14 months. June gold (GCM2 5) today is down -53.60 (-1.60%), and May silver (SIK2 5) is down -0.563 (-1.68%). Precious metals prices today are sharply lower due to a stronger dollar. Also, hopes for a de-escalation of the US-China trade war have sparked long liquidation pressures in precious metals today after Bloomberg reported that the Chinese government is considering suspending the 125% tariffs on some US imports, including medical equipment and industrial chemicals like ethane. In addition, today's news showing Japan's Apr Tokyo CPI rose more than expected may prompt the BOJ to keep raising interest rates, a negative factor for precious metals. Lower T-note yields today are supportive of precious metals. Also, geopolitical risks in the Middle East are boosting safe-haven demand for precious metals as the Israel-Hamas and the US-Houthi conflicts continue.
The Star
24-04-2025
- Business
- The Star
U.S. stocks extend gains amid rate cut hope
NEW YORK, April 24 (Xinhua) -- U.S. stocks ended higher on Thursday, after comments by a Federal Reserve official bolstered odds that the central bank will cut interest rates as early as June. The Dow Jones Industrial Average rose 486.83 points, or 1.23 percent, to 40,093.4. The S&P 500 added 108.91 points, or 2.03 percent, to 5,484.77. The Nasdaq Composite Index increased by 457.99 points, or 2.74 percent, to 17,166.04. Ten of the 11 primary S&P 500 sectors ended in green, with technology and communication services leading the gainers by going up 3.54 percent and 2.31 percent, respectively. Meanwhile, consumer staples bucked the trend by going down 0.96 percent. Beth Hammack, president of the Federal Reserve Bank of Cleveland, dismissed the possibility of an interest rate cut in May but indicated that the central bank could take action as early as June - provided there is clear evidence about the trajectory of the economy. "If we have clear and convincing data by June, then I think you'll see the committee move if we know which way is the right way to move at that point in time," Hammack said Thursday during an interview with CNBC when asked specifically about June. "I think the markets were clearly moving on some of the Fed comments around potentially cutting rates," Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in a phone call. "There's a bit of a risk-on move in equities and tech getting a bid." Shares of Nvidia, Meta, Amazon, Tesla, and Microsoft all finished higher, helping the major indexes notch a third consecutive day of gains. The tech sector, however, remains under pressure amid the White House's increasingly aggressive trade posture, especially toward China, which has weighed on investor sentiment.
Globe and Mail
24-04-2025
- Business
- Globe and Mail
Stocks Supported by Strength in Big Tech and Chip Makers
The S&P 500 Index ($SPX) (SPY) today is up +0.29%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.28%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.73%. June E-mini S&P futures (ESM25) are down -0.18%, and June E-mini Nasdaq futures (NQM25) are down -0.03%. Stock indexes today are mostly higher. Strength in megacap technology stocks and chip makers is boosting the broader maker after Texas Instruments, and Lam Research reported better-than-expected earnings results. Signs of a stable US labor market are also supporting stocks after weekly initial unemployment claims rose as expected, and weekly continuing claims fell to a 10-week low. In addition, lower T-note yields are positive for stocks, with the 10-year T-note yield down -5.1 bp to 4.330% after Cleveland Fed President Hammack said the Fed could cut rates in June if it has clear, convincing data. Stock gains are limited by concern there will be no quick resolution to the China-US trade war. Treasury Secretary Bessent said President Trump hasn't offered to take down US tariffs on China on a unilateral basis. Also, China's Commerce Ministry said the US should revoke all unilateral tariffs and 'show sincerity' if it wants to make a trade deal, and 'any reports on development in trade talks are groundless.' US weekly initial unemployment claims rose +6,000 to 222,000, right on expectations. Weekly continuing claims fell -37,000 to a 10-week low of 1.841 million, showing a stronger labor market than expectations of 1.869 million. US March capital goods new orders nondefense ex-aircraft and parts rose +0.1% m/m, right on expectations. The US Mar Chicago Fed national activity index fell -0.27 to -0.03, weaker than expectations of 0.12. Dovish comments from Cleveland Fed President Hammack were supportive of stock and bonds when she ruled out a Fed rate cut at that May 6-7 FOMC meeting but said, 'If we have clear and convincing data by June, I think you'll see the committee move if we know which is the right way to move at that point in time.' The markets are discounting the chances at 8% for a -25 bp rate cut after the May 6-7 FOMC meeting. This week's market focus will be on Q1 corporate earnings results and any changes to US trade policies. The Fed Beige Book will be released later today. Thursday brings March existing home sales (expected to fall -2.8% m/m to 4.14 million). Friday brings the revised University of Michigan April consumer sentiment index (expected no change at 50.8). Q1 earnings reporting season is in full swing. According to data compiled by Bloomberg Intelligence, the market consensus is for Q1 year-over-year earnings growth of +6.7% for the S&P 500 stocks, down from expectations of +11.1% in early November. Full-year 2025 corporate profits for the S&P 500 are seen rising +9.4%, down from the forecast of +12.5% in early January. Overseas stock markets today are mixed. The Euro Stoxx 50 is down -0.17%. China's Shanghai Composite rose to a 3-week high and closed up +0.03%. Japan's Nikkei Stock 225 climbed to a 3-week high and closed up +0.49%. Interest Rates June 10-year T-notes (ZNM2 5) today are up +14 ticks. The 10-year T-note yield is down -5.1 bp to 4.330%. June T-notes today are moderately higher due to carryover support from strength in European government bonds. T-notes also have carryover support from Wednesday when President Trump said he had no intention of firing Fed Chair Powell, easing concerns over the Fed's independence, which could have sparked foreign selling of dollar assets, including Treasuries. T-notes extended their gains on dovish comments from Cleveland Fed President Hammack, who said clear data could prompt the Fed to cut interest rates in June. Supply pressures are limiting gains in T-notes ahead of the Treasury's $44 billion auction of 7-year T-notes later this afternoon. European government bond yields today are moving lower. The 10-year German bund yield is down -4.6 bp to 2.451%. The 10-year UK gilt yield is down -5.1 bp to 4.501%. Eurozone Mar new car registrations fell -0.2% y/y to 1.030 million units, the third consecutive monthly decline. The German Apr IFO business confidence index unexpectedly rose +0.2 to a 9-month high of 86.9, stronger than expectations of a decline to 85.2. ECB Governing Council member Rehn said the ECB would probably have to lower interest rates further and shouldn't exclude a larger reduction than 25 bp. Swaps are discounting the chances at 98% for a -25 bp rate cut by the ECB at the June 5 policy meeting. US Stock Movers Magnificent Seven stocks are moving higher today and supporting gains in the broader market. Nvidia (NVDA) is up more than +2%. Also, Tesla (TSLA), Meta Platforms (META), (AMZN), Alphabet (GOOGL), and Microsoft (MSFT) are up more than +1%. In addition, Apple (AAPL) is up +0.47%. Chip stocks are climbing today on some better-than-expected earnings results. Microchip Technology (MCHP) is up more than +7% to lead gainers in the Nasdaq 100. Texas Instruments (TXN) is up more than +5% after reporting Q1 revenue of $4.07 billion, above the consensus of $3.91 billion, and forecast Q2 revenue of $4.17 billion-$4.53 billion, stronger than the consensus of $4.12 billion. Also, Lam Research (LRCX) is up more than +3% after reporting Q3 adjusted EPS of $1.04, above the consensus of $1.00. Other chipmakers rallied on the news, Analog Devices (ADI) and ON Semiconductor (ON) up more than +4%, and Marvell Technology (MRVL), GlobalFoundries (GFS), ARM Holdings Plc (ARM), and NXP Semiconductors NV (NXPI) up more than +2%. ServiceNow (NOW) is up more than +14% to lead gainers in the S&P 500after reporting Q1 subscription revenue of $3.09 billion, better than the consensus of $3.08 billion and forecast Q2 subscription revenue of $3.03 billion-$3.04 billion, stronger than the consensus of $3.02 billion. Hasbro (HAS) is up more than +12% after reporting Q1 net revenue of $887.1 million, well above the consensus of $769.2 million. Allegion Plc (ALLE) is up more than +8% after reporting Q1 adjusted EPS of $1.86, better than the consensus of $1.68. Edwards Lifesciences (EW) is up more than +5% after reporting raising its full-year sales forecast to $5.7 billion-$6.1 billion from a previous forecast of $5.6 billion-$6.0 billion, the midpoint above the consensus of $5.81 billion. Fiserv (FI) is down more than -14% to lead losers in the S&P 500 after reporting Q1 organic revenue rose +7.0%, weaker than expectations of +8.48%. Alaska Air Group (ALK) is down more than -11% after forecasting Q2 adjusted EPS of $1.15-$1.65, well below the consensus of $2.41. International Business Machines (IBM) is down more than -8% to lead losers in the Dow Jones Industrials despite reporting better-than-expected Q1 earnings after it said economic uncertainty and US government cost cuts may affect future earnings. LKQ Corp (LKQ) is down more than -8% after reporting Q1 revenue of $3.46 billion, weaker than the consensus of $3.59 billion. Tractor Supply (TSCO) is down more than -7% after reporting Q1 net sales of $3.47 billion, weaker than the consensus of $3.53 billion. Robert Half Inc (RHI) is down more than -11% after reporting Q1 revenue of $1.35 billion, below the consensus of $1.41 billion, citing US trade policy that is weighing on business confidence. Comcast Corp (CMCSA) is down more than -6% to lead losers in the Nasdaq 100 after reporting Q1 pay-TV customers fell by -427,000, a larger decline than the consensus of -409,300. Earnings Reports (4/24/2025) Allegion plc (ALLE), Alphabet Inc (GOOGL), Ameriprise Financial Inc (AMP), Bristol-Myers Squibb Co (BMY), CBRE Group Inc (CBRE), CenterPoint Energy Inc (CNP), CMS Energy Corp (CMS), Comcast Corp (CMCSA), Digital Realty Trust Inc (DLR), Dover Corp (DOV), Dow Inc (DOW), Eastman Chemical Co (EMN), Erie Indemnity Co (ERIE), Fiserv Inc (FI), Freeport-McMoRan Inc (FCX), Gilead Sciences Inc (GILD), Hartford Insurance Group Inc/The (HIG), Hasbro Inc (HAS), Healthpeak Properties Inc (DOC), Intel Corp (INTC), Interpublic Group of Cos Inc/The (IPG), Keurig Dr Pepper Inc (KDP), L3Harris Technologies Inc (LHX), LKQ Corp (LKQ), Merck & Co Inc (MRK), Nasdaq Inc (NDAQ), PepsiCo Inc (PEP), PG&E Corp (PCG), Pool Corp (POOL), Principal Financial Group Inc (PFG), Procter & Gamble Co/The (PG), Republic Services Inc (RSG), Southwest Airlines Co (LUV), Textron Inc (TXT), T-Mobile US Inc (TMUS), Tractor Supply Co (TSCO), Union Pacific Corp (UNP), Valero Energy Corp (VLO), VeriSign Inc (VRSN), West Pharmaceutical Services Inc (WST), Weyerhaeuser Co (WY), Willis Towers Watson PLC (WTW), Xcel Energy Inc (XEL).
CNBC
24-04-2025
- Business
- CNBC
Fed's Hammack calls for patience in assessing what impacts tariffs will have on the economy
Cleveland Fed President Beth Hammack said Thursday she thinks policymakers need to be patient rather than pre-emptive in assessing how tariffs will impact inflation and growth. In her first broadcast interview since taking the reins at the central bank district in August 2024, Hammack noted the high level of uncertainty now and did not commit to a specific course of action regarding interest rate policy. "I think we need to be patient. I think this is a time when we want to make sure we're moving in the right direction, than moving too quickly in the wrong direction," she told CNBC's "Squawk Box." "So I would rather take our time make sure we're looking at the data, the hard data ... which are actually really good." Hammack's remarks come at a sensitive time for the Fed, which has been left to assess the impact of President Donald Trump's tariffs on both inflation and employment. Several central bank officials, including Chair Jerome Powell, have said the duties pose threats to both sides of the Fed's "dual mandate," posing another challenge on how to calibrate monetary policy. Hammack also voiced concerns over how the Fed might balance those priorities. "It could be that we have the two sides of our mandate and conflict, which is the most challenging for monetary policy," she said. "If it's higher inflation, lower employment, that's where things get really complicated." Markets strongly expect the Fed will stand pat on interest rates when it meets May 6-7, then resume cutting rates in June with the likelihood of a total three or four cuts by the end of the year, according to CME Group data. "If we have convincing data by June, then I think you'll see the committee move if we know which way to move at that point," Hammack said. However, uncertainty over tariff policy and how the Fed might react has contributed to substantial market volatility in recent months, with stocks struggling, Treasury yields rising and the U.S. dollar falling. A former Goldman Sachs executive, Hammack said she is sensitive to market movements but only in how they affect broader economic conditions. "Our job is not to focus on what the markets are doing. Our job is to focus on how that's going to impact households and businesses, and what that's going to mean in the real economy," she said. "So we're not steering the markets. We're steering the real economy." Hammack noted that the "hard" economic data such as unemployment and inflation is still relatively good, while "soft" data such as surveys shows elevated levels of concern. "What we're hearing right now is that the uncertainty is really weighing on businesses," she said. "It's creating issues for them in terms of planning, in terms of thinking about where they're going to go, and so some of them have put pauses on whether they're going to make bigger investments, whether they're going to invest in new facilities, new capital plans, and then they're thinking about their hiring plans." "I wish I had a crystal ball. We don't have one," Hammack added.
