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Bloomberg
10 hours ago
- Business
- Bloomberg
Fed's Musalem Reports Multiple Real Estate Transactions
A new set of financial disclosures for Federal Reserve regional bank heads released Friday show that St. Louis Fed President Alberto Musalem and his spouse sold and purchased several residential real estate holdings last year. The documents show the couple sold seven properties in Rockville, Maryland, between April and November of 2024 and purchased nine residential real estate properties in Baltimore between June and November.
Yahoo
22-05-2025
- Business
- Yahoo
Fiscal fears push bond yields higher as stocks fall
Global concern about America's fiscal health and how long it will retain its status as an economic safe harbor triggered bond yields to push higher yesterday after a 20-year auction saw a muted reaction. The long-term outlook for the U.S. is taking a hit as analysts eye America's $36.2 trillion national debt burden. Debt-to-GDP is expected to spiral to all-time highs in the coming decades. The fears are partly down to the 'big, beautiful bill' President Trump is trying to encourage Congress to pass. The bill includes a raft of tax cuts, partly an extension of a temporary bill first passed in 2017. While the Trump team argues that tax cuts will increase discretionary income and, as such, lead to a rise in economic activity and growth, other economists counter that the White House is shutting off vital revenue needed to rebalance its books. These concerns played out in the bond market yesterday with 30-year Treasury yields closing above 5% at 5.09% for the first time since October 2023. Yields took a further step yesterday when a 20-year Treasury auction received a muted response, with $16 billion in bonds issued at 1.2 basis points above the pre-sale held at 5.05%. Real yields spun even higher, finishing the day at 2.65% per the St Louis Fed's securities yield index, which is quoted on an investment basis and is inflation-indexed. May 2025 marks the highest the index has risen since the St Louis Fed started tracking the data in 2010. 'Market volatility has resurfaced amid renewed uncertainty surrounding trade policy and the fiscal outlook. With bond yields elevated and tariff and budget risks in focus, this volatility may persist as investors monitor further developments in policy,' Mark Haefele, CIO at UBS Global Wealth Management, wrote in a note seen by Fortune this morning. If surging yields spell trouble ahead, then some caution bleed into the stock market. The S&P 500 closed 1.6% down yesterday, with Mag7 stocks down 1.41% over the past five days. The performer of the day was Alphabet, which jumped 2.9% by close up to $170 a share. Uncertainty appears to have bled into other regions, with Germany's DAX down 0.8% Thursday at the time of writing, and London's FTSE 100 down 0.6% as of Thursday morning. The Nikkei 225 finished down 0.8%. Here's a snapshot of today's action prior to the opening bell in New York: The S&P 500 fell 1.61% Tuesday. The index is down 0.6% YTD. S&P futures traded down 0.2% this morning. The Stoxx Europe 600 was down 0.7% in early trading. Asia was up down: Japan was down 0.8%. Hong Kong down 1.1%. Shanghai was down 0.8% and India's Nifty 50 was down 1.1%. The Mag7 was down with the exception of Alphabet, up nearly 3%. Bitcoin was sitting up at approximately $110,600 this morning. This story was originally featured on 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
RTHK
20-05-2025
- Business
- RTHK
US Fed official warns of tariff-linked price pressures
US Fed official warns of tariff-linked price pressures St Louis Fed President Alberto Musalem says the tariffs that Donald Trump rolled out last month were "substantially larger" than many people had anticipated. Photo: AFP US President Donald Trump's tariff plans are likely to push prices higher despite recent attempts at de-escalating his trade wars, a senior Federal Reserve official said on Tuesday. Trump's on-again, off-again tariff rollout since his return to office in January has unnerved investors and rocked financial markets. Recent deals to reduce tariffs on China and Britain suggest the administration is serious about wanting to negotiate deals to lower trade barriers and calm global markets. But it may not be sufficient to stop businesses from raising prices, St Louis Fed President Alberto Musalem told the Economic Club of Minnesota, according to prepared remarks. "Looking ahead, price pressures appear to be building," said Musalem, a voting member of the Fed's rate-setting committee this year. "Anecdotally, I've heard from business contacts that many firms are imposing price surcharges to recoup the costs of higher tariffs," he said. Musalem added that recent survey data pointed to more businesses planning to raise prices over the next six months, and to consumers raising their inflation expectations despite market-based measures of expected price increases remaining broadly in check. The tariffs that Trump rolled out last month were "substantially larger" than many people had anticipated, Musalem said. "Even after the de-escalation of May 12, they seem likely to have a significant impact on the near-term economic outlook," he noted, referring to the recent US-China deal to cut new US tariff rates down from 145 percent to 30 percent for 90 days. Despite these concerns, "the underlying strength" of the US economy, a resilient labour market, and inflation stuck above the Fed's long-term target of two percent suggest the current level of interest rates is appropriate for the task at hand, Musalem said. (AFP)
Reuters
10-05-2025
- Business
- Reuters
Fed's Musalem: Should not commit to rate cuts until tariff impact becomes certain
PALO ALTO, May 9 (Reuters) - The Fed should not commit to further interest rate cuts until it is clear whether the Trump administration's tariff policies lead to persistent inflation or a less serious, one-time adjustment in prices, St. Louis Fed President Alberto Musalem said on Friday. Musalem said he currently puts even odds on either of the two paths for inflation. In theory, tariffs should prompt a one-time price jump similar to the imposition of a tax; but coming off the heels of recent high inflation the effect could be longer-lasting, and may also be more persistent since the new levies hit intermediate goods, for example. That's a reason not to jump to conclusions, he said. The Fed cuts its policy rate by a full percentage point last year but has not made a move since December, with the Trump administration's tariff plans now posing the risk of renewed price pressures. "It is possible that higher inflation will be short-lived and mostly concentrated in the second half of 2025, as businesses run down inventories and pass tariffs on new goods purchased onto customers as one-off price increases," Musalem, a current voter on interest rate policy, said in remarks prepared for delivery at Stanford University's Hoover Institution. "It is equally likely that inflation could prove to be more persistent." "Committing now to looking through the inflation impact of tariffs, or to an easing of policy, runs the risk of underestimating the level and persistence of inflation," Musalem said. "Mistiming the policy switch can be costly for the public in terms of inflation and employment outcomes." It would still be appropriate to cut rates "if tariffs are sustained but inflation is short-lived, inflation expectations remain anchored, and economic activity is meaningfully slower," Musalem said. But right now all of those issues remain up in the air. The Trump administration has not decided what the final tariff schedule will be, and the issue may be unresolved for months still to come. Meanwhile, even though business and household confidence is falling, economic data on employment and inflation have yet to register much reaction to Trump's efforts to reorder the global trading system. That has been an argument in favor of the Fed keeping the policy rate intact, cited by officials this week when they unanimously agreed to maintain the rate in the current 4.25% to 4.5% range. Officials have largely agreed that they will have trouble making a decision on further policy moves until an array of administration policy decisions have been finalized and the impact on the economy clarified.
Yahoo
13-03-2025
- Business
- Yahoo
If you think the current outlook is bad, just wait until the White House can't find anyone to buy its debt, warns Ray Dalio
Ray Dalio warns the U.S. faces an imminent debt crisis as its debt-to-GDP ratio climbs past 122%, with experts worried foreign buyers will pull back or raise interest payments, making borrowing unsustainable. He suggests drastic measures may be needed, including debt restructuring, political pressure on buyers, and potentially cutting payments to certain countries. While Wall Street might be battening down the hatches against Trump's tariff rhetoric and nervously eyeing foreign relations, the fundamentals of the economy are still looking relatively good. GDP over the past couple of quarters has been steadily ticking upwards, while inflation and unemployment are similarly stable. But what will rock the boat is America's national debt, Ray Dalio has warned, and it's a crisis coming down the pipe "imminently." Speaking at CONVERGE LIVE in Singapore, the Bridgewater founder explained, "We have a very severe supply and demand problem. Some people think we'll handle it because we've handled it so far. I don't think they understand the mechanics of debt." What is concerning experts like Dalio now more so than in the past is America's debt-to-GDP ratio: the amount Uncle Sam owes in comparison to the value of its output and hence, how capable it is to repay its debts. In 2013, Amercia's debt went beyond the value of what it produces and, at the time of writing, has risen to 122% of GDP, per the St Louis Fed. This figure is also set to swing even higher—a sweep made all the more dramatic by the increasing burden of interest payments required to bankroll the debt. The Congressional Budget Office (CBO) expects the ratio to reach 166% of GDP in 2054 and "remain on track to increase thereafter." Dalio continued that, at some point, the U.S. will have to "sell a quantity of debt that the world is not going to want to buy.' This is an "imminent" scenario of "paramount importance," Dalio said. The man worth $16.2 billion isn't the only economic expert to have this opinion. Wharton Business School finance professor Joao Gomes previously told Fortune: 'The most important thing about debt for people to keep in mind is you need somebody to buy it. We used to be able to count on China, Japanese investors, the Fed to [buy the debt]. All those players are slowly going away and are actually now selling. "If at some moment these folks that have so far been happy to buy government debt from major economies decide, 'You know what, I'm not too sure if this is a good investment anymore. I'm going to ask for a higher interest rate to be persuaded to hold this,' then we could have a real accident on our hands." Dalio said running a yearly federal budget deficit of 7.2% of GDP was far too high, suggesting this figure needed to be closer to 3%. "You are going to see shocking developments in terms of how [debt] is going to be dealt with," Dalio continued. Asked whether this may be austerity measures, Dalio hinted that may not be the worse outcome: "What do you do when you don't have an adequate supply and demand balance? "There may be restructurings of debt, there may be exerting pressures on countries to buy the debt, to own the debt, political pressures on countries. There may be cutting the payments to some predator countries off for political reasons, there may be monetizations of debt." President Trump has certainly demonstrated he's not shy about exerting economic pressure in order to achieve his aims. A look over his executive orders since taking office are evidence enough. However, in stretching his relationships with America's closest partners like Canada, Mexico, and the EU, the Oval Office may also have lost some of its goodwill with the nations that once would have rushed to its rescue. "If you look at history and see the repeating of what do countries do when they're in this kind of situation, there are lessons from history that repeat. Just as we are seeing political and geopolitical shifts that seem unimaginable to most people, if you just look at history, you will see these things repeating over and over again," Dalio said. He added: 'We will be surprised by some of the developments that will seem equally shocking as those developments that we have seen.' This story was originally featured on
