Latest news with #StephenStanley
Bloomberg
02-06-2025
- Business
- Bloomberg
Bloomberg Surveillance: Tariffs and Debt
Watch Tom and Paul LIVE every day on YouTube: Bloomberg Surveillance hosted by Tom Keene & Paul Sweeney June 2nd, 2025 Featuring: 1) Stephen Stanley, Chief Economist at Santander, joins for an extended conversation on the outlook for the US economy, lower consumer spending, and potential for a shallow recession in the US. Global stocks started the new month under pressure due to a flare-up in global trade tensions and geopolitical uncertainty. Gold is heading for its biggest gain in almost four weeks as geopolitical and trade tensions revived demand for haven assets. 2) Kathy Jones, Chief Investment Strategist, Fixed Income at Charles Schwab, discusses bond market warnings and why the Fed won't be coming to the rescue any time soon. The dollar fell 0.5%, extending a streak of five monthly losses, while Treasury yields rose across the curve, with the 10-year rate up four basis points to 4.44% in the early part of the morning as risk appetite dissipates. 3) Maya MacGuineas, President of the Committee for a Responsible Federal Budget, talks about the House bill "debt fiasco" and why markets haven't fully awaken to the debt and deficit problem in the US. It comes as Treasury Secretary Scott Bessent says the US "is never going to default" as the deadline for increasing the federal debt ceiling approaches. Bessent declines to specify an "X date" for when the Treasury will run out of cash, but says the goal is to bring the deficit down over the next four years. 4) Henrietta Treyz, co-founder at Veda Partners, talks about President Trump threatening an increase to steel and aluminum tariffs, how the tax bill could be transformed in the Senate, and other DC headlines. Uncertainty prompted by President Donald Trump's trade agenda picked up after China and the US accused each other of violating a trade deal concluded last month. Trump also said he would double tariffs on steel and aluminum imports. Meanwhile, Ukraine staged a dramatic series of strikes across Russia, deploying drones hidden in trucks deep inside the country to hit strategic airfields. 5) Lisa Mateo joins with the latest headlines in newspapers across the US, including an NYT story on Gen Z's interest in chain restaurants and a Business Insider story on AI already taking human jobs.
Yahoo
01-03-2025
- Business
- Yahoo
Americans' rising inflation concerns threaten to undo soft landing
(Bloomberg) — A growing number of Americans are beginning to expect that prices will stay high, or even rise — a bad omen for the Federal Reserve and its years-long fight to stifle inflation. Cuts to Section 8 Housing Assistance Loom Amid HUD Uncertainty The Trump Administration Takes Aim at Transportation Research Shelters Await Billions in Federal Money for Homelessness Providers NYC Office Buildings See Resurgence as Investors Pile Into Bonds Hong Kong Joins Global Stadium Race With New $4 Billion Sports Park Consumer inflation expectations have been rising for the last month or two across several reports. Some surveys point to businesses anticipating higher prices as well. If those expectations become reality, it could prove catastrophic for the Fed's attempt to stabilize prices without causing a recession. 'It's something that has to concern the Fed, and it should concern the administration too,' said Stephen Stanley, chief US economist at Santander US Capital Markets LLC. One survey in particular has raised eyebrows. According to the University of Michigan, Americans' expectations of price growth over the next 5 to 10 years rose to the highest level in nearly three decades. But the alarming statistic came with a surprising political twist that has complicated how policymakers might interpret it. Inflation expectations have long shown a gap between Republicans and Democrats, with slightly lower projections from the side that controls the White House. Economists tend to ignore the gap and focus on the median. But recently, the divergence has become striking, especially in the short term. One-year expectations for Democrats rose to 5.4% in February from 1.6% in October. Republican expectations dropped to -0.1% from 3.7%. That has made some question whether the data is so distorted by politics as to be useless. Others say it's valid as long as the sentiment captured in the survey tells you something about how the respondent behaves as a shopper and a worker. 'Ultimately it doesn't matter if you think that and you're a Democrat or a Republican, if it affects how you're actually consuming or asking for wage increases and things of that nature,' said Omair Sharif, president of Inflation Insights LLC. 'It's still going to potentially affect inflation.' It's hard to overemphasize how important inflation expectations are to any central bank's mission to keep price growth low and stable. The last time price pressures got truly out of control in the US, in the 1970s and 1980s, they were vanquished not simply when high interest rates forced down inflation. The threat dissipated only after inflation expectations had been wrestled to the ground following multiple rounds of high rates, an effort that had a devastating impact on the labor market. This history is top of mind for Kansas City Fed President Jeff Schmid. He warned about the 'sharp upward' movement in price expectations in a speech Thursday, noting the data had made him more cautious about the inflation outlook than he was even a month prior. 'Certainly, survey measures of inflation expectations are imperfect and subject to noise, but with inflation just recently at a 40-year high, now is not the time to let down our guard,' Schmid said. 'I am not willing to take any chances when it comes to maintaining the Fed's credibility on inflation.' Other officials agree it's important to focus on inflation expectations, but aren't yet concerned. 'It was a bad month,' Chicago Fed President Austan Goolsbee said in an interview with Bloomberg News on Wednesday, referring to the University of Michigan data. 'If we got a lot of months of data like that, and it started reflecting in the market expectations, that would be a bad sign for monetary policy.' That said, 'if expectations did seem to unanchor, on a medium-term basis, that would be something that would be of significant importance,' Richmond Fed President Tom Barkin told reporters in Arlington, Virginia on Wednesday. Surveys of consumer expectations can be skewed by many factors — not just politics. The University of Michigan also switched its methodology last year, making historical comparisons a bit less reliable, Sharif said. The Fed has thus far had a relatively easy job in bringing inflation nearly back to its 2% target after a pandemic-triggered price surge. That's partly because expectations have remained largely in check. Inflation has declined by nearly five percentage points since mid-2022, all while unemployment has remained historically low. But there's another reason inflation expectations are crucial just now: tariffs. In 2018, when Trump was in his first term, Fed staffers advised policymakers they could ignore the inflationary impact of tariffs because it would prove temporary — but only if inflation expectations were firmly anchored. New tariffs, which seem to be playing the biggest role in inflation expectations, are being announced almost every week. Other policies, including deregulation, increased deportations and broader tax cuts could also help reaccelerate inflation. The increase in expectations also comes alongside rising concerns about the growth outlook. But economists stress that because the climb in inflation expectations has just happened in the last month or two, it might still fade after the early shock of Trump's proposed policies wears off. Furthermore, market-based measures of inflation expectations, which some economists consider more reliable than survey ones, haven't risen. The spread between yields on ordinary Treasuries and inflation-protected Treasuries, a measure known as breakevens, has actually declined slightly this year. 'It's early days,' said Veronica Clark, an economist at Citigroup Inc. The Fed's 'not going to be reading so much into just a couple months of data, but this is the kind of thing that if you do see it sustained at higher levels and definitely if it keeps increasing — that's the kind of worrying inflation for the Fed.' —With assistance from Jonnelle Marte, Jarrell Dillard, Augusta Saraiva and Amara Omeokwe. Rich People Are Firing a Cash Cannon at the US Economy—But at What Cost? Trump's SALT Tax Promise Hinges on an Obscure Loophole Warner Bros. Movie Heads Are Burning Cash, and Their Boss Is Losing Patience Walmart Wants to Be Something for Everyone in a Divided America China Learned to Embrace What the US Forgot: The Virtues of Creative Destruction ©2025 Bloomberg L.P.
Yahoo
01-03-2025
- Business
- Yahoo
Americans' Rising Inflation Concerns Threaten to Undo Soft Landing
(Bloomberg) -- A growing number of Americans are beginning to expect that prices will stay high, or even rise — a bad omen for the Federal Reserve and its years-long fight to stifle inflation. Cuts to Section 8 Housing Assistance Loom Amid HUD Uncertainty The Trump Administration Takes Aim at Transportation Research Shelters Await Billions in Federal Money for Homelessness Providers NYC Office Buildings See Resurgence as Investors Pile Into Bonds Hong Kong Joins Global Stadium Race With New $4 Billion Sports Park Consumer inflation expectations have been rising for the last month or two across several reports. Some surveys point to businesses anticipating higher prices as well. If those expectations become reality, it could prove catastrophic for the Fed's attempt to stabilize prices without causing a recession. 'It's something that has to concern the Fed, and it should concern the administration too,' said Stephen Stanley, chief US economist at Santander US Capital Markets LLC. One survey in particular has raised eyebrows. According to the University of Michigan, Americans' expectations of price growth over the next 5 to 10 years rose to the highest level in nearly three decades. But the alarming statistic came with a surprising political twist that has complicated how policymakers might interpret it. Inflation expectations have long shown a gap between Republicans and Democrats, with slightly lower projections from the side that controls the White House. Economists tend to ignore the gap and focus on the median. But recently, the divergence has become striking, especially in the short term. One-year expectations for Democrats rose to 5.4% in February from 1.6% in October. Republican expectations dropped to -0.1% from 3.7%. That has made some question whether the data is so distorted by politics as to be useless. Others say it's valid as long as the sentiment captured in the survey tells you something about how the respondent behaves as a shopper and a worker. 'Ultimately it doesn't matter if you think that and you're a Democrat or a Republican, if it affects how you're actually consuming or asking for wage increases and things of that nature,' said Omair Sharif, president of Inflation Insights LLC. 'It's still going to potentially affect inflation.' It's hard to overemphasize how important inflation expectations are to any central bank's mission to keep price growth low and stable. The last time price pressures got truly out of control in the US, in the 1970s and 1980s, they were vanquished not simply when high interest rates forced down inflation. The threat dissipated only after inflation expectations had been wrestled to the ground following multiple rounds of high rates, an effort that had a devastating impact on the labor market. This history is top of mind for Kansas City Fed President Jeff Schmid. He warned about the 'sharp upward' movement in price expectations in a speech Thursday, noting the data had made him more cautious about the inflation outlook than he was even a month prior. 'Certainly, survey measures of inflation expectations are imperfect and subject to noise, but with inflation just recently at a 40-year high, now is not the time to let down our guard,' Schmid said. 'I am not willing to take any chances when it comes to maintaining the Fed's credibility on inflation.' Other officials agree it's important to focus on inflation expectations, but aren't yet concerned. 'It was a bad month,' Chicago Fed President Austan Goolsbee said in an interview with Bloomberg News on Wednesday, referring to the University of Michigan data. 'If we got a lot of months of data like that, and it started reflecting in the market expectations, that would be a bad sign for monetary policy.' That said, 'if expectations did seem to unanchor, on a medium-term basis, that would be something that would be of significant importance,' Richmond Fed President Tom Barkin told reporters in Arlington, Virginia on Wednesday. Surveys of consumer expectations can be skewed by many factors — not just politics. The University of Michigan also switched its methodology last year, making historical comparisons a bit less reliable, Sharif said. Tariff Impact The Fed has thus far had a relatively easy job in bringing inflation nearly back to its 2% target after a pandemic-triggered price surge. That's partly because expectations have remained largely in check. Inflation has declined by nearly five percentage points since mid-2022, all while unemployment has remained historically low. But there's another reason inflation expectations are crucial just now: tariffs. In 2018, when Trump was in his first term, Fed staffers advised policymakers they could ignore the inflationary impact of tariffs because it would prove temporary — but only if inflation expectations were firmly anchored. New tariffs, which seem to be playing the biggest role in inflation expectations, are being announced almost every week. Other policies, including deregulation, increased deportations and broader tax cuts could also help reaccelerate inflation. The increase in expectations also comes alongside rising concerns about the growth outlook. But economists stress that because the climb in inflation expectations has just happened in the last month or two, it might still fade after the early shock of Trump's proposed policies wears off. Furthermore, market-based measures of inflation expectations, which some economists consider more reliable than survey ones, haven't risen. The spread between yields on ordinary Treasuries and inflation-protected Treasuries, a measure known as breakevens, has actually declined slightly this year. 'It's early days,' said Veronica Clark, an economist at Citigroup Inc. The Fed's 'not going to be reading so much into just a couple months of data, but this is the kind of thing that if you do see it sustained at higher levels and definitely if it keeps increasing — that's the kind of worrying inflation for the Fed.' --With assistance from Jonnelle Marte, Jarrell Dillard, Augusta Saraiva and Amara Omeokwe. Rich People Are Firing a Cash Cannon at the US Economy—But at What Cost? Trump's SALT Tax Promise Hinges on an Obscure Loophole Warner Bros. Movie Heads Are Burning Cash, and Their Boss Is Losing Patience Walmart Wants to Be Something for Everyone in a Divided America China Learned to Embrace What the US Forgot: The Virtues of Creative Destruction ©2025 Bloomberg L.P. Sign in to access your portfolio
