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Yahoo
15 hours ago
- Business
- Yahoo
Sterling rises against a weaker dollar ahead of UK's spending plan
By Linda Pasquini (Reuters) -Sterling rose against the dollar on Monday, as the greenback weakened after rallying on Friday on the back of a better-than-expected U.S. jobs report and investors eyed a spending plan by Britain's government later this week. The pound has been helped by a UK economy that has proved relatively resilient to global turbulence. Investors will, however, be monitoring a spending review on Wednesday that will set government departments' budgets up to 2029, covering most of the remainder of the Labour Party's term in office, while concerns persist around Britain's sovereign debt levels. The pound gained about 0.4% to $1.3575. It held steady against the euro, which was only marginally lower at 84.21 pence. More upbeat business surveys and strong first-quarter GDP indicated the UK economy is recovering from a weak end to 2024, but the public remains impatient for improvements to living standards, finance minister Rachel Reeves said on Thursday. This week's April data on UK jobs, growth and industrial output will not show much, said Kit Juckes, chief FX strategist at Societe Generale. "I think the economy is vulnerable. The economy will ultimately be sterling's Achilles heel because we have no room for fiscal policy, not much economic momentum." However, decent pay rises on average across the economy have helped, he said. "The UK economy is not growing, but there are people turning up in shops and bars because there's some wage growth. And so I think the world is full of sterling bears who are getting frustrated." Markets effectively fully anticipate that the Bank of England will leave interest rates unchanged on June 19 when it announces the result of its next policy meeting, according to data compiled by LSEG. Many of sterling's gains this year have resulted from broad dollar weakness as investors factor in the risk that President Donald Trump's erratic policymaking could result in a U.S. recession that might spill over to the rest of the world. The pound has appreciated about 8% so far this year against the dollar. 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
Reuters
2 days ago
- Business
- Reuters
Citigroup drops July rate cut bets for US, trims forecast to 75 bps
June 9 (Reuters) - Citigroup has pushed back its U.S. rate cut forecast to September from July and now expects three cuts this year instead of four, after a stronger-than-expected May jobs report in an otherwise cooling labor market. The Wall Street brokerage anticipates 75 basis points (bps) of cuts this year in three equal tranches in September, October and December, revising its earlier forecast of 100 bps of cuts. The brokerage also forecast two rate cuts of 25 bps each in January and March of 2026. The Federal Reserve's last rate cut was in December 2024, when it reduced the key lending rate by 25 bps. U.S. non-farm payrolls increased by 139,000 jobs last month after a downwardly revised rise of 147,000 in April, data showed. Economists polled by Reuters had estimated May payrolls to rise by 130,000 jobs. The U.S. central bank is expected to keep interest rates unchanged at its meeting next week, while traders have priced in close to two 25-bps cuts by December. On Friday, Citi lifted its S&P 500 (.SPX), opens new tab year-end target to 6,300 from 5,800 earlier, expressing renewed optimism in corporate earnings resilience and the accelerating momentum of artificial intelligence-driven growth. The benchmark S&P 500 index closed above 6,000 for the first time since late February on Friday.
Yahoo
2 days ago
- Business
- Yahoo
Citigroup drops July rate cut bets for US, trims forecast to 75 bps
(Reuters) - Citigroup has pushed back its U.S. rate cut forecast to September from July and now expects three cuts this year instead of four, after a stronger-than-expected May jobs report in an otherwise cooling labor market. The Wall Street brokerage anticipates 75 basis points (bps) of cuts this year in three equal tranches in September, October and December, revising its earlier forecast of 100 bps of cuts. The brokerage also forecast two rate cuts of 25 bps each in January and March of 2026. The Federal Reserve's last rate cut was in December 2024, when it reduced the key lending rate by 25 bps. U.S. non-farm payrolls increased by 139,000 jobs last month after a downwardly revised rise of 147,000 in April, data showed. Economists polled by Reuters had estimated May payrolls to rise by 130,000 jobs. The U.S. central bank is expected to keep interest rates unchanged at its meeting next week, while traders have priced in close to two 25-bps cuts by December. On Friday, Citi lifted its S&P 500 year-end target to 6,300 from 5,800 earlier, expressing renewed optimism in corporate earnings resilience and the accelerating momentum of artificial intelligence-driven growth. The benchmark S&P 500 index closed above 6,000 for the first time since late February on Friday. 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
Wall Street Journal
2 days ago
- Business
- Wall Street Journal
Signs of a Weaker Labor Market
The White House hailed Friday's jobs report for May, and it did beat market expectations with a net gain of 139,000 in payrolls. But there are signs of weakness under the labor-market hood that bear watching. The unemployment rate stayed low at 4.2% for the third straight month. Employers are holding onto their workers despite the uncertainty over tariffs. Wage gains were also healthy, rising 3.9% over the last 12 months. The weaker news is that the jobless rate stayed the same because some 625,000 people left the job market. As a result, the labor participation rate fell 0.2% in the month, and the employment-population ratio by a highly unusual 0.3%. Some 71,000 more people were jobless in May, and Labor Department revisions showed 95,000 fewer new jobs in March and April than previously reported. Our friend Don Luskin of Trend Macro notes another concern, which is two months in a row of shrinking foreign-born employment. Leaving aside the legal and other problems with Joe Biden's border failures, there's no doubt that immigrant labor buoyed the job market over his Presidency. That seems to be going into reverse, as you'd expect with the Trump Administration's crackdown.
Yahoo
2 days ago
- Business
- Yahoo
A fresh inflation reading greets a stock market back near all-time highs: What to know this week
The S&P 500 (^GSPC) is now roughly 2% from reaching a fresh all-time high. Stocks ended last week on a high note as a broad-based rally following Friday's May jobs report clinched weekly gains for all three major indexes. The Nasdaq Composite (^IXIC) rose more than 2.3%, while the S&P 500 popped about 1.6% and the Dow Jones Industrial Average (^DJI) rose above 1%. Updates on consumer and wholesale inflation for the month of May will headline the week ahead. The first reading of the University of Michigan's consumer sentiment survey for the month is also due for release at the end of the week. In corporate news, earnings from GameStop (GME), Oracle (ORCL), and Adobe (ADBE) highlight a sparse week of planned quarterly releases. Apple's (AAPL) Worldwide Developers Conference will also be in focus. On Friday, the May jobs report showed the US labor market added 139,000 jobs in the month, while the unemployment rate held flat at 4.2%. The data largely cooled fears that the US economy is rapidly deteriorating. Economists mostly said the report would prompt the Federal Reserve to hold interest rates steady when it announces its next policy decision on June 18. Still, some economists continue to highlight cracks emerging underneath the surface. Renaissance Macro head of economics Neil Dutta noted that Friday's report contained significant downward revisions to the prior month's payroll additions, a falling employment rate for workers aged 25 to 54, and an increasing unemployment rate on the margin. Unrounded, the unemployment rate increased to 4.244% in May from 4.187% in April. "The Fed and the markets appear to be looking at labor market conditions at a surface level while ignoring some obvious signs of weakness under the surface," Dutta wrote. "The pressure will keep building the longer the Fed waits." The CEO of one of the world's largest companies and President Trump are full-on feuding. After days of Tesla (TSLA) CEO Elon Musk bashing Trump's tax bill, the president responded in scathing fashion on Thursday. Trump wrote in a Truth Social post that the easiest way to save money in the budget is to "terminate Elon's Governmental Subsidies and Contracts." He added in a separate post, "Elon was 'wearing thin,' I asked him to leave, I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!' The spat drove Tesla stock down more than 14% in its worst single-day market cap loss in history. The decline helped drag down both the S&P 500 and Nasdaq on Thursday. On Friday, Tesla stock rallied modestly, rising almost 4%. But investors shouldn't consider the fallout to be over. "As a shareholder, [this] couldn't be worse for Elon and his properties and his investments and the future that he has because Trump's got another three and a half years," Ross Gerber, president and CEO of Gerber Kawasaki Wealth and Investment Management, told Yahoo Finance. "Elon, in his ego and sort of weird haze of reality, actually thinks he's more powerful than Trump. This is now a showdown." After several encouraging prints in a row, the May Consumer Price Index (CPI) is expected to show price increases accelerated amid tariff uncertainty. Wall Street economists expect headline inflation rose 2.5% annually in May, an increase from the 2.3% seen in April. April's report had shown the slowest annual price increase since February 2021. On a "core" basis, which strips out food and energy prices, CPI is expected to have risen 2.9% over the last year in May, up from the 2.8% increase seen in April. Monthly core price increases are expected to clock in at 0.3%, above the 0.2% seen the month prior. "Tariffs should have a clearer impact on goods, but seasonal factors on autos and modest services will keep a lid on core [price increases]," Bank of America US economist Stephen Juneau wrote in a note to clients. In April, negative tariff headlines regularly rattled markets. Lately, that's been the case to a lesser degree. This was on display Wednesday, when stocks managed to close higher despite an escalation of trade tensions. Barclays head of US equity strategy Venu Krishna told Yahoo Finance that the recent market action has been a part of the "broad realization" that the extreme levels of tariffs can't be taken at face value. Krishna and other strategists have also pointed out that the peak level of tariff uncertainty, which came when Trump increased the effective US tariff rate to its highest level in more than a decade on April 2, has already passed. Morgan Stanley chief investment officer Mike Wilson showed this by looking at how market volatility, as measured by the CBOE Volatility Index, or VIX, has moved lower in tandem with Bloomberg's US Trade Policy Uncertainty Index, which analyzes news articles for mentions of trade policy and uncertainty. "The bottom line is that while uncertainty remains high around the eventual tariff outcome, the rate of change on policy headwinds has become much less onerous." Wilson wrote. "This has reduced recession risk and is giving corporates and consumers more confidence in the forward looking outlook." Economic data: New York Fed one-year inflation expectations, May (3.63% previously); Wholesale trade sales month-over-month, April (+0.3% expected, +0.6% prior) Earnings: Casey's (CASY) Economic data: NFIB small business optimism, May (95.9 expected, 95.8 prior) Earnings: Academy Sports and Outdoors (ASO), Dave & Buster's (PLAY), GameStop (GME), The J.M. Smucker Company (SJM), Stitch Fix (SFIX) Wednesday Economic data: Consumer Price Index, month over month, May (+0.2% expected, +0.2% previously); Core CPI, month over month, May (+0.3% expected, +0.2% previously); CPI, year over year, May (+2.5% expected, +2.3% previously); Core CPI, year over year, May (+2.9% expected, +2.8% previously); Real average hourly earnings, year over year, May (+1.4% previously); MBA Mortgage Applications, week ending June 6 (-3.9% previously) Earnings: Chewy (CHWY), Oracle (ORCL), Vera Bradley (VRA), Victoria's Secret (VSCO) Economic data: Producer Price Index, month-over-month, May (+0.3% expected, -0.5% previously); PPI, year over year, May (+2.4%); Core PPI month-over-month, May (+0.4% expected, -0.4% prior); Core PPI year-over-year, May (+3.1%); Initial jobless claims, week ending June 7 (247,000 previously); Continuing claims, week ending May 31 (1.904 million prior) Earnings: Adobe (ADBE), Lovesac (LOVE), RH (RH) Economic data: University of Michigan Consumer Sentiment, June preliminary (52 expected, 52.2 prior) Earnings: No notable earnings releases. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Sign in to access your portfolio
