Rising rates

Share to Twitter Share to Linkedin Topline Stocks fell slightly on Wednesday as a growing number of major Wall Street firms warned that the likelihood of a recession has risen sharply, while Federal Reserve Chair Jerome Powell pledged that the central bank is “ strongly committed ” to raising rates until inflation moderates. Key Facts Markets finished lower in choppy trading: The Dow Jones Industrial Average fell 0.2%, less than 100 points, while the S&P 500 lost 0.1% and the tech-heavy Nasdaq Composite 0.2%. The Dow was down by as much as 400 points but stocks pared back losses following comments from Fed Chair Powell, who said the central bank is “determined to take the measures necessary to restore price stability” and that “ongoing rate increases will be appropriate.” Citigroup became the latest Wall Street bank to increase its recession odds, meanwhile, forecasting a 50% chance of a downturn as consumer demand “looks to be … [Read more...] about Stocks Fall After Powell Pledges More Big Rate Hikes To Combat Inflation

Share to Twitter Share to Linkedin Average Credit Card Interest Rates Have Topped 20% Rising interest rates have pushed the annual percentage rates on credit cards to new highs. The average annual percentage rate on a new credit card is now more than 20%, according to LendingTree’s tracker. It’s the first time that rates have topped 20% since the tracker began in 2018. And rates are poised to go even higher across the board. Credit card balances reached $841 billion in the first three months of the year, according to a report from the Federal Reserve Bank of New York. In the same timeframe, 229 million people opened new credit card accounts, an increase from the previous quarter. [ CNBC ] Inflation Causing 85% Of Americans to Adjust Their Essential Purchases You don’t have to follow the news to know inflation is raging. Inflation in May 2022 was up 8.6% from the past twelve months. A quarter of respondents selected that they only have a little … [Read more...] about This Week In Credit Card News: Average Card Interest Rate Tops 20%; Inflation Wrecking Personal Budgets

UOB: Room for Bank Negara to hike OPR by another 50bps before end-September - A + A KUALA LUMPUR (June 22): There is growing pressure on Bank Negara Malaysia to hike rates faster in the face of an aggressive US Federal Reserve, while there is widening consensus that global food and energy prices will continue to stay elevated for longer, with any potential supply shocks seen capable of driving prices and inflation even higher. In a note on Wednesday, UOB Global Economics and Market Research cautioned that the key takeaway is that "doing nothing or acting too slow" could sow seeds of more persistent and elevated inflation in the future, with more negative effects on demand and the economy. "Rate hikes would then also need to be sharper and more abrupt in that scenario. There may also be a need to act faster now in order to have sufficient policy buffers in preparation for the next recession (when it happens). A lagged policy response by BNM relative to peers … [Read more...] about Growing pressure on Bank Negara to hike rates faster

- A + A (June 22): Federal Reserve Chair Jerome Powell said the Central Bank will keep raising interest rates to tame inflation and conceded that a US recession was “certainly a possibility”. “We anticipate that ongoing rate increases will be appropriate,” Powell said Wednesday in his semiannual testimony to the Senate Banking Committee. “Inflation has obviously surprised to the upside over the past year, and further surprises could be in store. We therefore will need to be nimble in responding to incoming data and the evolving outlook.” Powell’s remarks largely reiterated comments at a press conference last week after he and his colleagues on the Federal Open Market Committee raised their benchmark lending rate 75 basis points — the biggest increase since 1994 — to a range of 1.5% to 1.75%. While Powell told reporters last week that another 75 basis-point increase, or a 50 basis-point move, was on the table for the next meeting in late July, Wednesday’s text made … [Read more...] about Powell sees ongoing rate hikes, says recession a ‘possibility’

- A + A (June 23): JPMorgan Chase & Co. is laying off hundreds of home-lending employees and reassigning hundreds more this week as rapidly rising mortgage rates drive down demand in what had been a red-hot housing market. The total affected will be more than 1,000 US workers, with about half moved to different divisions within the bank, according to people familiar with the matter who asked not to be identified discussing personnel matters. “Our staffing decision this week was a result of cyclical changes in the mortgage market,” a JPMorgan spokesperson said in a statement Wednesday. “We were able to proactively move many impacted employees to new roles within the firm, and are working to help the remaining affected employees find new employment within Chase and externally.” The cuts follow the Federal Reserve’s decision to boost interest rates to tame decades-high inflation. Last week, the Fed announced an increase of 75 basis points, the biggest hike since … [Read more...] about JPMorgan lays off hundreds in home lending after rate surge

Health officials are encouraging people not to discard their face masks as these will continue to protect them from COVID-19 despite the improving public health situation in recent months. (NIÑO JESUS ORBETA / Philippine Daily Inquirer / file photo) MANILA, Philippines — A stricter implementation of health protocols in Metro Manila can be expected with the uptick in COVID-19 infections , according to the National Capital Region Police Office (NCRPO). “Asahan po natin ang bahagyang paghihigpit sa pagpapaalala at pagpapatupad ng ating mga kapulisan habang nagpapatrolya sa lansangan sa pagsunod sa mga alituntuning ito ng IATF (Inter-Agency Task Force) at DOH (Department of Health),” NCRPO director Maj. Gen. Felipe Natividad said in a statement on Wednesday. (Let us expect a stricter enforcement of health protocols from police officers on patrol.) Natividad issued the statement after recent DOH data showed that COVID-19 cases from June 13-19 — which was at 3,051 — was 82 … [Read more...] about Stricter implementation of health protocols seen in Metro Manila amid rising COVID cases – NCRPO

- A + A (June 23): Indonesia’s central bank held its policy rate at a record low again, opting to look through price shocks and currency weakness to continue supporting the economy. Bank Indonesia (BI) left the seven-day reverse repurchase rate unchanged at 3.5% on Thursday (June 23) as predicted by 24 of 33 economists surveyed by Bloomberg . The rest expected policymakers to kick off the monetary tightening cycle with a 25-basis-point hike. The move sets Indonesia apart from most of the region’s central banks, which have begun raising borrowing costs to counter surging inflation. While domestic price gains are set to breach BI’s 2%-4% target this year, the central bank has maintained that there’s no rush to tighten as state subsidies and higher reserve requirements are helping manage price pressures. Governor Perry Warjiyo on Thursday said inflation will continue to rise, but said it remains manageable. The monetary authority sees consumer prices returning to … [Read more...] about Bank Indonesia holds key rate as inflation seen manageable

- A + A KUALA LUMPUR (June 23): Maybank Investment Bank Bhd (Maybank IB) remains positive on the Malaysian banking sector’s outlook as the rising interest rates are generally positive for banks’ earnings. In a note, it said the rate hikes should also benefit the banks in terms of the return on equity (ROE), which could return to over 10% in financial year 2023 (FY23). “Additionally, we think that current Malaysian Government Securities (MGS) yields seem to already reflect future rate increases, and thus the future mark-to-market losses are likely to be contained, if any. “Moreover, we believe that the banks have sufficient provisions to buffer against potential asset quality issues arising from higher borrowing costs,” it said. Maybank IB said it expects Bank Negara Malaysia (BNM) to raise the overnight policy rate (OPR) by 50 basis points (bps) in the second half of 2022, taking the total rate hike to 75bps in 2022, with a further 50bps increase in 2023. It … [Read more...] about Maybank IB remains positive on banking sector on rising interest rates

- A + A (June 23): The Philippine central bank increased its key interest rate for a second straight meeting and raised its inflation forecast, continuing a gradual pace of normalisation while it faces a slumping currency. Bangko Sentral ng Pilipinas raised the benchmark rate by 25 basis points to 2.5%, it said in a statement on Thursday (June 23), as forecast by 17 of 25 economists in a Bloomberg survey. The rest saw a half-point increase. The peso was 0.1% lower at 54.5 per dollar as of 3.06pm local time, holding near its weakest level since 2005. The benchmark stock gauge closed down 1.7% before the decision. BSP’s rate-hike cycle is picking up momentum as inflation accelerates at its quickest in more than three years. Many policymakers in Southeast Asia have been relatively slower than other global central banks, particularly the US Federal Reserve, in normalising rates as they focus on solidifying their economic recoveries from the pandemic. The … [Read more...] about Philippines raises key rate on inflation risks, peso slump

- A + A (June 23): Bonds in Southeast Asia are at risk of a selloff as the Federal Reserve’s hawkish posture pushes Central Banks in the region to hike rates aggressively. Benchmark rates in the region are close to record lows, and policy makers will be forced to act due to the double whammy from US rate hikes and surging domestic price pressures. Investor skepticism on the patient policy stance adopted by local central banks is deepening as inflationary pressures refuse to ebb across the globe. “The larger Fed hike raises the risks for more tightening in Southeast Asian economies, with rising domestic inflation in the region still the primary consideration,” said Maximillian Lin, Asia rates and currency strategist at Credit Suisse Group AG in Singapore. “In the short-term, we expect the selloff in Treasuries to put pressure on Southeast Asian local currency bonds.” The following four charts highlight how regional policy rates and sovereign bond yields have … [Read more...] about Rates divergence leads to ever bigger stress in EM Asia’s bonds