Latest news with #USEconomy
Bloomberg
9 hours ago
- Business
- Bloomberg
Why Recessions Aren't What They Used to Be
Subscribe to Merryn Talks Money on Apple Podcasts Subscribe to Merryn Talks Money on Spotify In a US economy based on intangibles and the seemingly constant stimulus of government spending, downturns are both less common and more shallow than they used to be. This according to Vincent Deluard, director of global macro strategy at StoneX, who joins this week's Merryn Talks Money to explain his thesis. If correct, it's one that has implications for the market. If a deep recession in the US isn't likely—and assuming that everyone understands that—it becomes hard to see market corrections being as brutal as they would have been in the past.
Bloomberg
10 hours ago
- Business
- Bloomberg
A Guide to Trade Talks, Trump-Style: Is His Unorthodox Approach Working?
One of the most ambitious international trade agreements of the past half century, the Uruguay Round was also one of the most complex. At nearly 300,000 pages of legal text, the deal took eight years to hammer out, spanning three US presidencies and leading in 1994 to the establishment of the World Trade Organization. The WTO's rules have brought more order to international commerce and a steady reduction in trade barriers that helped to boost the volume of global trade by 4% every year since the Geneva-based body was founded. To President Donald Trump, however, America's trading partners have swerved or gamed the WTO rules, maintaining many barriers to the import of US goods, creating new ones and 'ripping off' the world's biggest economy in the process. The plan for his second term in office is to ditch the old, consensual approach to trade negotiations and level the playing field through strength and coercion, imposing hefty tariffs on goods from nations that sell more to the US than they buy in return. The levies will either be a permanent feature of trade going forward, tipping the scales to favor US domestic industries, or a bargaining chip that quickly forces nations at the receiving end to lower barriers to American goods and services exports.
Yahoo
16 hours ago
- Business
- Yahoo
Dollar Rebounds on Hawkish Powell
The dollar index (DXY00) Wednesday recovered from early losses and rose by +0.09%. The dollar moved higher Wednesday afternoon due to hawkish comments from Fed Chair Powell, who said, 'We expect a meaningful amount of inflation in the coming months.' Mr. Powell's comments signal the Fed is not close to cutting interest rates and is supportive of the dollar. Also, heightened geopolitical risks in the Middle East support safe-haven demand for the dollar. The dollar on Wednesday initially moved lower on the weaker-than-expected reports on US May housing starts and building permits. Also, the action by the FOMC to cut its US 2025 GDP forecast was bearish for the dollar. In addition, the FOMC's dot-plot that projects two 25 bp interest rate cuts by the end of the year is negative for the dollar. A Look Ahead at the Fed Dollar Rebounds on Hawkish Powell Dollar Slips Ahead of FOMC Meeting Results Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! US weekly initial unemployment claims fell -5,000 to 245,000, right on expectations. US May housing starts fell -9.8% m/m to a 5-year low of 1.256 million, weaker than expectations of 1.350 million. May building permits, a proxy for future construction, unexpectedly fell -2.0% m/m to a 4-3/4 year low of 1.393 million, weaker than expectations of no change at 1.422 million. As expected, the FOMC kept the fed funds target rate unchanged at 4.25%-4.50% and said the uncertainty about the economic outlook has 'diminished but remains elevated.' The statement removed the language that the committee 'judges that the risks of higher unemployment and higher inflation have risen.' The FOMC cut its US 2025 GDP estimate to 1.4% from 1.7% in March and raised its 2025 core inflation estimate to 3.1% from 2.8% in March. The Fed's dot plot of interest rate projections shows the median fed funds rate forecast at the end of 2025 at 3.875%, implying two quarter-point cuts this year, the same as they expected in March. Fed Chair Powell said, 'We expect a meaningful amount of inflation in the coming months' as the increases in tariffs are likely to boost prices and that their effects on inflation could be more persistent. The markets are discounting the chances at 10% for a -25 bp rate cut after the July 29-30 FOMC meeting. EUR/USD (^EURUSD) Wednesday fell by -0.04%. The euro on Wednesday gave up an early advance and finished slightly lower due to a rebound in the dollar. The euro was also under pressure Wednesday due to dovish comments from ECB Governing Council member Panetta, who stated that the Eurozone's economic prospects face 'substantial' risks due to US tariffs and the ongoing conflict in the Middle East. Swaps are discounting the chances at 7% for a -25 bp rate cut by the ECB at the July 24 policy meeting. USD/JPY (^USDJPY) Wednesday fell by -0.09%. The yen posted modest gains on Wednesday as heightened geopolitical risks in the Middle East have prompted safe-haven buying of the yen. Wednesday's report showing a smaller-than-expected decline in Japan's Apr core machine orders was also supportive of the yen. The yen fell back from its best level when T-note yields rose on hawkish comments from Fed Chair Powell. Japan Apr core machine orders fell -9.1% m/m, a smaller decline than expectations of -9.5% m/m. Japanese trade news was mixed as Japan's May exports fell -1.7% y/y, a smaller decline than expectations of -3.7% y/y. However, May imports fell -7.7% y/y, weaker than expectations of -5.9% y/y and the biggest decline in 16 months. August gold (GCQ25) Wednesday closed up +1.20 (+0.04%), and July silver (SIN25) closed down -0.238 (-0.64%). Precious metals on Wednesday settled mixed. Heightened geopolitical risks in the Middle East support safe-haven demand for precious metals as the war between Israel and Iran continues for a sixth day with no end in sight. In addition, global trade uncertainty is boosting safe-haven demand for precious metals after President Trump indicated last Wednesday that he is moving ahead with his reciprocal tariffs. Fund buying of silver continues to support prices as silver holdings in ETFs rose to a 2-1/4 year high Tuesday. Wednesday's recovery in the dollar from early losses to higher on the day undercut precious metals prices. Also, gold prices fell more than -$10 an ounce in after-hours trading Wednesday afternoon due to hawkish comments from Fed Chair Powell, who said, 'We expect a meaningful amount of inflation in the coming months' due to tariffs. Silver prices also fell back after the FOMC cut its US 2025 GDP forecast and following Wednesday's weaker-than-expected reports on US May housing starts and building permits, which showed weakness in industrial metals demand. On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Sign in to access your portfolio
Yahoo
a day ago
- Business
- Yahoo
America's economy could face a war shock
As if a global trade war wasn't enough for businesses and consumers to contend with, it's looking increasingly like the Israel-Iran conflict could reach the brink of a full-blown war. While the conflict is playing out thousands of miles away from US soil, Americans may not be able to escape the economic impact of it. Federal Reserve Chair Jerome Powell told reporters Wednesday after the central bank's latest monetary policy meeting that officials are monitoring the situation. 'What's tended to happen is when there's turmoil in the Middle East, you may see a spike in energy prices, but it tends to come down,' he said in response to a question from CNN's Matt Egan. 'Those things don't generally tend to have lasting effects on inflation, although, of course, in the 1970s they famously did because you had a series of very, very large shocks,' Powell added. Among those: The Iranian Revolution, which caused global oil production to fall substantially and then contributed to already-high gas prices as a result of the Arab oil embargo following the Yom Kippur war. Powell seemed assured there isn't a risk of such a scenario this time around, adding that 'the US economy is far less dependent on foreign oil than it was back in the 1970s.' Economists, however, aren't as convinced that the conflict doesn't present a major risk to the US economy. In fact, JPMorgan economists said in a recent note to clients, 'The US and global economies are set to absorb multiple shocks this year.' Chief among those is the potential for a Middle East war, they said. 'One of the most direct impacts on US consumers would be if the Strait of Hormuz was closed, leading to a spike in energy costs as the flow of seaborne oil and gas becomes disrupted,' said James Knightley, chief international economist at ING. The US Energy Information Administration recently referred to the Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman, as 'one of the world's most important oil chokepoints.' Last year, the amount of oil that passed through the waterway averaged 20 million barrels per day, it said, which amounts to about 20% of global petroleum liquids consumption. 'Very few alternative options exist to move oil out of the strait if it is closed,' the EIA said in an online article on Monday. Meanwhile, Iran has repeatedly threatened to shut down the strait as a form of retaliation. That could end up proving to be more limited than what the Iranian government has threatened, though, analysts at S&P Global Market Intelligence said in a recent note. 'Iran's leadership is unlikely to fully close the Strait of Hormuz for an extended period; as a first recourse, it is more likely that Iran's naval forces deploy along the Strait and block passage to selected vessels depending on flag and destination.' Even though the US is considered energy independent, gas prices would still 'rocket higher,' Knightley. While tariff-related price hikes that economists widely expect to occur haven't shown up in the all-encompassing inflation reports the US government publishes, most believe it's only a matter of time. As the economy recovered from the pandemic, inflation accelerated across the globe. Then, while that unfolded, the war between Russia and Ukraine took hold, sending gas prices soaring and pushing inflation even higher. That could very well play out again if gas prices shoot higher due to the conflict. 'With tariff-induced price hikes already set to squeeze household spending power, higher gasoline prices would intensify the strain on consumer pockets, risking a more pronounced slowdown in the economy,' Knightley told CNN. 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
CNN
a day ago
- Business
- CNN
America's economy could face a war shock
As if a global trade war wasn't enough for businesses and consumers to contend with, it's looking increasingly like the Israel-Iran conflict could reach the brink of a full-blown war. While the conflict is playing out thousands of miles away from US soil, Americans may not be able to escape the economic impact of it. Federal Reserve Chair Jerome Powell told reporters Wednesday after the central bank's latest monetary policy meeting that officials are monitoring the situation. 'What's tended to happen is when there's turmoil in the Middle East, you may see a spike in energy prices, but it tends to come down,' he said in response to a question from CNN's Matt Egan. 'Those things don't generally tend to have lasting effects on inflation, although, of course, in the 1970s they famously did because you had a series of very, very large shocks,' Powell added. Among those: The Iranian Revolution, which caused global oil production to fall substantially and then contributed to already-high gas prices as a result of the Arab oil embargo following the Yom Kippur war. Powell seemed assured there isn't a risk of such a scenario this time around, adding that 'the US economy is far less dependent on foreign oil than it was back in the 1970s.' Economists, however, aren't as convinced that the conflict doesn't present a major risk to the US economy. In fact, JPMorgan economists said in a recent note to clients, 'The US and global economies are set to absorb multiple shocks this year.' Chief among those is the potential for a Middle East war, they said. 'One of the most direct impacts on US consumers would be if the Strait of Hormuz was closed, leading to a spike in energy costs as the flow of seaborne oil and gas becomes disrupted,' said James Knightley, chief international economist at ING. The US Energy Information Administration recently referred to the Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman, as 'one of the world's most important oil chokepoints.' Last year, the amount of oil that passed through the waterway averaged 20 million barrels per day, it said, which amounts to about 20% of global petroleum liquids consumption. 'Very few alternative options exist to move oil out of the strait if it is closed,' the EIA said in an online article on Monday. Meanwhile, Iran has repeatedly threatened to shut down the strait as a form of retaliation. That could end up proving to be more limited than what the Iranian government has threatened, though, analysts at S&P Global Market Intelligence said in a recent note. 'Iran's leadership is unlikely to fully close the Strait of Hormuz for an extended period; as a first recourse, it is more likely that Iran's naval forces deploy along the Strait and block passage to selected vessels depending on flag and destination.' Even though the US is considered energy independent, gas prices would still 'rocket higher,' Knightley. While tariff-related price hikes that economists widely expect to occur haven't shown up in the all-encompassing inflation reports the US government publishes, most believe it's only a matter of time. As the economy recovered from the pandemic, inflation accelerated across the globe. Then, while that unfolded, the war between Russia and Ukraine took hold, sending gas prices soaring and pushing inflation even higher. That could very well play out again if gas prices shoot higher due to the conflict. 'With tariff-induced price hikes already set to squeeze household spending power, higher gasoline prices would intensify the strain on consumer pockets, risking a more pronounced slowdown in the economy,' Knightley told CNN.
