Trump called the Fed ‘crazy,’ but it won’t deter future rate hikes

President Donald Trump has gone on the attack against the Federal Reserve, but it’s highly unlikely the Fed will listen, at least one market observer says. Last week, Trump amped up his criticism of the Fed by calling its decision to hike rates “crazy” and “out of control.” While the Fed’s criticism is unlikely to deter the central bank, Schumacher said at least one thing could change members’ minds. Last week, the 10-year yield spiking to its highest level since 2011 sent stock markets sharply


President Donald Trump has gone on the attack against the Federal Reserve, but it’s highly unlikely the Fed will listen, at least one market observer says. Last week, Trump amped up his criticism of the Fed by calling its decision to hike rates “crazy” and “out of control.” While the Fed’s criticism is unlikely to deter the central bank, Schumacher said at least one thing could change members’ minds. Last week, the 10-year yield spiking to its highest level since 2011 sent stock markets sharply
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Company: cnbc, Activity: cnbc, Date: 2018-10-14  Authors: keris lahiff, susana vera, drew angerer, getty images, getty images news, david a grogan
Keywords: news, cnbc, companies, deter, hikes, rate, crazy, week, increase, unlikely, trump, yield, really, rates, 10year, wont, schumacher, called, fed, market, future


Trump called the Fed 'crazy,' but it won't deter future rate hikes

President Donald Trump has gone on the attack against the Federal Reserve, but it’s highly unlikely the Fed will listen, at least one market observer says.

Last week, Trump amped up his criticism of the Fed by calling its decision to hike rates “crazy” and “out of control.” Markets are pricing in another increase in December, in what would be the ninth increase of a tightening cycle that began in late 2015. Still, the fed funds rate remains near historical lows.

“Loco, crazy, fake, whatever you want to call it, I think that has zero impact on the Fed,” said Michael Schumacher, head of interest rate strategy at Wells Fargo, on CNBC’s “Futures Now” Thursday.

While the Fed’s criticism is unlikely to deter the central bank, Schumacher said at least one thing could change members’ minds.

“What could impact the Fed, though, is if you see equities take another downturn from here,” he explained. The fear of higher rates has shaken investors, who sent blue chip and technology shares on a wild, volatile ride last week.

“Stocks are really not down very much. Dropping 3 percent in a day, yes it’s a big deal, [but] is that really going to steer the Fed? No,” Schumacher said. “But if they were down 10 to 15 percent in a week, maybe that could.”

The S&P 500 has not dropped by more than 10 percent in one week since it plummeted 18 percent in October 2008, and a 6 percent decline in March was its biggest weekly drop this year. Even last week, one of the most whipsaw of 2018, ended with just a 4.1 percent fall.

Stock market pressure would likely continue as rising yields continue to spook investors, Schumacher said.

“The combination of tariffs, more debt issuance by the Treasury, and general concern on the inflation front, I suspect is getting people a little bit more worried about prospects down the road,” the analyst said. “I suspect that’s why corporate America is more concerned now than it was a few months ago.”

Higher rates make debt for highly-leveraged companies more expensive. Last week, the 10-year yield spiking to its highest level since 2011 sent stock markets sharply lower on Wednesday and Thursday.

Schumacher anticipates a modest increase in the 10-year yield to 3.35 percent by year’s end, but he notes that a few market factors could increase his forecast.

“You could imagine a number of scenarios where that gets more severe – if you do get a burst in inflation, if you get lots more Treasury issuance or something really gets derailed, could they get to 3.60 percent, 3.70 percent? It’s possibly, we think unlikely, but it could happen,” he said.

The 10-year yield last traded above 3.60 percent in February 2011.


Company: cnbc, Activity: cnbc, Date: 2018-10-14  Authors: keris lahiff, susana vera, drew angerer, getty images, getty images news, david a grogan
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China echoes IMF pledge to avoid using currency as a trade tool

“China will continue to let the market play a decisive role in the formation of the RMB exchange rate,” Yi said in an International Monetary and Financial Committee (IMFC) statement posted on Saturday. “We will not engage in competitive devaluation, and will not use the exchange rate as a tool to deal with trade frictions.” His statement echoes currency pledges made in a communique issued by the IMF’s member countries on Saturday to step up their trade dialogue as rising tariff frictions, and hi


“China will continue to let the market play a decisive role in the formation of the RMB exchange rate,” Yi said in an International Monetary and Financial Committee (IMFC) statement posted on Saturday. “We will not engage in competitive devaluation, and will not use the exchange rate as a tool to deal with trade frictions.” His statement echoes currency pledges made in a communique issued by the IMF’s member countries on Saturday to step up their trade dialogue as rising tariff frictions, and hi
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China echoes IMF pledge to avoid using currency as a trade tool

Sec. Mnuchin: China selling US Treasurys would be costly for them 7:41 AM ET Fri, 12 Oct 2018 | 03:47

The yuan has fallen more than 8 percent against the dollar since the end of April to about 6.91 on Friday, close to the psychologically important 7.0 level not seen in a decade.

“China will continue to let the market play a decisive role in the formation of the RMB exchange rate,” Yi said in an International Monetary and Financial Committee (IMFC) statement posted on Saturday. “We will not engage in competitive devaluation, and will not use the exchange rate as a tool to deal with trade frictions.”

His statement echoes currency pledges made in a communique issued by the IMF’s member countries on Saturday to step up their trade dialogue as rising tariff frictions, and higher borrowing costs threaten to knock global growth.

In the statement from the IMF’s steering committee, the member countries also agreed to debate ways to improve the World Trade Organization so it can better address trade disputes.

“We acknowledge that free, fair, and mutually beneficial goods and services trade and investment are key engines for growth and job creation,” the IMFC said in the statement.

“We will refrain from competitive devaluations and will not target our exchange rates for competitive purposes,” it added.


Company: cnbc, Activity: cnbc, Date: 2018-10-13  Authors: lintao zhang, getty images
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US Treasury yields jump as stocks bounce back

The Dow Jones Industrial Average rose more than 250 points in volatile trading and gained as much as 414 points. Yields dipped from multiyear highs on Thursday, as investors sought safety from the stock market’s rout int he previous session. Slowing its rate hiking path would only increase the chances of entrenching inflation and, thus, force a more rapid rate rise down the road.” Sentiment around the globe was rocked in recent sessions, as investors grew nervous over the rise in interest rates.


The Dow Jones Industrial Average rose more than 250 points in volatile trading and gained as much as 414 points. Yields dipped from multiyear highs on Thursday, as investors sought safety from the stock market’s rout int he previous session. Slowing its rate hiking path would only increase the chances of entrenching inflation and, thus, force a more rapid rate rise down the road.” Sentiment around the globe was rocked in recent sessions, as investors grew nervous over the rise in interest rates.
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Company: cnbc, Activity: cnbc, Date: 2018-10-12  Authors: fred imbert, alexandra gibbs
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US Treasury yields jump as stocks bounce back

Equity markets reclaimed some ground after posting solid losses over the last two sessions. The Dow Jones Industrial Average rose more than 250 points in volatile trading and gained as much as 414 points.

Yields dipped from multiyear highs on Thursday, as investors sought safety from the stock market’s rout int he previous session.

Strategists at MRB Partners said in a note Friday that rates should continue to rise in the long term as “the cyclical bond outlook” is still bearish.

“Fed policy is a long way from being restrictive, but the U.S. economy is overheating: the rate hiking cycle will persist,” they said. “The U.S. is far ahead of the other major economies in terms of inflation risks. … Even with a firm dollar, the Fed has little leeway to pause its rate cycle absent a significant financial market debacle. Slowing its rate hiking path would only increase the chances of entrenching inflation and, thus, force a more rapid rate rise down the road.”

Sentiment around the globe was rocked in recent sessions, as investors grew nervous over the rise in interest rates. President Donald Trump has recently criticized the U.S. Federal Reserve for the decline in stock markets, saying on Wednesday that he wasn’t happy with how the central bank continued to raise interest rates.

“The problem I have is with the Fed. The Fed is going wild. I mean, I don’t know what their problem is that they are raising interest rates and it’s ridiculous,” Trump said during a telephone interview on Wednesday with Fox News. Trump went onto blame the Fed for the stock market decline on Thursday, but added that while he was disappointed, he wouldn’t remove Jay Powell as Fed chair.


Company: cnbc, Activity: cnbc, Date: 2018-10-12  Authors: fred imbert, alexandra gibbs
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Cramer says the Fed could cause a 2019 slowdown with its aggressive rate hike agenda

“Three lockstep rate hikes next year will slow growth, boost the dollar and make people feel less wealthy. Even so, Cramer wanted to make clear that he still favored one more rate hike before the end of 2018. “The number one predictor of higher stock prices is higher earnings estimates,” he said. “The best predictor of lower stock prices? What makes things worse for investors is companies don’t usually get a free pass for slashing guidance because of the Fed’s actions like they do for occasional


“Three lockstep rate hikes next year will slow growth, boost the dollar and make people feel less wealthy. Even so, Cramer wanted to make clear that he still favored one more rate hike before the end of 2018. “The number one predictor of higher stock prices is higher earnings estimates,” he said. “The best predictor of lower stock prices? What makes things worse for investors is companies don’t usually get a free pass for slashing guidance because of the Fed’s actions like they do for occasional
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Company: cnbc, Activity: cnbc, Date: 2018-10-12  Authors: elizabeth gurdus
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Cramer says the Fed could cause a 2019 slowdown with its aggressive rate hike agenda

The stock market could be “headed for big trouble on the earnings front” next year because of the Federal Reserve’s plans to hike interest rates three times in 2019, and CNBC’s Jim Cramer is sounding the alarm.

“Three lockstep rate hikes next year will slow growth, boost the dollar and make people feel less wealthy. That is a fatal cocktail, one that makes it very difficult for most companies to raise their forecasts,” the “Mad Money” host said on Friday.

“The Fed’s determined to keep tightening, and if we get the promised rate hike in December followed then by three more rate hikes next year no matter how weak the economy might get, I’m betting that will [be] an accelerant to what could be a serious economic slowdown,” Cramer continued.

And while he insisted that this market situation wasn’t the same as in 2007, when the Fed’s lockstep rate hikes brought the economy to the precipice of a major recession, he was worried about the effect the current Fed could have on stocks.

“I don’t think an actual recession is on the table — the economy’s too strong — but even if we merely decelerate from 4 percent GDP growth down to 2 percent, that’s going to hurt a lot of stocks,” Cramer said.

Even so, Cramer wanted to make clear that he still favored one more rate hike before the end of 2018. He said it would help him determine that the weaker economic data he was seeing wasn’t an aberration caused by the most recent hike.

But J.P. Morgan chief Jamie Dimon’s warning on Friday that geopolitical issues could threaten U.S. economic growth, paired with softer results from key inflation indicators like the consumer price index, worried the “Mad Money” host.

“The number one predictor of higher stock prices is higher earnings estimates,” he said. “The best predictor of lower stock prices? When companies cut their forecasts. I expect a ton of guidance cuts like we had this week from PPG, Trinseo, Fluor and Wabash National,” all key industrials.

What makes things worse for investors is companies don’t usually get a free pass for slashing guidance because of the Fed’s actions like they do for occasional swings in currency or gas prices, Cramer said.

“I’ve been doing this for almost 40 years now, and I can tell you in no uncertain terms that you cannot ignore the Federal Reserve, not at this point in the business cycle,” he said. “If the Fed stays on its ill-advised current course, these forecasts will be … suboptimal, to put it very diplomatically.”

“Look, the current situation has almost nothing in common with 2007,” Cramer continued. “But the Fed is making the same mistake now that they made 11 years ago. They’ve decided to stop doing their homework, or they’ve become very anecdotal in their analysis. Back then, the Fed just looked at the headlines: ‘Oh, an overheated housing market. We’ve got to raise the rates.’ It was already crashing, Mr. Fed! They didn’t want to get their hands dirty with research like we do. Now, Jerome Powell doesn’t even seem interested in knowing the data. He’s got that preferred narrative. He’s sticking with it.”

Stocks recovered slightly in Friday trading after sustaining sharp losses in Wednesday and Thursday’s sessions. The Dow Jones Industrial Average saw a volatile day, rising 287 points as of the close.


Company: cnbc, Activity: cnbc, Date: 2018-10-12  Authors: elizabeth gurdus
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Gold nudges down as strong US data boosts rate rise view

Gold prices inched down on Thursday as robust U.S. data potentially bolstered the chances of multiple U.S. interest rate hikes over the next year, but a weaker dollar curbed losses. The marginal decline came even as Wall Street suffered its worst drubbing in eight months. “Rising interest rates is not good news for gold. Asian share markets, meanwhile, sank on Thursday following steep falls on Wall Street. U.S. President Donald Trump said Wednesday’s stock market sell-off was a long-awaited “cor


Gold prices inched down on Thursday as robust U.S. data potentially bolstered the chances of multiple U.S. interest rate hikes over the next year, but a weaker dollar curbed losses. The marginal decline came even as Wall Street suffered its worst drubbing in eight months. “Rising interest rates is not good news for gold. Asian share markets, meanwhile, sank on Thursday following steep falls on Wall Street. U.S. President Donald Trump said Wednesday’s stock market sell-off was a long-awaited “cor
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Gold nudges down as strong US data boosts rate rise view

Gold prices inched down on Thursday as robust U.S. data potentially bolstered the chances of multiple U.S. interest rate hikes over the next year, but a weaker dollar curbed losses.

The marginal decline came even as Wall Street suffered its worst drubbing in eight months.

Spot gold was down 0.2 percent at $1,192.58 an ounce at 0430 GMT.

U.S. gold futures edged up 0.2 percent to $1,195.90 an ounce.

“Rising interest rates is not good news for gold. People are preferring U.S. Treasury bonds as they are more attractive in the current environment over gold, despite the sell-off in equities,” said Ronald Leung, chief dealer, Lee Cheong Gold Dealers, Hong Kong.

Data on U.S. producer prices, which rose in September after declining the previous month, and a revision to wholesale inventory estimates for August, added to a hawkish outlook on interest rates.

“The Fed is expected to raise interest rates in December but we are not sure about the future hikes as we have to see how the trade war will affect the U.S. economy. The upcoming mid-term elections in U.S. will also be very crucial,” Leung said.

The Fed can likely stop raising U.S. interest rates once they reach about 3 percent, as long as inflation remains around 2 percent and the economy is doing well, Chicago Federal Reserve President Charles Evans suggested on Wednesday.

Asian share markets, meanwhile, sank on Thursday following steep falls on Wall Street. U.S. President Donald Trump said Wednesday’s stock market sell-off was a long-awaited “correction,” and the Federal Reserve, which has been raising U.S. interest rates, had gone “crazy”.

“The sentiment that we have seen this morning with the Wall Street and Asian markets tanking is a chance for gold prices to reintroduce as a safe haven again, especially at this time of poor risk appetite,” OCBC analyst Barnabas Gan said.

“That is something investors will be looking at very closely if the dollar falls further.”

The dollar index, which measures the greenback against a basket of six major currencies, was down 0.3 percent.

Spot gold may break a resistance at $1,195 per ounce and edge up to the next resistance at $1,200, as it has temporarily bottomed around a support at $1,182, according to Reuters technical analyst Wang Tao.

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1.21 percent to 738.99 tonnes on Wednesday, for its first gains since July.

Meanwhile, spot silver was flat at $14.26 an ounce and palladium was little changed at $1,067.24. Platinum slipped 0.9 percent to $811.49 an ounce.


Company: cnbc, Activity: cnbc, Date: 2018-10-11
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Wall Street losses rip through global markets as rate fears shake investors

Global markets plunged Thursday, continuing steep losses seen in the previous session, as investors worry about rapidly rising interest rates and an expected slowdown in global growth. Overnight Dow Jones industrial average futures were down by 189 points as of 2:52 a.m. This after stocks sank Wednesday with the Dow plunging more than 800 points in its worst drop since February. Around the world, stocks have tumbled on the back of concerns surrounding global economic growth and rising interest r


Global markets plunged Thursday, continuing steep losses seen in the previous session, as investors worry about rapidly rising interest rates and an expected slowdown in global growth. Overnight Dow Jones industrial average futures were down by 189 points as of 2:52 a.m. This after stocks sank Wednesday with the Dow plunging more than 800 points in its worst drop since February. Around the world, stocks have tumbled on the back of concerns surrounding global economic growth and rising interest r
Wall Street losses rip through global markets as rate fears shake investors Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-10-11  Authors: fred imbert, eustance huang, ryan browne, matt clinch, getty images
Keywords: news, cnbc, companies, seen, investors, points, street, wall, dow, yields, trump, stocks, week, rates, rate, global, losses, markets, rip, shake, fears


Wall Street losses rip through global markets as rate fears shake investors

Global markets plunged Thursday, continuing steep losses seen in the previous session, as investors worry about rapidly rising interest rates and an expected slowdown in global growth.

Overnight Dow Jones industrial average futures were down by 189 points as of 2:52 a.m. ET. Futures implied the Dow will open Thursday down by 280 points. This after stocks sank Wednesday with the Dow plunging more than 800 points in its worst drop since February. The VIX (the CBOE Volatility Index), which is seen as a fear gauge for the market, also hit a high of 20.58, its highest level since April 11.

Around the world, stocks have tumbled on the back of concerns surrounding global economic growth and rising interest rates. The International Monetary Fund warned earlier this week that simmering trade tensions, such as those between the U.S. and China, could lead to a “sudden deterioration in risk sentiment, triggering a broad-based correction in global capital markets and a sharp tightening of global financial conditions.”

Meanwhile, U.S. Treasury yields have this week climbed to multi-year highs. Traditionally a sharp rise in bond yields — the cost of borrowing — is seen as negative for major cooperates and their stock prices. President Donald Trump on Wednesday once again criticized the U.S. Federal Reserve, calling the central bank “crazy” for its insistence on hiking rates. Trump also commented on the plunge in markets, calling it a “correction that we’ve been waiting for for a long time.”


Company: cnbc, Activity: cnbc, Date: 2018-10-11  Authors: fred imbert, eustance huang, ryan browne, matt clinch, getty images
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Here’s another theory for this week’s market skid — the ‘buyback blackout’

The primary factor was worry about the negative effects from the rising interest rate environment, which may slow the economy due to higher corporate and consumer borrowing costs. Last week, Federal Reserve Chairman Jerome Powell saidthe central bank is a “long way” from getting rates to neutral in an interview with PBS, which pointed to a possible more aggressive path for rate hikes. Those remarks sent bond yields higher with the benchmark U.S. 10-year Treasury note yield reaching levels not se


The primary factor was worry about the negative effects from the rising interest rate environment, which may slow the economy due to higher corporate and consumer borrowing costs. Last week, Federal Reserve Chairman Jerome Powell saidthe central bank is a “long way” from getting rates to neutral in an interview with PBS, which pointed to a possible more aggressive path for rate hikes. Those remarks sent bond yields higher with the benchmark U.S. 10-year Treasury note yield reaching levels not se
Here’s another theory for this week’s market skid — the ‘buyback blackout’ Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-10-11  Authors: tae kim, getty images
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Here's another theory for this week's market skid — the 'buyback blackout'

The primary factor was worry about the negative effects from the rising interest rate environment, which may slow the economy due to higher corporate and consumer borrowing costs.

Last week, Federal Reserve Chairman Jerome Powell saidthe central bank is a “long way” from getting rates to neutral in an interview with PBS, which pointed to a possible more aggressive path for rate hikes.

Those remarks sent bond yields higher with the benchmark U.S. 10-year Treasury note yield reaching levels not seen in years. On Tuesday, the 10-year note yield traded above 3.25 percent, hitting its highest level since 2011.

The rise in yields also makes higher equity valuation multiples less attractive because investors use U.S. government bond yields as their “risk-free” discount rate in financial models to value stock investments.


Company: cnbc, Activity: cnbc, Date: 2018-10-11  Authors: tae kim, getty images
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Larry Summers: Trump’s Fed bashing is actually ‘counterproductive’ to his own goal of low rates

On Thursday, Trump said Powell is making a mistake with monetary policy but added that he does not intend to fire the Fed chairman. “Actions like the president’s are counterprodutive in the president’s terms,” said Summers, Harvard University president emeritus and formerly an economic advisor in Barack Obama’s White House. Summers, a strident critic of Trump, favors the kind of low rate policy that the president wants to preserve, but for different reasons. Trump wants to keep rates low because


On Thursday, Trump said Powell is making a mistake with monetary policy but added that he does not intend to fire the Fed chairman. “Actions like the president’s are counterprodutive in the president’s terms,” said Summers, Harvard University president emeritus and formerly an economic advisor in Barack Obama’s White House. Summers, a strident critic of Trump, favors the kind of low rate policy that the president wants to preserve, but for different reasons. Trump wants to keep rates low because
Larry Summers: Trump’s Fed bashing is actually ‘counterproductive’ to his own goal of low rates Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-10-11  Authors: matthew j belvedere
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Larry Summers: Trump's Fed bashing is actually 'counterproductive' to his own goal of low rates

Larry Summers: This might be the most short-sighted set of economic policies since World War II 2 Hours Ago | 09:10

President Donald Trump’s “totally inappropriate” attack on the Federal Reserve puts central bankers in a box, economist Larry Summers said Thursday.

“When the president of the United States blatantly politicizes the Fed, he makes it much harder for the Fed to ease [monetary policy] if they think that’s what’s appropriate,” the Treasury secretary in Bill Clinton’s administration told CNBC.

“No responsible central bank wants to look like it’s bending to political pressure,” he added. “It will damage its reputation and credibility if there’s an appearance of bending.”

Trump called into Fox News on Wednesday night and upped the ante on his criticism of the Fed under the leadership of Chairman Jerome Powell for increasing interest rates too quickly. “The Fed is going loco,” Trump said.

On Thursday, Trump said Powell is making a mistake with monetary policy but added that he does not intend to fire the Fed chairman.

“Actions like the president’s are counterprodutive in the president’s terms,” said Summers, Harvard University president emeritus and formerly an economic advisor in Barack Obama’s White House.

Powell’s remarks last week about monetary policy being a “long way” from neutral signaled a possibly more aggressive path for rate hikes, sparking a spike in bond yields to seven-year highs and applying pressure on the stock market.

The Fed last month raised the federal funds rate, which banks charge each other for overnight loans, for the third time this year. Another increase is expected in December. Post-meeting projections indicated central bankers were likely to take that benchmark rate to 3.4 percent before pausing.

Summers, a strident critic of Trump, favors the kind of low rate policy that the president wants to preserve, but for different reasons.

“For a long time now, I believed that the dangers are probably more on the tightening side than they are of staying easy for too long,” Summers told “Squawk on the Street,” saying he’s worried the “sugar high” from Trump’s corporate tax cut and other stimulative policies won’t be able to prop up the economy forever.

Trump wants to keep rates low because he fears further hikes could derail the stronger economy that’s been seen since he’s been in the White House. The president and his advisors have argued the pace of growth is not fueling problematic inflation, and therefore there’s no reason for the Fed to act.

Larry Kudlow, the president’s top economic advisor, said earlier Thursday in a separate interview on CNBC that Trump “is not dictating policy to the Fed.”

“The president has his own views. He’s stated them many times,” said Kudlow, a CNBC commentator before joining the White House. “We all know the Fed is independent.”


Company: cnbc, Activity: cnbc, Date: 2018-10-11  Authors: matthew j belvedere
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Treasury yields inch lower in late trading as investors seek safety in bond market

The 10-year Treasury yield has climbed about 17 basis points over the last seven days amid a report Friday which showed the lowest unemployment rate in 49 years, along with rising wages. The report adds to the now-widespread view that the labor market is near or beyond full employment and shows wages are starting to accelerate higher. After the long holiday weekend, Tuesday saw the benchmark 10-year Treasury yield notch a fresh seven-year high during trade, before paring its gains. The Treasury


The 10-year Treasury yield has climbed about 17 basis points over the last seven days amid a report Friday which showed the lowest unemployment rate in 49 years, along with rising wages. The report adds to the now-widespread view that the labor market is near or beyond full employment and shows wages are starting to accelerate higher. After the long holiday weekend, Tuesday saw the benchmark 10-year Treasury yield notch a fresh seven-year high during trade, before paring its gains. The Treasury
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Company: cnbc, Activity: cnbc, Date: 2018-10-10  Authors: thomas franck
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Treasury yields inch lower in late trading as investors seek safety in bond market

Bond experts have pointed to the robust economic data, signs of inflation and a glut of debt issuance as a reason for the rising rates. The 10-year Treasury yield has climbed about 17 basis points over the last seven days amid a report Friday which showed the lowest unemployment rate in 49 years, along with rising wages.

The report adds to the now-widespread view that the labor market is near or beyond full employment and shows wages are starting to accelerate higher. This could be a worry for the Federal Reserve trying to keep a lid on inflation.

The Fed announced its third quarter-point increase to the federal funds rate in September.

After the long holiday weekend, Tuesday saw the benchmark 10-year Treasury yield notch a fresh seven-year high during trade, before paring its gains. The 30-year bond yield also reached its highest point since 2014.

Speculation around rising prices flared again Wednesday after the Labor Department reported that U.S. producer prices rose 0.2 percent in September, in line with expectations and countering a decline in the month of August. A rise in services prices offset a slight drop in prices for goods.

“Bottom line, price pressures remain with prices ex food, energy and transportation running at a 2.9 percent rate, the most since at least 2014 that I have data on,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote Wednesday. “Tariffs are also working its way thru supply chains and those costs will only get worse when the rate goes to 25 percent from 10 percent on the last batch on China.”

Final demand prices had fallen 0.1 percent in August. In the 12 months through September, the producer price index rose 2.6 percent, slightly less than expected.

The Treasury Department auctioned $36 billion in 3-year notes a high yield of 2.989 percent. The bid-to-cover ratio, an indicator of demand, was 2.56. Indirect bidders, which include major central banks, were awarded 46.9 percent. Direct bidders, which includes domestic money managers, bought 9.8 percent.

The Treasury Department also auctioned $23 billion in 10-year notes at a high yield of 3.225 percent. The bid-to-cover ratio, an indicator of demand, was 2.39. Indirect bidders, which include major central banks, were awarded 64.5 percent. Direct bidders, which includes domestic money managers, bought 5.4 percent.

“With 10-year yields at levels not seen since 2011, outright cheapness will surely entice buying,” wrote Ian Lyngen, head of U.S. rate strategy at BMO Capital Markets. “That notion is bolstered by the fact that 10s have averaged an on on-the-screws stop so far in 2018 and the prior two auctions stopped well through when rates were greater than 20 basis points lower than they are currently.”

On the central bank front, a slew of speeches are scheduled to take place. Chicago Fed President Charles Evans will be in Michigan at the Flint & Genesee Chamber of Commerce luncheon; while in Georgia, Atlanta Fed President Raphael Bostic is set to make an appearance at a National Association of Corporate Directors event in Atlanta.

— CNBC’s Alexandra Gibbs contributed reporting.


Company: cnbc, Activity: cnbc, Date: 2018-10-10  Authors: thomas franck
Keywords: news, cnbc, companies, prices, market, lower, department, treasury, inch, rising, bidders, trading, seek, rate, 10year, late, high, yield, fed, safety, yields, investors


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There’s been an unlikely winning group of stocks during this rate-driven market rout

But despite the 10-year yield sitting near a seven-year high, the S&P 500 utility sector has rallied from its September lows and is now up 2.5 percent in October. Meanwhile, every other sector is in the red and the broader S&P 500 is down 4.4-percent month to date. The October rout accelerated sharply on Wednesday, with the Dow Jones industrial average falling more than 800 points, or 3.2 percent, and the S&P 500 plunging by 3.3 percent. The utility sector saw the lightest losses on Wednesday, d


But despite the 10-year yield sitting near a seven-year high, the S&P 500 utility sector has rallied from its September lows and is now up 2.5 percent in October. Meanwhile, every other sector is in the red and the broader S&P 500 is down 4.4-percent month to date. The October rout accelerated sharply on Wednesday, with the Dow Jones industrial average falling more than 800 points, or 3.2 percent, and the S&P 500 plunging by 3.3 percent. The utility sector saw the lightest losses on Wednesday, d
There’s been an unlikely winning group of stocks during this rate-driven market rout Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-10-10  Authors: tom dichristopher, david mcnew, newsmakers, getty images
Keywords: news, cnbc, companies, safe, market, group, winning, rout, theres, 500, unlikely, ratedriven, utility, sector, rate, month, interest, sectors, sp, stocks


There's been an unlikely winning group of stocks during this rate-driven market rout

But despite the 10-year yield sitting near a seven-year high, the S&P 500 utility sector has rallied from its September lows and is now up 2.5 percent in October. Meanwhile, every other sector is in the red and the broader S&P 500 is down 4.4-percent month to date.

The October rout accelerated sharply on Wednesday, with the Dow Jones industrial average falling more than 800 points, or 3.2 percent, and the S&P 500 plunging by 3.3 percent.

Given the stock market slump this month, investors are prioritizing another benefit of utility names: their status as a relatively safe haven.

“In a market like this, in a dramatic sell-off, the rotational effects will be higher than the interest rate effect,” said Jay Hatfield, portfolio manager at Infrastructure Capital Management.

The utility sector saw the lightest losses on Wednesday, down just a half a percent, compared with the technology sector’s 4.8 percent drop.

Not everyone believes it’s wise to hide out in utilities and other defensive sectors like REITs and consumer staples while the Federal Reserve is hiking interest rates.

Art Hogan, chief market strategist at B. Riley FBR, told CNBC on Wednesday the group is “not safe at all in a rising interest rate environment.” He advised investors who want to be defensive to raise cash rather than buy bond surrogates.


Company: cnbc, Activity: cnbc, Date: 2018-10-10  Authors: tom dichristopher, david mcnew, newsmakers, getty images
Keywords: news, cnbc, companies, safe, market, group, winning, rout, theres, 500, unlikely, ratedriven, utility, sector, rate, month, interest, sectors, sp, stocks


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