The rate rout is heating up, and that could be good news for homebuilders

Monday’s monster sell-off is sending interest rates into a tailspin. “Anything that is obviously rate sensitive, or inversely correlated has an opportunity to continue to do well if, and as, rates continue to plunge,” Worth said Friday on “Options Action.” One of those rate-sensitive plays is the homebuilder space. The Home Construction ETF (ITB) and the S&P Homebuilders ETF (XHB) have pulled back only slightly in Monday’s sell-off compared with other stocks, and are off to healthy starts in 202


Monday’s monster sell-off is sending interest rates into a tailspin.
“Anything that is obviously rate sensitive, or inversely correlated has an opportunity to continue to do well if, and as, rates continue to plunge,” Worth said Friday on “Options Action.”
One of those rate-sensitive plays is the homebuilder space.
The Home Construction ETF (ITB) and the S&P Homebuilders ETF (XHB) have pulled back only slightly in Monday’s sell-off compared with other stocks, and are off to healthy starts in 202
The rate rout is heating up, and that could be good news for homebuilders Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-02-24  Authors: tyler bailey
Keywords: news, cnbc, companies, selloff, homebuilder, mondays, opportunity, rate, stocks, space, homebuilders, heating, rout, rates, good, worth, yield


The rate rout is heating up, and that could be good news for homebuilders

Monday’s monster sell-off is sending interest rates into a tailspin. After hitting a brand-new all-time low Friday, the U.S. 30-year Treasury yield is continuing to fall, while the yield curve slides closer to inversion territory.

The broader equity markets are feeling the pain as well, but there is one group of stocks for which the rate rout might be a golden opportunity, according to Carter Worth, head of technical analysis at Cornerstone Macro.

“Anything that is obviously rate sensitive, or inversely correlated has an opportunity to continue to do well if, and as, rates continue to plunge,” Worth said Friday on “Options Action.”

One of those rate-sensitive plays is the homebuilder space. The Home Construction ETF (ITB) and the S&P Homebuilders ETF (XHB) have pulled back only slightly in Monday’s sell-off compared with other stocks, and are off to healthy starts in 2020. But while you could make a pure homebuilder play, Worth said there’s another way to get in on this space.


Company: cnbc, Activity: cnbc, Date: 2020-02-24  Authors: tyler bailey
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The coronavirus is hurting stocks, but here’s what could be the real problem

The coronavirus is front and center as the cause of Monday’s dramatic stock market sell-off, but investors have more on their minds. One issue that may not be getting enough credit for the uneasiness on Wall Street is the troubling slide in bond market yields. “I don’t think this would be nearly as dramatic this morning were it not for the bond market. “The message in the bond market may not be that much different in stocks,” he said. Stocks are ‘vulnerable’The bond market trends also represent


The coronavirus is front and center as the cause of Monday’s dramatic stock market sell-off, but investors have more on their minds.
One issue that may not be getting enough credit for the uneasiness on Wall Street is the troubling slide in bond market yields.
“I don’t think this would be nearly as dramatic this morning were it not for the bond market.
“The message in the bond market may not be that much different in stocks,” he said.
Stocks are ‘vulnerable’The bond market trends also represent
The coronavirus is hurting stocks, but here’s what could be the real problem Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-02-24  Authors: jeff cox
Keywords: news, cnbc, companies, bond, real, coronavirus, investors, stock, negative, stocks, problem, market, low, hurting, inflation, yields, heres, prices, rates


The coronavirus is hurting stocks, but here's what could be the real problem

The coronavirus is front and center as the cause of Monday’s dramatic stock market sell-off, but investors have more on their minds. One issue that may not be getting enough credit for the uneasiness on Wall Street is the troubling slide in bond market yields. The 30-year bond is at historic lows, while the benchmark 10-year Treasury is at levels not seen since the Brexit unrest in the summer of 2016. While that usually is a telltale sign that the market is pricing in low economic growth, the current dynamic is adding some twists that have investors unnerved. “I don’t think this would be nearly as dramatic this morning were it not for the bond market. This might have more to do with the bond market pushing on an all-time low,” said Jim Paulsen, chief investment strategist at The Leuthold Group. “It opens up a whole new can of worms of whether bond yields can go negative in the United States.”

The bond moves came amid a sharp sell-off in the stock market, with major indexes seeing losses of 2.5% or more in Monday morning trading. Negative nominal yields are prevalent across much of Europe and in Japan, involving about $11 trillion of global sovereign debt. The entire German yield curve traded in negative territory Monday.

The Fed’s fear

In the U.S., Federal Reserve officials have expressed doubt that government debt ever could see below-zero yields, a phenomenon that happens when bonds are priced so high above par that investors holding to duration receive below the principal amount at maturity. But as investors keep buying bonds and inflation expectations dim, the prospect of negative yields is rising. While borrowers benefit in that situation, banks suffer, and negative yields have done little to boost overall growth in the countries where they prevail. Paulsen, though, said the low rates in the U.S. may not be signaling low growth expectations but rather the belief that inflation will stay down for an extended duration.

“The message in the bond market may not be that much different in stocks,” he said. “Bond yields are down this year, but credit spreads have not widened. That tells me the bond market is saying inflation is down but growth is OK.” Still, the low yields are playing into fears expressed by Federal Reserve officials worried about inflation. Central bankers have been talking up inflation, trying to reach a 2% goal so they can keep short-term rates high enough to provide policy room in the case of a downturn. Markets, though, are looking for more rate cuts; futures traders on Monday were pricing in a 56% chance of a reduction by April, according to the CME’s FedWatch tool.

Stocks are ‘vulnerable’

The bond market trends also represent a tricky calculus for stock market investors. Normally, when stock prices are rising bond prices fall and yields rise as investors demand more of a premium for safe haven fixed income. However, that hasn’t been the case lately, with the correlation between bond prices and stocks at a four-year high, according to Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. Shalett said this is a case where “this time has been different.” “As rates have gone down, equity investors have redoubled their focus on how low rates will drive valuations higher, which is risky,” she said in a note for clients. “We see stock prices as vulnerable, so if interest rates were to back up suddenly, the diversification that bonds usually provide could fail.” For investors, Paulsen said it will be critical to watch spreads, or the difference between bonds of similar maturities but different credit quality. Widening spreads indicate greater market fear. “If they stay in the range they’ve been in the last year, I think things will hold together,” he said.


Company: cnbc, Activity: cnbc, Date: 2020-02-24  Authors: jeff cox
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Coronavirus fears cause mortgage rates to plunge to 8-year low

As coronavirus fears hit financial markets, U.S. bond yields are tanking, pushing mortgage rates that loosely follow the 10-year Treasury yield toward an eight-year low. The average rate on the popular 30-year fixed mortgage hit 3.34% on Monday, according to Mortgage News Daily. That rate hit 3.34% for one day in the summer of 2016, before spiking much higher that fall. While rates generally follow the 10-year yield, there are certain market factors that keep rates above a certain level. “When r


As coronavirus fears hit financial markets, U.S. bond yields are tanking, pushing mortgage rates that loosely follow the 10-year Treasury yield toward an eight-year low.
The average rate on the popular 30-year fixed mortgage hit 3.34% on Monday, according to Mortgage News Daily.
That rate hit 3.34% for one day in the summer of 2016, before spiking much higher that fall.
While rates generally follow the 10-year yield, there are certain market factors that keep rates above a certain level.
“When r
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Keywords: news, cnbc, companies, plunge, coronavirus, rate, hit, strong, low, market, thats, cause, 8year, fears, mortgage, quickly, treasury, rates, yield


Coronavirus fears cause mortgage rates to plunge to 8-year low

As coronavirus fears hit financial markets, U.S. bond yields are tanking, pushing mortgage rates that loosely follow the 10-year Treasury yield toward an eight-year low. They could sink even lower.

The average rate on the popular 30-year fixed mortgage hit 3.34% on Monday, according to Mortgage News Daily. That is for borrowers with strong financials and credit scores.

“Aggressive lenders will be at 3.25% today, and 3.375% will be the new going rate for the average lender,” said Matthew Graham, chief operating officer at Mortgage News Daily.

That rate hit 3.34% for one day in the summer of 2016, before spiking much higher that fall. Before that, rates were this low in 2012. While rates generally follow the 10-year yield, there are certain market factors that keep rates above a certain level.

“When rates fall this quickly, it’s not so much that big banks draw the line on mortgage rates, but rather, the underlying Mortgage Backed Securities (MBS) market refuses to improve as quickly as the Treasury market,” said Graham. “Both mortgages and Treasuries are feeling the impact of coronavirus panic. That’s pushing rates lower. But mortgages also become less valuable to investors if they get paid off too quickly.”

And those payoffs, or refinances, are surging right now. Applications to refinance a home loan are up around 165% annually, according to the Mortgage Bankers Association.

Mortgage applications to purchase a home have not been as strong, due to the severe shortage of homes for sale. Builders, however, may be getting a boost, especially those putting up more affordable homes.

Another barrier to entry for some buyers is still-tight lending standards. Sean Dobson, CEO of Amherst Holdings, which does have a mortgage arm, said tight lending is why his company got into the single-family rental business.

“Unless you have a large down payment or unless you have a very solid amount of free cash flow that’s underwritable, and we forget about this because the Uber driver might not have income that is fungible from a mortgage lenders perspective, or the people working 3 or 4 jobs, or the contributors to CNBC who contribute to a few places, they may literally have trouble qualifying for a mortgage,” said Dobson.


Company: cnbc, Activity: cnbc, Date: 2020-02-24  Authors: diana olick, in dianaolick
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China’s central bank vows more steps to support virus-hit economy

China’s central bank will take further steps to support the virus-hit economy, including releasing more liquidity and lowering funding costs for firms, a vice governor of the bank told state media. We are confident and able to offset the impact of the epidemic,” Liu told the newspaper. Liu reiterated that the central bank will not resort to “flood-like” stimulus. “We believe that after this epidemic is over, pent-up demand for consumption and investment will be fully released, and China’s econom


China’s central bank will take further steps to support the virus-hit economy, including releasing more liquidity and lowering funding costs for firms, a vice governor of the bank told state media.
We are confident and able to offset the impact of the epidemic,” Liu told the newspaper.
Liu reiterated that the central bank will not resort to “flood-like” stimulus.
“We believe that after this epidemic is over, pent-up demand for consumption and investment will be fully released, and China’s econom
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China's central bank vows more steps to support virus-hit economy

A woman walks past the headquarters of the People’s Bank of China in Beijing, China.

China’s central bank will take further steps to support the virus-hit economy, including releasing more liquidity and lowering funding costs for firms, a vice governor of the bank told state media.

The People’s Bank of China (PBOC) will guide market interest rates lower and keep liquidity appropriately ample to help companies affected by the coronavirus epidemic, Liu Guoqiang, the bank official, told the Financial News in an interview.

The PBOC will release more liquidity to banks by adjusting the criteria for targeted reserve requirement ratios (RRR) cuts, Liu said.

“China’s monetary policy space is still very sufficient, and the toolbox is also sufficient. We are confident and able to offset the impact of the epidemic,” Liu told the newspaper.

The central bank will push down real lending rates, especially for small firms, by further improving the transmission mechanism of the loan prime rate (LPR) – its new benchmark lending rate, Liu said.

Liu reiterated that the central bank will not resort to “flood-like” stimulus.

China has cut several of its key rates in recent weeks, including the benchmark lending rate on Thursday, in a bid to reduce financial strains on companies facing severe business disruptions due to the outbreak. Investors widely expect further monetary and fiscal support measures in coming weeks.

Benchmark deposit rates will also be adjusted at an appropriate time, Liu said.

Liu said that the epidemic’s impact on China’s economy would be limited, and that Beijing would strive to meet economic and social development targets this year.

Chen Yulu, another vice central bank governor, said that the coronavirus’ impact on China’s economy will be short-term and limited, and that the country is fully confident it beat the epidemic, state media reported on Saturday.

“We believe that after this epidemic is over, pent-up demand for consumption and investment will be fully released, and China’s economy will rebound swiftly,” Chen said.

China’s economic growth may show a sharp slowdown in the first quarter, probably dipping to 3% or even lower from 6% in the previous quarter — which was the weakest pace in nearly 30 years, economists estimated.

The central bank also is closely monitoring consumer prices, which could be disturbed by the virus epidemic, Liu said.

Seasonal factors and the virus’ impact were behind the flat M1 money supply, or cash in circulation plus corporate demand deposits, in January from a year earlier, Liu said.

Liu also said China’s economic fundamentals were sound, adding it had ample foreign currency reserves to support its yuan currency.


Company: cnbc, Activity: cnbc, Date: 2020-02-22
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Buffett says it’s ‘almost certain’ stocks will beat bonds over long term if rates, taxes stay low

Warren Buffett says stocks are the place to be invested in for the long haul if interest rates and corporate taxes remain near current levels. Stocks got off to a hot start in 2020, with the S&P 500 and other major U.S. averages reaching all-time highs. Last year, the S&P 500 surged more than 28% to keep the longest bull market in U.S. history going. The market got another jolt at the end of 2017, when the Trump administration slashed the U.S. corporate tax rate to 21% from 35%. He noted that oc


Warren Buffett says stocks are the place to be invested in for the long haul if interest rates and corporate taxes remain near current levels.
Stocks got off to a hot start in 2020, with the S&P 500 and other major U.S. averages reaching all-time highs.
Last year, the S&P 500 surged more than 28% to keep the longest bull market in U.S. history going.
The market got another jolt at the end of 2017, when the Trump administration slashed the U.S. corporate tax rate to 21% from 35%.
He noted that oc
Buffett says it’s ‘almost certain’ stocks will beat bonds over long term if rates, taxes stay low Cached Page below :
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Buffett says it's 'almost certain' stocks will beat bonds over long term if rates, taxes stay low

Warren Buffett says stocks are the place to be invested in for the long haul if interest rates and corporate taxes remain near current levels.

“If something close to current rates should prevail over the coming decades and if corporate tax rates also remain near the low level businesses now enjoy, it is almost certain that equities will over time perform far better than long-term, fixed-rate debt instruments,” Buffett wrote in his annual letter to Berkshire Hathaway shareholders, which was released Saturday morning.

The letter also pointed to more exposure for two of his potential successors and addressed the company’s inability to find an attractive, monster-sized acquisition target, which the ‘Oracle of Omaha’ has been known for.

Stocks got off to a hot start in 2020, with the S&P 500 and other major U.S. averages reaching all-time highs. Last year, the S&P 500 surged more than 28% to keep the longest bull market in U.S. history going.

The market got a boost from low interest rates from the Federal Reserve during this bull run, pushing bond yields lower and making equities a more attractive investment. The market got another jolt at the end of 2017, when the Trump administration slashed the U.S. corporate tax rate to 21% from 35%.

These elements, coupled with the “American Tailwind,” will make “equities the much better long-term choice for the individual who does not use borrowed money and who can control his or her emotions,” Buffett said.

The investing legend, however, offered a big caveat to his prediction: “Anything can happen to stock prices tomorrow.” He noted that occasionally, “there will be major drops in the market, perhaps of 50% magnitude or even greater.”


Company: cnbc, Activity: cnbc, Date: 2020-02-22  Authors: fred imbert
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Larry Kudlow says falling bond yields don’t reflect the US economy’s fundamentals

Asked by CNBC’s David Faber how he interprets a new, all-time low on the 30-year Treasury bond, Kudlow said he has to think it’s “a run to safety.” “I just think, in general, I would be very careful to put too much emphasis on what bond rates are doing, what interest rates are doing. Or even in the short, short run, the stock market,” he said. “I think you have a lot of mood swings here and I don’t think it reflects the fundamentals.” Kudlow’s comments came as the yield on the benchmark 30-year


Asked by CNBC’s David Faber how he interprets a new, all-time low on the 30-year Treasury bond, Kudlow said he has to think it’s “a run to safety.”
“I just think, in general, I would be very careful to put too much emphasis on what bond rates are doing, what interest rates are doing.
Or even in the short, short run, the stock market,” he said.
“I think you have a lot of mood swings here and I don’t think it reflects the fundamentals.”
Kudlow’s comments came as the yield on the benchmark 30-year
Larry Kudlow says falling bond yields don’t reflect the US economy’s fundamentals Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-02-21  Authors: thomas franck
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Larry Kudlow says falling bond yields don't reflect the US economy's fundamentals

Larry Kudlow, President Donald Trump’s top economic advisor, told CNBC on Friday that he believes the recent decline in U.S. bond yields doesn’t reflect market fundamentals but instead a transient flight to safer assets in the wake of the coronavirus in Asia.

Asked by CNBC’s David Faber how he interprets a new, all-time low on the 30-year Treasury bond, Kudlow said he has to think it’s “a run to safety.”

“I just think, in general, I would be very careful to put too much emphasis on what bond rates are doing, what interest rates are doing. Or even in the short, short run, the stock market,” he said. “I think you have a lot of mood swings here and I don’t think it reflects the fundamentals.”

Kudlow’s comments came as the yield on the benchmark 30-year Treasury bond fell to an all-time low under 1.9% and the Dow Jones Industrial Average fell 285 points, slightly less than 1%.

Though traders widely blamed the coronavirus for Friday’s risk-off pivot, some suggested the record low on the 30-year bond represents a longer-term view that economic growth could be slowing and that the Federal Reserve may not be equipped to remedy a slowdown.

“The fixed income market, usually the world’s greatest pessimist, tends to look way out in the future when pricing the current market,” wrote Raymond James rates strategist Kevin Giddis. “It is looking far ahead to the negative effects that the virus could have on the U.S. economy, which could force the Fed in, kicking and screaming.”

But Kudlow countered that the stock market’s strong gains over the last 12 months are a sign of “business and consumer confidence” and that corporate conditions could remain healthy throughout 2020.

“In the three years under policies of lower tax rates, deregulation, independent energy and better trade deals to open up an export boom, we have managed a 2.5% growth rate on average,” he said. “That is significantly better than the prior administration. It is also significantly better than what the CBO has forecasted.”

“America is working and there is a blue-collar boom,” he continued. “This a fundamentally very sound economy.”

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Company: cnbc, Activity: cnbc, Date: 2020-02-21  Authors: thomas franck
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Fed’s Bostic says ‘we won’t have to do anything’ on rates, despite market expectations

Atlanta Federal Reserve President Raphael Bostic became the latest central banker to advocate a hold on interest rates, telling CNBC that he doesn’t see a need to change given current conditions. Despite the market pricing in up to two cuts this year, Bostic said that unless there’s a significant shift in economic performance, the Fed should stay put. “There are many different scenarios about what’s going to happen between now and say June or July. My baseline expectations are that the economy i


Atlanta Federal Reserve President Raphael Bostic became the latest central banker to advocate a hold on interest rates, telling CNBC that he doesn’t see a need to change given current conditions.
Despite the market pricing in up to two cuts this year, Bostic said that unless there’s a significant shift in economic performance, the Fed should stay put.
“There are many different scenarios about what’s going to happen between now and say June or July.
My baseline expectations are that the economy i
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Company: cnbc, Activity: cnbc, Date: 2020-02-21  Authors: jeff cox
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Fed's Bostic says 'we won't have to do anything' on rates, despite market expectations

Atlanta Federal Reserve President Raphael Bostic became the latest central banker to advocate a hold on interest rates, telling CNBC that he doesn’t see a need to change given current conditions.

Despite the market pricing in up to two cuts this year, Bostic said that unless there’s a significant shift in economic performance, the Fed should stay put.

“There are many different scenarios about what’s going to happen between now and say June or July. My baseline expectations are that the economy is not going to see rising risks and it’s going to stay stable, so we won’t have to do anything,” he told CNBC’s Steve Liesman during a “Squawk Box” interview.

“But my focus is on today and what we know today and what we know next week as the data comes in. If we see more weakness than expected, then I’d be open to moving. But that’s not my expectation,” he added.


Company: cnbc, Activity: cnbc, Date: 2020-02-21  Authors: jeff cox
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The Federal Reserve thinks low rates have had only a ‘modest’ impact on stock market prices

That’s contrary to the conventional Street wisdom which ties the low rates and money-printing to a market bull run that is less than a month away from its 11th anniversary. “I think that the conventional wisdom is valuations look high, but not at this level of interest rates. But Booth said that adjusting earnings for the historically low interest rate environment actually does put valuations around the dotcom bubble era of the late 1990s. “With interest rates so low, you wonder what the next sh


That’s contrary to the conventional Street wisdom which ties the low rates and money-printing to a market bull run that is less than a month away from its 11th anniversary.
“I think that the conventional wisdom is valuations look high, but not at this level of interest rates.
But Booth said that adjusting earnings for the historically low interest rate environment actually does put valuations around the dotcom bubble era of the late 1990s.
“With interest rates so low, you wonder what the next sh
The Federal Reserve thinks low rates have had only a ‘modest’ impact on stock market prices Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-02-21  Authors: jeff cox
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The Federal Reserve thinks low rates have had only a 'modest' impact on stock market prices

The Federal Reserve’s extraordinary policy moves over the last 12 years have marched arm in arm with the biggest bull market in Wall Street history. But the central bank’s economists say the two really have little in common. As part of the ongoing discussion Fed officials are having about the effectiveness of past policy and the proper path forward, staff members last month presented their findings about the impact that low interest rates have had on asset prices, which generally refer to things like stocks, corporate debt and commercial real estate. Their conclusion: “The available empirical evidence suggests that the effects of changes in policy rates on asset prices and risk premiums tend to be modest relative to the historical fluctuations in those measures,” according to minutes released Wednesday from the Jan. 28-29 meeting.

That’s contrary to the conventional Street wisdom which ties the low rates and money-printing to a market bull run that is less than a month away from its 11th anniversary. But the analysis also reflects a tightrope Fed officials are trying to walk in which they want to keep policy accommodative enough to maintain the economic expansion while not fueling bubbles. “What they’re saying is rates have affected the economy, but what they’re not doing is causing the rampant speculation that you saw in the late ’90s,” said Doug Roberts, head of Channel Capital Research. “It could happen, but right now they’re trying to prevent it.” Still, the idea that the relationship is tenuous between ultra-easy policy — zero policy rates that prevailed for seven years and nearly $4 trillion worth of quantitative easing — and a more than 400% rise in the S&P 500 is a tough sell.

Putting blinders on

Every time the Fed has tried to tighten policy, the markets have recoiled and the Fed has relented. “They think that valuations are justified because rates are so low,” said Danielle DiMartino Booth, who was an advisor to former Dallas Fed President Richard Fisher and now is CEO of Quill Intelligence. “At the risk of saying it’s different this time, I think the Fed is not factoring in its own policy in its risk premium calculus.” Indeed, St. Louis Fed President James Bullard told CNBC on Friday that he is not very concerned about where the market stands. The S&P 500 is trading at 19 times forward earnings, compared to the 10-year average of 15, about a 27% premium. “We watch financial stability issues and bubble-type issues very carefully,” Bullard said during a “Squawk Box” interview. “I think that the conventional wisdom is valuations look high, but not at this level of interest rates. And so to the extent that you think this level of interest rates is probably the future, which I have been arguing, you’re probably OK for now.” But Booth said that adjusting earnings for the historically low interest rate environment actually does put valuations around the dotcom bubble era of the late 1990s. She credits Fed Chairman Jerome Powell with trying to stay ahead of runaway asset prices but said current policy doesn’t leave enough room for the central bank in case of an economic downturn. “It doesn’t really work well to put blinders on. That’s what it feels like officials are doing,” Booth said. “With interest rates so low, you wonder what the next shock to the system will be. They’re running out of ammunition.” Powell tried to guide the Fed back to more normal state of affairs regarding interest rates, but markets recoiled and he was forced to backtrack. Four rate hikes in 2018 sparked a wave of selling on Wall Street, and the Fed responded with three cuts last year and a resolve in 2020 to hold policy steady. If anything, markets are expecting more rate cuts rather than increases. “The Fed has become the enabler for the markets,” said Quincy Krosby, chief market strategist at Prudential Financial. “They wanted to raise rates in 2019, but they didn’t. They saw within a couple of weeks what was happening. Then what they did was create this ‘buy on the dip’ mentality. You’re never able to get off it. That’s the dilemma for this policy.”

‘The news is good’


Company: cnbc, Activity: cnbc, Date: 2020-02-21  Authors: jeff cox
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Expectations for a rate cut will fade as coronavirus fear eases, Fed’s James Bullard says

Markets expecting an interest rate cut are reacting to the coronavirus scare and likely will reverse once the fear starts to fade, St. Louis Fed President James Bullard said Friday. Central bank officials have indicated that they are content to keep policy on hold as they watch economic developments play out. “There’s a high probability that the coronavirus will blow over as other viruses have, be a temporary shock and everything will come back. The statement helped exacerbate a sell-off that ca


Markets expecting an interest rate cut are reacting to the coronavirus scare and likely will reverse once the fear starts to fade, St. Louis Fed President James Bullard said Friday.
Central bank officials have indicated that they are content to keep policy on hold as they watch economic developments play out.
“There’s a high probability that the coronavirus will blow over as other viruses have, be a temporary shock and everything will come back.
The statement helped exacerbate a sell-off that ca
Expectations for a rate cut will fade as coronavirus fear eases, Fed’s James Bullard says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-02-21  Authors: jeff cox
Keywords: news, cnbc, companies, coronavirus, probability, eases, fear, fade, rates, james, feds, bullard, fed, cut, markets, market, expectations, going, rate, worse


Expectations for a rate cut will fade as coronavirus fear eases, Fed's James Bullard says

Markets expecting an interest rate cut are reacting to the coronavirus scare and likely will reverse once the fear starts to fade, St. Louis Fed President James Bullard said Friday.

Central bank officials have indicated that they are content to keep policy on hold as they watch economic developments play out.

However, traders in the fed funds futures market are indicating about a 54% chance of a rate cut by June and a 58% probability of a second move lower by the end of the year, according to the CME’s FedWatch tracking tool.

In an interview on CNBC’s “Squawk Box,” Bullard pushed back on the likelihood of a cut, saying current policy seems right considering the pace of the record-breaking U.S. expansion.

“There’s a high probability that the coronavirus will blow over as other viruses have, be a temporary shock and everything will come back. But there’s a low probability that this could get much worse,” he said. “Markets have to price that in, and that drags down the center of gravity a little bit. But if this all goes away, I expect that pricing will come back out of the market and we’ll be back to the on-hold scenario.”

Bullard spoke the day after Fed Vice Chair Richard Clarida jolted markets when he told CNBC that he pays less attention to market pricing and more to economist forecasts, which don’t see the Fed cutting. The statement helped exacerbate a sell-off that came amid heightened fear that the coronavirus spread could be even worse than thought.

Aside from the virus worries, Fed officials have been generally optimistic about the outlook, saying the strong U.S. labor market and signs of a pickup in global growth are indications that rates are probably appropriate.

The Fed cut rates three times in 2019 but has held the line at the last two meetings.

“If you think that this virus is going to dissipate and we’re going to have temporary shocks and then everything’s going to go back to normal, then I think the Fed’s in great shape and we don’t have to lower rates in that scenario,” Bullard said. “A lot of the news on the U.S. economy has been good in the last couple of months. I’ve been arguing we’re in good shape for a soft landing in the U.S. economy.”


Company: cnbc, Activity: cnbc, Date: 2020-02-21  Authors: jeff cox
Keywords: news, cnbc, companies, coronavirus, probability, eases, fear, fade, rates, james, feds, bullard, fed, cut, markets, market, expectations, going, rate, worse


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China cuts benchmark lending rates amid coronavirus outbreak

China said on Thursday it lowered its benchmark lending rates — a move that was widely expected by analysts as the world’s second-largest economy faced threats from an outbreak of a deadly coronavirus. The country’s central bank, the People’s Bank of China, cut the one-year loan prime rate from 4.15% to 4.05%, and the five-year rate from 4.80% to 4.75%. Loan prime rate is the interest rate that banks charge their most creditworthy clients. The PBOC, in a revamp to China’s interest rates regime l


China said on Thursday it lowered its benchmark lending rates — a move that was widely expected by analysts as the world’s second-largest economy faced threats from an outbreak of a deadly coronavirus.
The country’s central bank, the People’s Bank of China, cut the one-year loan prime rate from 4.15% to 4.05%, and the five-year rate from 4.80% to 4.75%.
Loan prime rate is the interest rate that banks charge their most creditworthy clients.
The PBOC, in a revamp to China’s interest rates regime l
China cuts benchmark lending rates amid coronavirus outbreak Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-02-20  Authors: yen nee lee
Keywords: news, cnbc, companies, rate, loan, prime, rates, amid, interest, lending, cuts, pboc, cut, coronavirus, oneyear, china, outbreak, benchmark


China cuts benchmark lending rates amid coronavirus outbreak

China said on Thursday it lowered its benchmark lending rates — a move that was widely expected by analysts as the world’s second-largest economy faced threats from an outbreak of a deadly coronavirus.

The country’s central bank, the People’s Bank of China, cut the one-year loan prime rate from 4.15% to 4.05%, and the five-year rate from 4.80% to 4.75%. The PBOC publishes the rates every month. Thursday’s move was the first cut since October last year, according to Refinitiv data.

Loan prime rate is the interest rate that banks charge their most creditworthy clients. The PBOC, in a revamp to China’s interest rates regime last year, pushed commercial lenders to reference the loan prime rate when pricing their new loans.

The cut to the one-year and five-year loan prime rates followed the central bank’s move on Monday to lower the interest rate on its one-year medium-term lending facility — funds that PBOC lends to financial institutions — from 3.25% to 3.15%. The loan prime rate is linked to interest rate on the medium-term lending facility.

Lower lending rates in China come at a time when a lot of economic activities around the country stall as authorities race to contain the spread of a new coronavirus — now called COVID-19 — which is believed to have originated in Wuhan, the capital of Hubei province.


Company: cnbc, Activity: cnbc, Date: 2020-02-20  Authors: yen nee lee
Keywords: news, cnbc, companies, rate, loan, prime, rates, amid, interest, lending, cuts, pboc, cut, coronavirus, oneyear, china, outbreak, benchmark


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