Fed's December Meeting Minutes Are Out Today; U.S. Job Openings Decline; Renters Get Some Relief From Price Hikes By James Christie
Good day. Federal Reserve officials signaled at last month's meeting that the central bank will implement three quarter-point rate cuts this year. Investors will get a better idea of what conditions prompted the Federal Open Market Committee to make this call when the minutes of that meeting are released this afternoon. Also today, the U.S. Labor Department releases November data on job openings and labor turnover. It will be followed on Friday by the December jobs report. Economists expect the data to show the frenzied hiring and worker shortages that marked an earlier phase of the pandemic recovery are fading, even as unemployment remains low, boosting hopes for a soft landing for the American economy. Meanwhile, the U.S. apartment rental market finally stopped clobbering tenants with big price increases last year, and this is expected to continue in 2024 even as housing demand remains high in many parts of the country.
Now on to today's news and analysis.
Top News How Serious Is the Fed About Cutting Rates?
The minutes from the Federal Open Market Committee's Dec. 12-13 meeting will be released at 2 p.m. and should provide some additional insight into how Fed officials' views of the economy have shifted in recent months and what economic data policy makers are prioritizing to make their economic projections.
During the December meeting, Fed policy makers chose to keep the target for the federal-funds rate at 5.25-5.50%. FOMC members also released their Summary of Economic Projections, in which they forecast the median federal-funds rate would fall to 4.6% by the end of the year.
Investors see twice as many interest-rate cuts in 2024 as the Fed has forecast, according to the CME FedWatch Tool. And some economists and investors are betting policy makers will go even further. ( Barron's )
How December Fed Minutes Could Shake Up Investors' Rate-Cut Expectations ( MarketWatch ) U.S. Economy Finding a New Job Is Getting Harder
Employers finished 2023 with far fewer open positions than at the start of the year, according to private-sector estimates, as businesses filled more jobs and decided not to hire for others.
Total job postings as of the end of 2023 declined more than 15% from a year earlier, according to data from job-listing site Indeed through Dec. 29. "The pace of descent seems to have leveled off a bit in the second half of the year," said Nick Bunker, an economist at the jobs site.
Where the Job Market Is Heading in 2024, in Six Charts Apartment Rent Relief Is Expected to Continue in 2024
Relief for tenants has come from a surge in new supply that has pushed vacancy higher , making it harder for landlords to raise prices. Many tenants have also simply reached the limits of what they are able to pay.
Investors' Hope for 2024: A Return to Long-Lost Normalcy
U.S. stocks delivered outsize returns in 2023. This year, many investors are dreaming of something more normal, including an economic backdrop of moderate inflation and middle-of-the road interest-rate policies .
Optimism Abounds on Wall Street This New Year U.S. Auto Sales Bounced Back in 2023
U.S. auto sales rebounded in 2023, boosted by pent-up demand and better availability on dealership lots. But this year could prove more challenging for automakers, with industrywide sales expected to level off.
Heard on the Street: Tesla Faces a Higher Bar for Hype in 2024 How Often Should You Mess With Your 401(k)? More Than Before
Compulsively checking your 401(k) is seen by behavioral economists as the source of bad investment decisions. Right now, though, looking at your portfolio too seldom could equally lead to missed opportunities .
Key Developments Around the World China Is Pressing Women to Have More Babies. Many Are Saying No.
Wary of the sacrifices of child-rearing, many young women are putting themselves ahead of what Beijing and their families want, a crisis for the Communist Party , which needs more babies to rejuvenate China's aging population.
Maersk Pauses Transit Through Red Sea Until Further Notice
Shipping giant A.P. Moeller-Maersk said it will pause all transit through the Red Sea and Gulf of Aden until further notice following an attack on one of its vessels. Some vessels will be rerouted around the Cape of Good Hope in South Africa.
The Hottest Property in Gold Mining Is Copper
From central Mexico to the Australian Outback, gold producers are raising bets on copper through deals and other investments that will give them more influence over a commodity vital to the global energy transition.
Financial Regulation Roundup U.S. Can Charge Foreign Officials With Bribery Under New Provision
For the first time, a provision of the National Defense Authorization Act has made it a crime for a foreign official to ask for or take a bribe from an American person, a U.S. company or within a U.S. jurisdiction.
FTX Has Filed About a Dozen Lawsuits in a Bid to Claw Back Billions
Since filing for bankruptcy in November 2022, FTX-through a dozen or so lawsuits-has been trying to claw back billions of dollars that the cryptocurrency exchange says it is owed. FTX is expected to file more such lawsuits in 2024.
Hong Kong's IPO Drought Casts Pall Over Region's Businesses
A dearth of initial public offerings in Hong Kong is causing companies to suffer cash crunches and put off expansion plans , showing how the steep market downturn is taking a toll on businesses that need to raise money.
Forward Guidance Wednesday (all times ET)
8:30 a.m.: Richmond Fed's Barkin gives economic outlook speech to Raleigh Chamber in Raleigh, N.C.
10 a.m.: ISM Report on Business Manufacturing PMI for U.S. for December; U.S. Job Openings and Labor Turnover Survey (JOLTS) for November
2 p.m.: Federal Reserve releases minutes of its Dec. 12-13 meeting
Thursday
4:30 a.m.: Bank of England consumer credit for November
8:15 a.m.: ADP National Employment Report for U.S. for December
8:30 a.m.: U.S. weekly jobless claims
Research BOE Could Cut Interest Rates by Half a Point in the First Quarter
The Bank of England could cut interest rates by 50 basis points in the first quarter of 2024, asset management firm Managing Partners Group says in a note. "It was ludicrous to put rates up to the extent the Bank of England did. Whatever they were trying to achieve it was not necessary to go as far as they did," MPG CEO Jeremy Leach says. MPG expects a 50 basis-point rate cut in the first quarter and expects the base rate could hit 4% by end-2024-from 5.25% currently-as inflation is projected to fall to 2.25% by that time. It forecasts the U.K. will "narrowly avoid recession" but lag the U.S. and Europe with growth of between 0.5% and 0.75%.
-Miriam Mukuru
Eurozone Manufacturing Still Facing Severe Challenges
The weakness of eurozone manufacturing output in December as shown in the latest purchasing managers index data sends a stark reminder of the persistent challenges faced by the region's manufacturing industry, Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, writes in a note. While the PMI rose marginally from 44.2 in November to 44.4 in December-a little higher than the first estimate and consensus, which were both 44.2-the index was dragged by falling inflows of new business, leading to a depletion of work backlogs, with purchasing activity also plunging, recording one of the steepest declines since the financial crisis, Vistesen writes. Looking ahead, global indicators point to a slight increase in optimism regarding the year-ahead outlook, though that silver lining to eurozone manufacturing is only slim, he adds.
-Ed Frankl
Commentary Utilities Get an Inflation Shock
Inflation is really zapping returns for utility investors . Utilities' capital requirements are rising as they must repair storm- and fire-related damage and are also trying to harden their grid against future problems Jinjoo Lee writes.
Welcome to the Neighborhood! Wall Street Designed It
Big investors are bullish about America's family homes. So bullish they are willing to build entire new neighborhoods as it becomes harder to buy houses from the usual channels, Carol Ryan writes.
India's Food-Security Problem Is Also the World's
India is the ninth-largest exporter of agricultural products in the world, making food security there a global issue-but its tangled politics of agricultural pricing mean that change could be slow, Megha Mandavia writes.
Basis Points U.S. construction spending rose in November as companies and the government continued to ramp up projects. Spending on building projects increased 0.4% from October and 11.3% from a year earlier, to $2.04 trillion, the Commerce Department reported Tuesday. (MarketWatch) Global trade flows fell in October after two months of increase, a sign that the value of goods moving across international borders likely fell in 2023 as a whole. An indicator of goods trade flows developed by The Wall Street Journal and published Tuesday points to a 1.6% decrease from September , adjusted for the seasonal ups and downs of exports of goods between countries. Annual U.K. shop-price inflation was unchanged in December , with growth at the lowest rate since June 2022, a report by NielsenIQ and the British Retail Consortium showed Tuesday. Prices at U.K. stores were up 4.3% on year in December, matching November's rate and below the three-month average rate of 4.6%. Factory activity in Canada declined in December, as the S&P Global Canada manufacturing purchasing managers index fell to 45.4 from 47.7 in November, marking an eighth straight month below the 50 threshold separating expansion from contraction. The latest reading was the lowest for the index since May 2020. (Dow Jones Newswires) Germany's jobless rate rose slightly in December, a sign that a creaking economy and high European Central Bank interest rates are slowly hitting the labor market. German adjusted unemployment rose to
(MORE TO FOLLOW) Dow Jones Newswires
01-03-24 0716ET
