Powell Says Fed Has New Focus; U.S. Jobs Report Dents Hopes for Rate Cuts; Head of Turkish Central Bank Steps Down By James Christie
Good day. Federal Reserve Chair Jerome Powell said the central bank has shifted its focus toward deciding when to begin cutting interest rates, but that solid economic growth means officials don't have to rush that decision. Given recent economic strength, "we feel like we can approach the question of when to begin to reduce interest rates carefully," he said during a TV interview broadcast on CBS on Sunday night. Meanwhile, employers in the U.S. added 353,000 jobs last month, while December's payroll gains were revised upward from 216,000 to 333,000, the Labor Department reported Friday. Elsewhere, Hafize Gaye Erkan resigned as Turkey's central bank governor, marking the latest turbulence in a major economy that has suffered a series of economic crises in recent years. The former Goldman Sachs and First Republic Bank executive held the post for less than a year.
Now on to today's news and analysis.
Top News Powell Says Fed Has New Focus: When to Cut Rates
Speaking on "60 Minutes" on Sunday night, Jerome Powell said officials were trying to balance the risks of leaving rates too high for too long , which could cause an economic slowdown, and of cutting rates too soon and allowing inflation to settle above the Fed's 2% goal. The interview was taped Thursday from the Fed's Washington headquarters.
"There is no easy, simple, obvious path," Powell said. "We think the economy's in a good place. We think inflation is coming down. We just want to gain a little more confidence that it's coming down in a sustainable way."
The central bank held its benchmark federal-funds rate steady last week in a range between 5.25% and 5.5%, the highest level in more than two decades.
U.S. Jobs Growth of 353,000 Blasts Past Expectations
Hiring is booming, defying expectations the economy would cool after going gangbusters last year.
Employers added 353,000 jobs last month, the Labor Department reported Friday. That was the strongest in a year and nearly double what economists surveyed by The Wall Street Journal expected.
Bond yields surged after the report was released, a sign investors believed that the Federal Reserve might now take longer to cut interest rates . The S&P 500 climbed 1.1% to close at a new record, indicating that-after months of falling inflation-investors have become more confident that a strong labor market is sustainable rather than a problem that could cause prices to jump again.
Week of Whipsawing Treasurys Casts Doubt on Soft-Landing Trade
Fed 'Not Yet at That Point' of Lowering Interest Rates, Bowman Says
The Federal Reserve is not yet at the point where it can start gradually lowering interest rates, central bank governor Michelle Bowman said on Friday, MarketWatch reported . Bowman added she has not ruled out another rate increase.
Turkey's Central Bank Chief Steps Down
Hafize Gaye Erkan resigned late on Friday . The Turkish central bank named as a successor Fatih Karahan, a former deputy central bank governor and former economist at the New York Fed, according to an official statement.
Turmoil at Turkey's Central Bank Won't Push It Off Course U.S. Economy A 3% Mortgage Sounds Too Good to Be True. In Many Cases It Is.
With interest rates high, "assumptions" have emerged as a buzzy way to make buying more affordable . But buyers, sellers and people who advise them, say the servicers that process assumptions are bogging down the process.
Bulletproof Your Tax Return to Avoid Costly Mistakes and IRS Audits
If the IRS catches mistakes before you do, your tax season can quickly become more expensive and aggravating. Correcting mistakes can take weeks or months, and make a big enough blunder and you may invite an audit.
Want a Tax Shelter? Buy a Bond Fund
After 2022, arguably the worst year in history for fixed income, deep losses are embedded in many mutual funds and exchange-traded funds that invest in high-quality, intermediate-term and long-term bonds.
Key Developments Around the World Dream of EV-Driven Prosperity Helps Fuel a Coal Binge Instead
A few years ago, Indonesia set out to turn its treasure trove of nickel into an electric-car manufacturing boom. The smelters came, and Indonesia's nickel industry witnessed explosive growth. But powering it is a coal binge.
Chinese Investors Vent Frustration After U.S. Embassy's Giraffes Post
When the U.S. Embassy in China posted a photo of giraffes on a Chinese social-media platform, it was making a point about conservation. But the post quickly became an outlet for the frustration of China's mom-and-pop stock-market investors .
U.S. Plans Further Action Against Iran's Militia Allies
The U.S. is planning more military strikes in response to an attack from an Iran-backed militia that killed three American soldiers in Jordan, including fresh strikes in a continuing effort against Houthi rebels in Yemen.
Iranian Revolutionary Guard Members Charged in Oil Cases
The U.S. Justice Department said Friday that it had unsealed three federal cases related to the alleged illicit trafficking of oil which funds the Islamic Revolutionary Guard Corps and the paramilitary Qods Force.
Financial Regulation Roundup Wall Street Gets Laser Eyes in Bid for Bitcoin ETF Bucks
After years of tiptoeing around the world of cryptocurrencies, huge financial firms are racing to lure Main Street investors into these mostly unregulated markets, seeking a fresh source of revenue.
Crypto Marketers Have a New Target Audience: Your Mother
A Research Tax Deduction Change May Go Away. Some Pain Won't.
Companies are hoping they can deduct research expenses as they used to after a more than two year change to a tax law led to layoffs and reduced research investment. But for some, it may be too late to unwind adjustments .
Justice Department Charges Three in $400 Million FTX Mystery Hack
Robert Powell, Carter Rohn and Emily Hernandez are accused of conspiring to steal dozens of people's identities over a two-year period to siphon money from accounts they held in crypto exchanges and financial institutions.
Forward Guidance Monday (all times ET)
10 a.m.: The Conference Board Employment Trends Index for U.S. for January; Chicago Fed's Goolsbee appears on Bloomberg Markets
10:30 a.m.: Bank of Canada Market Participants Survey
2 p.m.: Atlanta Fed's Bostic speaks at virtual Uneven Outcomes in the Labor Market conference
10:30 p.m.: Reserve Bank of Australia interest-rate decision
Tuesday
4 a.m.: ECB Consumer Expectations Survey
12 p.m.: Cleveland Fed's Mester speaks on economic outlook at 2024 Ohio Bankers League Economic Summit
1 p.m.: Bank of Canada's Macklem speaks to Montreal Council on Foreign Relations
Research Canada Needs Interest Rate Relief 'As Soon As It Can Get It'
CIBC Capital Markets' chief economist Avery Shenfeld says his firm's call for 1.5 percentage points of interest rate cuts in Canada appears a tad aggressive now, given indicators suggesting more strength than previously believed. Still, he says in a note to clients that early fourth-quarter gross domestic product estimates "haven't countered" his belief the economy needs interest-rate relief "as soon as it can get it." He expects another weak employment report this week, and believes the Bank of Canada is more focused on labor-market slack than GDP performance. BOC rate cuts will emerge once officials are convinced upward price pressures are confined to mortgage-interest payments and rent, Shenfeld says, adding he predicts deeper rate cuts in Canada relative to the Federal Reserve.
-Paul Vieira
Commentary A Jobs Mystery: Where Are All the New Employees Coming From?
The complication for the Federal Reserve, and investors, is that crossed signals make it hard to tell not just how quickly the job market is growing, but how quickly it can grow without overheating, Justin Lahart writes.
Why Major U.S. Cities Are Becoming a Problem for Foreign Banks
Many of the problems identified in the property market, such as low occupancy rates for office buildings and the challenge of higher interest rates on refinancing, aren't evenly spread around the country, Telis Demos writes.
Basis Points U.S. consumer sentiment shot up in January to its highest level since the summer of 2021, as Americans got some relief from waning inflation and saw an improved economy. The final reading of the University of Michigan's sentiment survey rose to 79.0 from a preliminary 78.8 earlier in the month and from 69.7 in December. (MarketWatch) U.S. new vehicles sales softened in January, with sales of lightweight trucks and autos falling 6.8% to a 15.0 million annual rate. That followed a revised 6.8% gain to a 16.1 million unit rate in December. (MarketWatch) Orders for U.S. manufactured goods rose 0.2% in December, the Commerce Department said Friday, a gain in line with the consensus of economists surveyed by The Wall Street Journal. Durable-goods orders were flat in December, unrevised from the initial estimate. Nondurable-goods orders rose 0.4% in December. (MarketWatch) Food prices fell further in January, with lower prices for cereals and meat more than offsetting increases in sugar, the Food and Agriculture Organization of the United Nations said on Friday. The FAO's food price index, which tracks global prices for a basket of staple foods, averaged 118 points in January, down 1% from December's level and around 10% lower from a year earlier. In December, food prices fell 1.5% from the previous month. (DJN) Output from French industry climbed again in December, offering a little cheer amid sluggish activity in the wider euro area as total industrial production rose 1.1% from a month earlier, data from statistics body Insee showed Friday. (DJN) Spain's tourism sector recovered fully from the Covid-19 years in 2023, with visitor numbers topping prepandemic levels as Europeans and Americans flocked to the country. More than 85 million people visited Spain during the year,
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02-05-24 0759ET
