2025-03-07 16:28

March 7 (Reuters) - The Federal Reserve will head into its March 18-19 policy meeting with the labor market strong overall but showing some potential early signs of weakening, a development that could put the U.S. central bank in a tough spot if inflation remains high and the Trump administration's tariffs add to price pressures. U.S. job growth picked up in February, the Labor Department reported on Friday, with employers adding 151,000 jobs. That's well above the monthly growth rate of 80,000 to 100,000 that Fed Governor Christopher Waller on Thursday said he would view as being a healthy level of job creation. Waller and other Fed officials have said a strong labor market for now allows the central bank to keep its benchmark overnight interest rate in the 4.25%-4.50% range as it waits for more progress on inflation, which remains above the 2% goal. But the latest jobs report also showed the unemployment rate ticked up to 4.1% and the number of people settling for part-time work because they couldn't find a full-time position also rose sharply, pushing up a broader measure of unemployment known as the U-6 to 8%, the highest level for this measure of underemployment since October 2021. The federal government shed jobs last month, the report also showed, though analysts said the full effect of workforce reductions spearheaded by tech billionaire Elon Musk and his Department of Government Efficiency may not show up until March or April. "The February employment report showed some softening in conditions even before the impact of the larger cuts to federal hiring and contractors takes effect," Julia Coronado, the president of MacroPolicy Perspectives, wrote in a note. "We continue to expect reduced immigration, federal job losses, and the chilling effect of uncertainty from DOGE payment defaults and tariff policy to substantially slow hiring in the months ahead, so the Fed is likely to face threats to both sides of its dual mandate." Traders of short-term interest rate futures after the report pushed their bets on a start to Fed rate cuts to June, from a view of May before the report, but still see a total of three cuts in 2025. Fed policymakers, who in December felt there would likely be two rate cuts this year, will be updating their rate-path projections at the upcoming policy meeting. U.S. President Donald Trump's on-again, off-again tariff policies have whipsawed investors and prompted some businesses to put investments on hold. Several Fed policymakers have said they want more clarity on the tariffs and other policies before they move rates again. Fed Chair Jerome Powell will give his latest read on the economic outlook and monetary policy later on Friday. Sign up here. https://www.reuters.com/markets/rates-bonds/fed-expected-cut-rates-june-jobs-data-raises-potential-red-flags-2025-03-07/

2025-03-07 16:28

MEXICO CITY, March 7 (Reuters) - Mexico expects to significantly boost the number of compliant companies exporting to the U.S. under a regional trade pact in coming weeks, Economy Minister Marcelo Ebrard said on Friday, after Washington paused tariffs on Mexican shipments entering under the agreement. Ebrard, speaking in a regular press conference alongside President Claudia Sheinbaum, said currently over half of goods going from Mexico to the U.S. were compliant under the U.S.-Mexico-Canada (USMCA) trade agreement - and subsequently eligible for the tariff reprieve announced on Thursday. The minister said he estimated that figure could increase to between 85% and 90% as companies shifted their export practices away from shipping under a so-called "most-favored nation" clause to the USMCA. But Ebrard acknowledged that a group of companies behind 10% to 12% of exports would have greater difficulty complying, mentioning parts of the auto sector in particular. Mexico will meet with auto firms in the coming weeks to work on the issue, he said. While the Detroit Three automakers General Motors (GM.N) , opens new tab, Ford (F.N) , opens new tab, and Stellantis (STLAM.MI) , opens new tab pushed for USMCA-compliant goods to be exempted from tariffs, and applauded the move, some competitors that do not comply could be on the hook to pay the full 25% tariff. At issue are the complex rules of origin stipulated by USMCA which require a certain percentage of parts, as well as the steel and aluminum used to make the vehicle, be sourced in the region. The U.S. imported $181.4 billion in autos and auto parts from Mexico in 2024, representing nearly 10% of Mexico's economy, according to Goldman Sachs. The North American auto supply chain is highly integrated through the United States, Canada and Mexico, as parts cross the border in various stages of manufacturing that could expose car companies to multiple tariffs. STEEL, ALUMINUM TARIFFS ON THE TABLE Mexican officials are also set to meet with U.S. trade authorities next week regarding fresh tariffs on steel and aluminum coming into the U.S., Ebrard said. "Mexico imports more than what the U.S. imports from Mexico," Ebrard said. "We're having those discussions, because there's no justification for having tariffs on aluminum and steel." President Donald Trump has said the U.S. needs to reduce trade deficit with other nations, and used the argument to justify tariffs. Sign up here. https://www.reuters.com/world/americas/after-tariff-victory-mexico-seeks-win-aluminum-steel-shipments-us-2025-03-07/

2025-03-07 15:49

India need to stop defence purchases from Russia, US commerce secretary says Lutnick asks India to lower its high tariffs as part of bilateral deal US wants India to open its agriculture market for American firms US, India aim to sign bilateral trade pact by autumn of 2025 NEW DELHI, March 7 (Reuters) - India needs to buy more defence products and lower its tariffs on U.S. products for the two countries to be able to sign a "grand" bilateral deal, U.S. Commerce Secretary Howard Lutnick told India Today television on Friday. India's import tariffs, among the highest in the world, warrant a reassessment of its "special relationship" with the United States, Lutnick said, speaking from Washington. He also asked India to shift defence equipment purchases away from Russia. Lutnick's remarks come weeks ahead of U.S. President Donald Trump's planned reciprocal tariffs from early April on trading partners, including India, which are worrying exporters across sectors ranging from autos to electronics. "We would like to focus on a bilateral conversation just between India and the United States - bring down the tariff levels that India has, that protects some of its areas," Lutnick said. For sensitive industries like agriculture, which India has long shielded to support its small farmers, Lutnick suggested a trade agreement with quotas and limits but emphasised that India must open up the sector. After a meeting between Trump and Indian Prime Minister Narendra Modi last month, the two countries agreed to resolve tariff rows and work on the first segment of a deal by the fall of 2025, aiming for bilateral trade worth $500 billion by 2030. Indian Trade Minister Piyush Goyal has been on a nearly week-long trip to the United States and on Tuesday met Lutnick to pursue trade talks. "Maybe certain products have quotas. Maybe certain products have limits...And then we do the same thing on the other side and craft an agreement that makes sense for both of us," Lutnick said. "The Indian agriculture market has to open up. It can't just stay closed," he added. Referring to India's high tariffs, Lutnick called them among the steepest globally. Washington wants India to bring tariffs down to zero or negligible in most sectors, except agriculture, under the bilateral trade deal, Reuters has reported. The U.S. has a $45.6 billion trade deficit with India. Overall, the U.S. trade-weighted average tariff rate has been about 2.2%, according to World Trade Organization data, compared with India's 12%. DEFENCE PURCHASES Lutnick also asked India to shift defence equipment purchases from Russia to sophisticated U.S. products. "India has historically bought significant amounts of its military equipment from Russia, and we think that is something that needs to end," he said. The U.S. will increase military sales to India starting in 2025 and eventually provide F-35 fighter jets, Trump announced last month after meeting Modi in Washington. India has agreed to buy more than $20 billion of U.S. defence products since 2008. On the impact of tariffs on inflation, Lutnick dismissed concerns, saying: "Inflation only comes from running deficits and printing money. Tariffs have not created inflation in India, so that argument is nonsense. "I want manufacturing to come back home. And if that means I need to put a 25% tariff on the outside world, I'll do that." Sign up here. https://www.reuters.com/world/us-commerce-chief-says-indias-high-tariffs-call-rethinking-ties-2025-03-07/

2025-03-07 14:24

March 7 (Reuters) - U.S. job growth picked up in February and the unemployment rate edged up to 4.1%, but growing uncertainty over trade policy and deep federal government spending cuts could erode the labor market's resilience in the months ahead. The less-than-expected improvement in job growth brought little relief to investors rattled by tariff-related market turbulence. Nonfarm payrolls increased by 151,000 jobs last month after rising by a downwardly revised 125,000 in January, the Labor Department's said on Friday. Economists polled by Reuters had forecast payrolls advancing by 160,000 jobs after a previously reported 143,000 gain in January. The rise in the unemployment rate was from 4.0% in January. MARKET REACTION: STOCKS: S&P 500 E-minis turned 0.23% lower, pointing to a weak open on Wall Street BONDS: The yield on benchmark U.S. 10-year notes fell to 4.225%, the two-year note yield fell to 3.908% FOREX: The dollar index extended lower and was off 0.55% and the euro slightly extended a gain to stand up -0.7% COMMENTS: BEN MCMILLAN, PRINCIPAL AND CHIEF INVESTMENT OFFICER, IDX INSIGHTS, TAMPA, FLORIDA via text "It came in pretty much in line across the board. The market will welcome that news. No obvious red flags “under the hood” either. It's good news for equities after yesterday . . . The market is pricing in 3 cuts (which I think is optimistic)…this suggests Fed might lean towards fewer than that." BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN "Not to be a Debbie Downer, but there was a shockingly large jump in the number of people working part time because of economic reasons and a large increase in the number of multiple jobholders. While federal employment fell 10,000, the survey was done prior to the large layoffs, so we are likely to see government serving as a drag on payroll growth. At least the average duration of unemployment has ticked lower, so hopefully those individuals will quickly find gainful employment. "The market is back to pricing in three rate cuts in 2025, but I wouldn’t bank on the Fed sending any dovish signals anytime soon. With the unemployment rate at 4.1% and inflation still above target, they have no reason to change their messaging yet." GENNADIY GOLDBERG, HEAD OF US RATES STRATEGY, TD SECURITIES, NEW YORK “It's not quite the softening in economic growth that a lot of investors were expecting based on some of the recent data. So, if you look at recent data surprise indicators, they're really plummeting, which fanned expectations of sharply slower economic growth. The payroll number tells a more moderate story. We're looking at a three-month average of about 200K, a six-month average of about 191K. So, overall payroll growth is still relatively okay, even though it's starting to show a little bit of softening at the edges. For the rates market, it remains to be seen if this is weak enough to continue to drive the rally, although there's going to be a lot of caution before Chair Powell's remarks this afternoon.” “The rising unemployment rate to 4.1% is a bit of a rebound, but not really concerning as an outright level. If you look at something like the underemployment rate, that rose to a cycle high. That could be a little bit concerning, but that rate can be quite volatile as well.” Sign up here. https://www.reuters.com/markets/us/view-feb-payrolls-growth-picks-up-along-with-jobless-rate-2025-03-07/

2025-03-07 14:02

OTTAWA, March 7 (Reuters) - Canadian industries ran at 79.8% of capacity in the fourth quarter of 2024, higher than the upwardly revised 79.4% in the third quarter, Statistics Canada said on Friday. The increase was largely attributed to growth in the construction sector, as well as petroleum and coal product manufacturing. Following are the rates in percent: Q4 2024 Q3 2024 (rev) Q3 2024 (prev) Cap. utilization 79.8 79.4 79.3 Manufacturing 78.2 78.1 78.2 Keywords: CANADA ECONOMY/INDUSTRIAL CAPACITY Sign up here. https://www.reuters.com/markets/canadian-q4-industry-capacity-use-edges-up-798-2025-03-07/

2025-03-07 13:47

Morning Bid U.S. What matters in U.S. and global markets today By Mike Dolan , opens new tab, Editor-At-Large, Financial Industry and Financial Markets In my Friday newsletters, I'll now offer you an overview of the day's market-moving news, a quick glimpse into some top events to watch out for next week, and a list of some stories you may have missed amid all the market ructions. Today's Market Minute Wall St turns to jobs picture On or off? Partial or universal? Higher or lower? Business and markets have no clear idea what U.S. import tariffs are going to be, a gnawing uncertainty about trade and prices that could potentially prove as corrosive as the tariffs themselves. Attention now turns squarely to the labor market on Friday with the release of February's U.S. payrolls report. Markets are already on edge following Thursday's news that planned U.S. layoffs soared last month to the highest point since the pandemic recession in 2020, even though weekly jobless claims fell unexpectedly. Meanwhile, private sector jobs in February rose only about half the amount forecast, based on the ADP report released earlier this week. The Atlanta Federal Reserve's real time 'GDPNow' model is still tracking a contraction for the economy of 2.4% for the first quarter, though the forecast did improve slightly in recent days. While chipmaker Broadcom's post-bell surge on its latest results helped steady U.S. stock futures early on Friday, Wall Street stocks have recorded another rough week. Heavy losses on Thursday saw the S&P 500 (.SPX) , opens new tab clock its biggest daily loss of the year so far, as it hit its lowest point since before U.S. President Donald Trump's was re-elected on November 5. And for chart-watchers, the index fell below its closely-watched 200 day moving average. The tech-heavy Nasdaq (.IXIC) , opens new tab is now in what's known as correction territory, having recoiled more than 10% from its December record high. Bitcoin fell back again, with traders disappointed by Trump's latest plans for a crypto reserve. Global shares fell broadly on Friday too, following Wall Street's lead amid U.S. trade and recession fears. But even after the latest European Central Bank interest rate cut on Thursday, the euro continued its march higher against the ailing dollar (.DXY) , opens new tab, with European leaders agreeing on a 150 billion euro defense fund overnight to add to Germany's seismic fiscal stimulus plans announced earlier in the week. The euro is now on course for its best week against the dollar in 16 years. Today's key chart Layoffs announced by U.S. employers jumped to levels not seen since the last two recessions amid mass federal government job cuts, canceled contracts and fears of trade wars. Global outplacement firm Challenger, Gray & Christmas said planned job cuts vaulted 245% month-over-month to 172,017 in February, the highest level since July 2020 when the economy was in the grips of the COVID-19 pandemic and the highest February total since the Great Recession 16 years ago. Today's events to watch Top events to watch for next week Stories away from major macro developments that you might have missed this week: Sign up here. https://www.reuters.com/markets/us/global-markets-view-usa-2025-03-07/