2024-04-05 14:36

April 5 (Reuters) - Richmond Federal Reserve Bank President Thomas Barkin on Friday said the unexpected surge in employment in March and drop in the unemployment rate made for a "quite strong jobs report." "Unemployment is at 3.8%. It's been 26 months in a row with unemployment below 4%," Barkin said at an event in Maryland. "That's the first time that's happened since the late '60s. So the job market is very strong." Barkin said companies are reluctant to layoff workers even with consumption showing signs of moderating because the experience of the ultra-tight job market in the early months of the pandemic remain fresh in employers' minds. Shortly before Barkin spoke, the Labor Department had reported that a greater-than-expected 303,000 jobs had been created in March - the most since last May - and that the unemployment rate had dropped to 3.8% from 3.9%. The remarks from Barkin, a voter this year on Fed interest rate policy, also came a day after he told Reuters that he was finding it hard to reconcile the breadth of inflation he was been observing with the "kind of progress you'd want to make" in returning overall inflation to the Fed's 2% target. Investors are increasingly on the fence about when the Fed will begin cutting interest rates from the current level of 5.25%-to-5.50%, where they've been since July. The most recent projections from Fed officials still showed the majority of policymakers expect three, one-quarter-percentage-point cuts by the end of this year. The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. https://www.reuters.com/markets/rates-bonds/feds-barkin-thats-quite-strong-jobs-report-2024-04-05/

2024-04-05 13:13

April 5 (Reuters) - U.S. employers hired far more workers than expected March while raising wages, suggesting the economy ended the first quarter on solid ground and potentially delaying anticipated interest rate cuts from the Federal Reserve this year. Nonfarm payrolls increased by 303,000 jobs last month, the Labor Department's Bureau of Labor Statistics said in its closely watched employment report on Friday. Data for February was revised slightly lower to show 270,000 jobs added instead of 275,000 as previously reported. Economists polled by Reuters had forecast 200,000 jobs, with estimates ranging from 150,000 to 250,000. MARKET REACTION: STOCKS: S&P 500 e-mini futures pointed to a higher open on Wall Street BONDS: The U.S. Treasury 10-year yield rose 8.9 basis points to 4.398%; Two-year yields rose 7.2 basis points to 4.7127% FOREX: The dollar index rose 0.4% to 104.65 COMMENTS: TIM GHRISKEY, SENIOR PORTFOLIO STRATEGIST, INGALLS & SNYDER, NEW YORK "It's very strong payrolls data... well above the prior month and well above expectations. So it really just shows this is a very strong economy. A strong economy provides less need for the Fed to lower interest rates, and we've seen that impact in the stock market over the past several weeks. Fed speak has been more 'hawkish,' meaning they are not in any hurry to lower rates. It's smart. They are keeping their ammunition for when it's needed." ART HOGAN, CHIEF MARKET STRATEGIST, B RILEY WEALTH, NEW YORK "While we continue to consider the non farm payroll number as the most important piece of data every month, it really takes a backseat to inflation. We continue to be surprised by the number of jobs this economy can produce on a monthly basis entering the year." "The good news in the report is that the unemployment remains below 4% and then the year-over-year increase in wages remains in or about 4.1%. So wages are up not as much as they were at the end of last year so that's good news. There's no inflationary pressure in this jobs report, so I think that's the key takeaway." CHRIS LARKIN, MANAGING DIRECTOR TRADING AND INVESTING, E*TRADE FROM MORGAN STANLEY, NEW JERSEY "Today’s big upside surprise in the jobs report may not have closed the door on a June rate cut, but there’s a little less daylight coming through than there was a day ago. This will make next week’s CPI and PPI even more important." "For months, the stock market has brushed off almost every troublesome bit of data that has come its way, but if those inflation numbers come in hotter than expected for a third month in a row, it could dent the market’s confidence about the Fed’s commitment to cutting rates some time in Q3." ANTHONY SAGLIMBENE, CHIEF MARKET STRATEGIST, AMERIPRISE FINANCIAL, TROY, MICHIGAN "This week's data, including the employment report, complicates the Fed's trajectory of maybe cutting interest rates here in the second half. Expectations for June have come down now after the hotter-than-expected employment number that is on top of a hotter-than-expected manufacturing data, a still an expanding services economy. So the economy is doing really, really well." "What investors are going to have to grapple with now is that the likelihood that the Fed is going to cut at that May or June meetings are probably off the table. We'll get the we'll get the inflation data next week and that'll be really important." "What you're going to see in the rate markets, which you've already seen and what you're starting to see in the stock market, is investors are recalibrating to this idea that we might not get three rate cuts this year. It might be two, and you know, I think it's too early to tell her." "If the economy is running the way it's running now through most of this year, then it might be likely that the Fed does not cut interest rates this year. So that will be a change in expectations for investors." GENNADIY GOLDBERG, HEAD OF US RATES STRATEGY, TD SECURITIES, NEW YORK "The numbers certainly beat expectations on headline, revisions, unemployment rate, average hourly earnings - there’s very few obvious blemishes to this figure so I think it is going to be hard for markets to ignore this particular print. The market is pushing Fed rate cut expectations a little bit further out on this reading, and of course you’re seeing Treasuries bear flatten on this report, so not surprising there." "The source of uncertainty is going to be geopolitics heading into the weekend, and the CPI print coming up next week. So, I do wonder how willing investors are going to be to stay short the rates market heading into a weekend of geopolitical uncertainty and with CPI coming up next week, especially with some of the FOMC speakers recently telling us to focus on CPI rather than economic data more broadly. It could be a bit of a choppy market from here." "I still think if inflation comes down June is still very much on the table for a first rate cut, but of course this very large number could make the Fed think twice about imminently cutting rates, especially if the economy is seemingly quite strong and they’re still adding jobs at a reasonable rate." ALEX COFFEY, SENIOR TRADING STRATEGIST, TD AMERITRADE, CHICAGO "Huge move in yields, no doubt that's the story for sure out of the gate and it makes sense especially after kind of the flight to quality yesterday that maybe was kind of a counter to the recent move that we've seen, which has been this reaction to hotter than expected data - inflationary economic et cetera." "But through the lens of how that ISM services set it up on Wednesday, it was a setup where good was bad and it seems like that's the reaction that we initially got. But when you look at the inflationary piece of this, average hourly earnings year-over-year was in line with expectation, down from prior. Month over month though did heat up a little bit but it was in line with what the expectations were." "So a little bit hotter, especially given the fact that we did see average hours uptick slightly again too. Participation rate went up as well. But to me, it's a pretty big beat on the headline figure with the 303 (thousand), so to me, this is just a good piece of data, but how well the market can stomach a good piece of data as they yearn for rate cuts to kick off early in the summer, and this pushes back on that quite a bit. This seems like one of those situations where after yesterday, it's still going to be a pretty volatile day." BEN LAIDLER, GLOBAL MARKETS STRATEGIST, ETORO, LONDON "This is now our fifth month over 200,000 new jobs. We were all hoping for a cooling labor market to open the door to early rate cuts and instead we may be getting the opposite. Certainly, for the June meeting, this report may well have closed that door." "Markets were braced for a hot report and I think they more than got it. I would fully expect this to be used as an opportunity to some sort of pull back here in the short term for stocks. Think the dollar will get bolstered, Bond yields well, which have been firm for a while will go further up." "This report has piled even more pressure on the two big numbers next week, which is the U.S. inflation report on Tuesday and I think expectations well be for a bad report there. But that certainly has the potential to write to the rescue a little bit." KIM FORREST, CHIEF INVESTMENT OFFICER, BOKEH CAPITAL PARTNERS, PITTSBURGH "(The number) is somewhere in the range that people expect the Fed will still be able to lower interest rates at some point this spring. As weird as this sounds, March unemployment by be the thing saving today's market." "And we sold off in anticipation of this yesterday, so we're going to probably come back a little bit." BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN "The labor market is the gift that keeps on giving jobs, but it's coal for the bond markets. The fears in the markets shouldn’t be about stagflation. The fears are shifting to one of overheating. However, the job gains are in the most economically insensitive areas, like healthcare, so those fears are overblown." "Good job gains where wage gains are modest isn’t inflationary. The Fed doesn’t think it has to kill the economy to tame inflation. This does push out the date when cuts will make sense, but it doesn’t mean the Fed needs to reverse course and start hiking again." PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK "This is a hot number again and unemployment ticked lower." "The real nitty gritty is what happens to hourly wages, which were basically in line with expectations, just slightly over 4%, on a year-to-year basis." "That means that while the fear of a further increase in overall inflation may diminish somewhat, nevertheless it's a strong number." "This means June rate cut is now looking less likely, and the dilemma for the Fed continues." DAVID WADDELL, CEO AND CHIEF INVESTMENT STRATEGIST, WADDELL & ASSOCIATES, NASHVILLE "The headlines are going to talk about unemployment rate being 3.8%, which is a beat but the meaningful data point with the report is average hourly earnings, which have now fallen down to 4.1% year over year, which is the lowest level since June of 2021." "So the employment report was hot, but it was a cooling inflation report and that's why the market can digest it .. this doesn't really change anything." PAUL NOLTE, SENIOR WEALTH ADVISOR & MARKET STRATEGIST, MURPHY & SYLVEST WEALTH MANAGEMENT, ELMHURST, ILLINOIS "Everything in the numbers look good. Participation rate was up, hours worked were up. The reason the unemployment rate came down was because of more people coming into the labor force." "With this number and the prior numbers we've seen, it still indicate that the labor market is strong." "The revisions are the only thing that I'm looking for. We'll find out a little bit more from some of the Fed governors that talk today." "We been in the camp that the Fed doesn't cut rates at all because the economy is strong so this still fits within our framework of good employment data that should keep the Fed on the sidelines." BRAD BECHTEL, GLOBAL HEAD OF FX, JEFFERIES, NEW YORK "It definitely pushes out rate cut expectations. You can see the market is already pricing after September now. That should continue to underpin dollar strength on a broad basis." "I don't know that it'll shake up the carry crowd and the carry narrative, so the high yield versus low yield theme that's been prevalent throughout FX this year. I think that's going to continue to be a popular trade at least through the summer, but the dollar will likely also remain supported just given this shift in rate cut expectations." Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/us/view-march-us-payrolls-beat-expectations-wages-increase-steadily-2024-04-05/

2024-04-05 12:45

LONDON/SINGAPORE, April 5 (Reuters) - Shell (SHEL.L) , opens new tab and Saudi Aramco (2222.SE) , opens new tab, which are competing to buy the assets of Temasek-owned liquefied natural gas (LNG) trading firm Pavilion Energy, are now locked in price negotiations after completing the due diligence process, three sources with knowledge of the matter said. The potential sale comes a decade after the Singapore state investment firm set up Pavilion Energy to focus on LNG-related investments. The assets could fetch more than $2 billion, two of the sources said. Pavilion Energy, Temasek, Shell and Barclays, which is advising Temasek, all declined to comment. Saudi Aramco, whose gas unit is overseeing its negotiations, did not respond to a request for comment. Aramco believes the deal would position it as a global LNG player. It is accelerating its gas exploration and aims to boost production by more than 60% from 2021 levels by 2030. It is also looking at investing in liquefied natural gas (LNG) projects abroad, after last year buying a minority stake in MidOcean Energy for $500 million. LNG trading accounted for nearly a third of Shell's profit in the fourth quarter of last year, The company, the world's largest LNG trader, has operations worldwide that allow it to benefit from regional shifts in demand and pricing. Shell has said it believes gas and LNG will play a critical role in the energy transition by replacing more polluting coal in power plants. As one of four firms appointed by Singapore's Energy Market Authority to import LNG, Pavilion Energy supplies one-third of the city state's power and industrial gas demand with LNG and piped natural gas, according to its website. It also supplies LNG to ships in Singapore, the world's top bunkering port. The company invested about $1.3 billion in three gas blocks in Tanzania in 2013, soon after it was set up, and gained access to Europe with its 2019 purchase of Iberdrola's LNG assets, including regasification capacity in the United Kingdom and Spain. The unlisted company posted profit after tax of $438 million for the year to March 2023, reversing a year earlier loss of $666 million, Temasek's website showed, while revenue rose 38% to $9.09 billion. Shareholder equity value was $3.63 billion as of March 2023, the website showed. Get U.S. personal finance tips and insight straight to your inbox with the Reuters On the Money newsletter. Sign up here. https://www.reuters.com/markets/deals/shell-aramco-final-stage-pavilion-energy-talks-sources-2024-04-05/

2024-04-05 12:39

WASHINGTON, April 5 (Reuters) - The U.S. Transportation Department on Friday said it reached an agreement with Baltimore County to revise an $8.26 million grant agreement to enable Tradepoint Atlantic (TPA) to accommodate more cargo. Repurposing the funds will allow a boost in cargo to Sparrows Point at the Port of Baltimore, which is outside the area affected by last week’s collapse of Baltimore’s Francis Scott Key Bridge and continues to move cargo. The changes will enable Baltimore County and TPA to speed paving at least 10 acres that will be used for an additional cargo laydown area by the end of April, the department said. The U.S. Army Corps of Engineers on Thursday said it expects to open a new channel to the Port of Baltimore by the end of April, freeing up commercial shipping blocked by the bridge wreckage, and then restore port access to full capacity by the end of May. The main channel has been blocked by wreckage since the fully loaded container ship Dali lost power and rammed into a support column of the Francis Scott Key Bridge on March 26, killing six road workers and causing the highway bridge to tumble into the Patapsco River. The Port of Baltimore ranks first in the United States for the volume it handles of autos and light trucks and farm and construction machinery, according to the state of Maryland. The Transportation Department said the grant will more than double prior capacity of 10,000 autos monthly to over 20,000 autos per month at the TPA site. The department last week gave Maryland $60 million in emergency "quick release" funding to begin clearing debris and preparing for rebuilding and on Friday formally asked Congress to recover all costs for rebuilding the bridge. Get weekly news and analysis on the U.S. elections and how it matters to the world with the newsletter On the Campaign Trail. Sign up here. https://www.reuters.com/world/us/baltimore-can-use-grant-boost-cargo-shipments-says-us-transport-department-2024-04-05/

2024-04-05 12:03

LONDON, April 5 (Reuters) - An upgraded gold price forecast for 2024 from Nicky Shiels, head of metals strategy at Swiss gold refinery MKS PAMP, drew an unexpected follow-up question this week from market participants. The enquiry was: "Will or can gold 'go cocoa'?" Cocoa prices have more than doubled since the start of 2024 due to poor harvests in Ivory Coast and Ghana. Meanwhile, spot gold , a much more global and liquid market, hit record highs on five previous trading sessions as investors jumped in looking for exposure to the metal used to preserve wealth. Gold's record high at $2,305.04 an ounce hit on Thursday amounts to a gain of 12% since the start of the year. "There is almost zero probability gold can replicate those gains in that amount of time," Shiels said. While cocoa price growth is driven by supply shortage, the gold market is protected by significant stocks held by individuals and reserves of central banks, which own one-fifth of all the gold ever mined. "One cannot de-stock chocolate bars at the same rate as one can de-stock gold bars," she said. Her forecast for the 2024 average gold price was raised by $150 to $2,200 an ounce. However, while the market may not exactly "go cocoa", analysts retain a bullish tone even as technically the market feels ripe for hefty falls due to it being overbought. "It is hard to say where values are going to top out as there are no resistance "signposts" on the charts," said Marex analyst, Edward Meir. Gold's April rally came on top of its 9.3% jump in March, the strongest since July 2020, which unfolded despite traditional macro headwinds such as a strong dollar and elevated U.S. real interest rates. Over-the-counter and futures gold markets have been buoyant, with an estimated 40% rise in trading volumes, said Johan Palmberg, senior quantitative analyst at the World Gold Council. "And there is outsized activity in the gold options market, in comparison with the likes of equities and bonds, which implies that the current interest is specifically in gold." Further out, many analysts expect gold to test new highs once the U.S. Federal Reserve starts cutting key rates triggering demand from investors sitting on the sidelines such as holders of physically-backed gold exchange traded funds (ETFs). "We had previously proposed a $2,400 per ounce price estimate if the Fed cut rates in the first quarter of 2024; we commit to that estimate for this year, even if rate cuts come later," analysts at BofA said in a note. Get a look at the day ahead in U.S. and global markets with the Morning Bid U.S. newsletter. Sign up here. https://www.reuters.com/markets/commodities/gold-bulls-eye-more-record-highs-despite-lightning-gains-2024-04-05/

2024-04-05 12:00

SARAJEVO, April 5 (Reuters) - The Hungarian government agreed on Friday to help finance 140 million euros ($152 million) of infrastructure and energy projects in Bosnia´s autonomous Serb Republic, the region's government said in a statement. The projects agreed by Serb Republic Prime Minister Radovan Viskovic and Hungary´s Economy Minister Marton Nagy include a waste management programme and building wind and solar parks, the statement said. Two of the projects were launched by the German government but it shut them down last year, along with two other energy projects, citing as the reason the secessionist aims of the region´s nationalist president Milorad Dodik. Hungarian companies Veolia, MVM and Alteo will take part in implementing the projects, according to the statement. On Friday, the two governments organised an economic forum in the Serb Republic's de facto capital of Banja Luka with dozens of companies attending and presenting investment projects. Hungary´s Prime Minister Viktor Orban, whom Dodik decorated with the Serb Republic's highest award, said he believed the Bosnian region could have impressive economic growth in the future, in which Hungary wanted to take part. Orban criticised what he called "foreign meddling" in Bosnia's internal affairs, pledging to help the country on its path towards the European Union integration. ($1 = 0.9234 euros) The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here. https://www.reuters.com/business/energy/hungary-help-with-156-mln-energy-projects-bosnias-serb-region-2024-04-05/