2024-01-10 20:18

WHITE PLAINS, New York, Jan 10 (Reuters) - Federal Reserve Bank of New York President John Williams said Wednesday that it’s still too soon to call for rate cuts as the central bank still has some distance to go on getting inflation back to its 2% target. The policy maker also said that banking sector liquidity levels do not signal any near-term need for the Fed to stop the contraction of its balance sheet, a process which has complemented rate hikes aimed at bringing inflation back to 2%. “We have seen meaningful progress on restoring balance to the economy and bringing inflation down,” Williams said in a speech before the Bronx EDC and BICNY’s 2024 Regional Economic Outlook in White Plains, N.Y., while adding “our work is not done.” “I expect that we will need to maintain a restrictive stance of policy for some time to fully achieve our goals, and it will only be appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward 2% on a sustained basis,” Williams said. The official said the economic outlook remains “highly uncertain” and said decisions about monetary policy will be made meeting-by-meeting, based on “the totality of the incoming data, the evolving outlook, and the balance of risks.” Williams’ comments were his first of the year and followed a television appearance in late December that pushed back at the market view that the most recent rate-setting Federal Open Market Committee meeting had set the stage for rate cuts by spring. At the December gathering officials maintained their overnight rate target at between 5.25% and 5.5%, while penciling in a several rate cuts for this year amid expectations that softening inflation pressures would continue to ease back toward the 2% target. The meeting drove markets to price in a possible rate cut by March, a view investors still hold, even as a number of central bankers have argued over recent weeks that it’s too soon to say when a rate cut might happen. Speaking with reporters after his remarks, Williams declined to comment on the market's bet on the near-term outlook for monetary policy. "Before we dial back on the restrictive stance of policy, I think it's important that we're confident that we're moving toward 2%," Williams said, adding that when it comes to lowering rates, "I'm not making a prediction" as to when that might take place. But he also said the Fed is in a "good place" to take in data and consider its next moves. The New York Fed president reiterated his view that over time monetary policy will need to bring rates down to track declining inflation, because keeping them in place in such an environment would create a rise in monetary policy restraint. Williams also declined to say how a broad easing in financial conditions that in theory adds lift to the economy will affect the Fed outlook. He noted markets have been very volatile but over the longer run, they have gotten tighter than they were. INFLATION ENDGAME IN SIGHT Williams said in his formal remarks the Fed has made considerable progress on lowering inflation, including in challenging areas like those for services. He sees inflation ebbing to 2.25% this year and to 2% next year. “We are clearly moving in the right direction,” Williams said, adding “we still are a ways from our price stability goal.” The New York Fed leader also said monetary policy will slow growth to about 1.25% this year and cause the unemployment rate, now at 3.7%, to rise to 4%. Williams also said the shrinkage of the Fed’s balance sheet, commonly referred to as quantitative tightening, has moved forward smoothly and there are yet to be any signs of liquidity issues that would cause the Fed to stop an effort that has shrunk its holdings by over $1 trillion. Williams did not give a time table for changing gears on the balance sheet, while noting that matter would be under debate by the Fed this year. The official told reporters recent money market volatility represents a normalization for that part of the market and said that it wasn't affecting the Fed's ability to control the federal funds rate. https://www.reuters.com/markets/us/feds-williams-says-more-work-needed-bring-inflation-back-target-2024-01-10/

2024-01-10 19:50

WASHINGTON, Jan 10 (Reuters) - Cummins (CMI.N) agreed to a record-setting fine in a $2 billion settlement of a lawsuit filed on Wednesday by the U.S. Justice Department and California charging the truck engine maker with installing devices designed to cheat emissions control. The lawsuit said Cummins installed "defeat devices" to bypass or disable emissions controls such as emission sensors and onboard computers. U.S. officials they were ramping up enforcement after a series of excess emissions cases in recent years. "These results should send a powerful message that admission cheating attempts by vehicle and engine manufacturers will not be tolerated," said Todd Kim, who heads the Justice Department’s Environment and Natural Resources Division. Cummins, which is to pay a record-setting $1.675 billion fine, did not admit any wrongdoing under the settlement agreement. The Justice Department said Cummins used defeat devices on 630,000 pickup truck engines it produced for RAM trucks made by Stellantis (STLAM.MI). It said the engines were made for RAM 2500 and 3500 vehicles from 2013 to 2019. Justice said Cummins also had undisclosed auxiliary emission software on 330,000 2019-2023 pickup truck engines. Under the settlement, which is subject to court approval, the $1.675 billion fine to be paid by Cummins includes $1.48 billion to the federal government, $164 million to the California Air Resources Board and $33 million to the California Attorney General's Office. The Justice Department said it is the largest-ever civil penalty for a Clean Air Act violation. Cummins will also spend more than $325 million to remedy the excess emissions, including $175 million to California to reduce excess nitrogen oxide, and will fund replacement high-emitting diesel locomotive engines. Cummins said the settlement does "not involve any additional financial commitments beyond those disclosed by Cummins" last month. It said in December that it expected to take a $2.04 billion charge in the 2023 fourth quarter to resolve emissions claims. "The company has seen no evidence that anyone acted in bad faith and does not admit wrongdoing," Cummins has said. EPA enforcement chief David Uhlmann told reporters Wednesday that "Cummins would not be paying $2 billion today to settle these claims if the company did nothing wrong." He said using illegal on more than 600,000 vehicles "over a six-year period is wrongdoing." RAM-owner Stellantis (STLAM.MI) declined comment. The 960,000 vehicles have been recalled and emissions controls software updated. Cummins must pay higher penalties if at least 85% of recalled vehicles do not get software updates. In August 2022, the U.S unit of Fiat Chrysler Automobiles -- now part of Stellantis -- pleaded guilty to criminal conspiracy and paid nearly $300 million to resolve a Justice Department diesel-emissions fraud probe. Volkswagen (VOWG_p.DE) paid $1.45 billion in civil penalties in 2017 after the German automaker disclosed it cheated emissions tests by installing defeat devices" in 11 million vehicles worldwide, using sophisticated software to reduce emissions only during emissions tests. https://www.reuters.com/legal/cummins-agrees-settle-us-emissions-defeat-device-suit-2024-01-10/

2024-01-10 19:44

Jan 10 (Reuters) - Cryptocurrency company Ripple Labs, known for its XRP coins, is buying back $285 million worth of shares in the company from early investors and employees, two sources familiar with the matter told Reuters. The investment, also known as a tender offer, valued the company at $11.3 billion. Investors are only allowed to sell up to 6% of their stake, sources added, who requested anonymity. The privately-held company confirmed the tender offer, and said it plans to spend $500 million in the planned buyback to cover the costs of converting restricted stock units into shares and taxes. It expects to do more share buybacks on a regular basis to provide liquidity for investors and has no plan to go public in the United States any time soon due to regulatory uncertainty, said Brad Garlinghouse, chief executive at Ripple. Garlinghouse said Ripple now holds over $1 billion cash and over $25 billion worth of crypto, mostly XRP coins, on its balance sheet. The offering comes after Ripple's partial win in its lengthy legal fight with the U.S. Securities and Exchange Commission, where a U.S. District Judge found that sales of XRP on public exchanges were not unregistered securities offerings. Founded in 2012, the company builds a payment system that facilitates cross-border transactions while promoting the use of XRP. It bought Switzerland-based crypto custody firm Metaco for $250 million last May. "Growing in the headwinds of the SEC lawsuit was certainly a challenge, but 95% of our customers are non-US financial institutions," said Garlinghouse, who declined to disclose the size of the payment business. XRP had a market cap of $30 billion as of Wednesday, according to CoinMarketCap. https://www.reuters.com/technology/ripple-buy-back-285-million-its-shares-valuing-company-11-bln-sources-2024-01-10/

2024-01-10 19:43

U.S. CPI data due Thursday Expecting a quiet session ahead of inflation data- analyst Platinum hits one-month low Palladium snaps 11-session losing steak Jan 10 (Reuters) - Gold prices eased on Wednesday ahead of U.S. inflation data that could shape the Federal Reserve's outlook on interest rate cuts this year, although a softer dollar kept a floor under prices. Spot gold was down 0.4% at $2,021.39 per ounce by 2:25 p.m. ET (1925 GMT). U.S. gold futures settled 0.3% lower at $2027.8. Cooler-than-expected inflation data will give the Fed more reason to cut rates this year, which should move gold prices higher, said Bob Haberkorn, senior market strategist at RJO Futures, adding that he expected "a quiet session with a little bit of back and forth." U.S. consumer inflation data is due on Thursday. Economists polled by Reuters see year-on-year inflation at 3.2% in December, but think core inflation likely fell to 3.8%, its lowest since mid-2021. (USCPI=ECI), (USCPNY=ECI) A New York Federal Reserve report revealed that consumers expect a decline in inflation, while Fed Governor Michelle Bowman on Monday stated that the U.S. central bank's monetary policy seems "sufficiently restrictive". Benchmark 10-year U.S. Treasury yields ticked up, denting bullion's appeal. Higher interest rates raise the opportunity cost of investing in non-yielding bullion. "If markets have to dilute bets for a March rate cut, spot gold may see a brief stint back in the sub-$2k domain," said Han Tan, chief market analyst at Exinity Group. "Still, bullion bulls would have no qualms restoring spot gold back above that psychologically important mark once markets get a firmer grasp on the Fed's policy pivot." The dollar index (.DXY) ticked down about 0.2%, making greenback-priced bullion more affordable for buyers holding other currencies. In other metals, spot silver fell 0.3% to $22.91 per ounce, set for its third consecutive session of declines. Platinum lost 1.3% to a near one-month low of $917.55, while palladium rose 1.8% to $995.69, snapping an 11-sesion losing streak. https://www.reuters.com/markets/commodities/gold-holds-steady-ahead-us-inflation-print-2024-01-10/

2024-01-10 19:35

Jan 10 (Reuters) - Walmart (WMT.N) on Wednesday said it had temporarily closed about a dozen stores due to scattered power outages on the East Coast following a massive winter storm that has put more than 90 million people under high wind and flooding advisories. A company spokesperson said the store closure number fluctuates and the winter storm has had minimal impact on Walmart's business with people stocking up on staples, snacks and baby food. As of Tuesday, the storm has knocked out power to about 811,000 homes and businesses in 12 states ahead of a brutal freeze expected to blanket the eastern half of the United States starting this weekend. A Home Depot (HD.N) spokesperson said one New Jersey store closed a few hours early on Tuesday night but was back open Wednesday morning, while Lowe's (LOW.N) said its stores in some areas were operating on backup power but remained open. Lowe's added that it was routing additional critical response supplies like tarps, generators and sump pumps to the areas impacted by the storm. Burrito chain Chipotle Mexican Grill (CMG.N) was seeing adjusted store hours and isolated closures sporadically but nothing with a major impact, a company spokesperson said. Meanwhile, Target (TGT.N) and supermarket chain Kroger (KR.N) said they were not seeing any impact on store operational hours at this time. https://www.reuters.com/world/us/walmart-closes-dozen-stores-following-winter-storm-east-coast-2024-01-10/

2024-01-10 19:17

NEW YORK, Jan 10 (Reuters) - A comparatively hawkish European Central Bank is likely to keep the dollar under pressure against the euro in the near term, though the greenback could recover later in the year as chances of a U.S. recession rise, Citigroup strategists said. "Tactically, we are a bit more constructive on the euro (vs the dollar) in terms of looking for the ECB to be a lot slower to pivot than the Fed," Daniel Tobon, Citi's head of G10 FX strategy said on Wednesday in a virtual panel discussion as part of Citi’s Year Ahead Conference 2024. "We do think, though, that ultimately the dollar can strengthen a bit later on in the year given our economists call for a U.S. recession and ultimately an ECB pivot," Tobon said. Euro zone inflation jumped as expected last month, supporting the European Central Bank's case to keep interest rates at record highs for some time, even as cooling U.S. inflation is widely expected to allow the Federal Reserve room to start cutting interest rates later this year. The Fed last month projected it could cut rates by as much as 75 basis points in 2024 from their current range of 5.25% to 5.50%, with futures tied to the Fed's policy rate showing investors factoring in nearly twice that amount. Consumer price data on Thursday is expected to show whether prices are continuing a cooling trend that began last year, potentially setting the stage for easier monetary policy. The euro has advanced nearly 5% against the dollar since early October with investors aggressively pulling forward market bets for U.S. interest rate cuts. Most market participants in a recent Reuters poll of strategists said the dollar will slip against major currencies in 12 months, weighed down by as the Fed rate cuts. Citi's Tobon said economic strength in Europe was the biggest risk to their call for a recovery in the dollar in the later part of the year, as it would allow the ECB to remain hawkish. Meanwhile, benchmark 10-year Treasury yields will likely end 2024 around 3.9%, though they will "move around quite substantially over the course of the year," Jabaz Mathai, head of G10 rates and FX strategy at Citi, said in a separate discussion as part of the firm's year-ahead outlook Wednesday. Mathai sees it as unlikely that 10-year yields will test the nearly 16-year highs of 5% they reached in mid-October, he said. Instead, the primary driver of yields will be the strength of the U.S. economy and supply, which will likely hit $1.7 trillion in coupon issuance in 2024, Mathai said. https://www.reuters.com/markets/currencies/citi-sees-us-dollar-weak-near-term-rebounding-later-2024-2024-01-10/