2024-07-09 20:29

WASHINGTON, July 9 (Reuters) - Rent and housing costs are keeping U.S. inflation higher than preferred but consumer price pressures will continue to come down over time, Treasury Secretary Janet Yellen said on Tuesday, as a top White House adviser cited what she called "tremendous progress" in bringing down inflation. Yellen told the U.S. House of Representatives Financial Services Committee that inflationary factors including supply issues and labor market tightness have eased, which would help continue to drive down consumer price pressures. "I believe that it (inflation) will continue to come down over time. Rents and housing costs continue to leave it higher than we would ideally like," Yellen told the U.S. House panel on financial services. "Although the labor market was initially very tight, now we have a strong labor market, but one with fewer pressures that would create inflationary concern, so inflation is coming down," she said. Lael Brainard, chair of the White House National Economic Council and a former vice chair of the Federal Reserve, said the Biden administration is encouraged by continued progress on lowering inflation, but President Joe Biden would keep fighting to lower the cost of living for working families. Brainard said several months of data had confirmed that inflation was returning to the Fed's 2% target, noting that the most recent data showed an inflation level of 2.6%, which she said marked "tremendous progress." The inflation target is set in reference to the Personal Consumption Expenditures price index, which as of May was increasing at a 2.6% year-over-year rate. Looking more closely at the underlying categories of inflation showed an actual reduction in food prices, and gasoline prices holding steady at around $3.50 a gallon over the July 4 "driving holiday," Brainard added. "But we also know that Americans are still squeezed by the cost of living," Brainard said. She said Biden would continue to push for more affordable housing, slower increases in rents and the introduction of tax credits to help first-time homeowners. The Fed receives consumer price information for the month of June on Thursday. The consumer price index did not rise at all in May, and analysts anticipate another weak reading later this week. Sign up here. https://www.reuters.com/markets/us/us-treasurys-yellen-inflation-will-continue-ease-over-time-2024-07-09/

2024-07-09 20:18

July 9 (Reuters) - Leaders across the Caribbean were still tallying the financial toll wrought by the earliest Atlantic storm on record to intensify to the maximum Category 5 level, after it left a trail of destruction on Jamaica and islands of the eastern Caribbean. "There is no doubt this disaster will have a major impact on Grenada's economic situation," Prime Minister Dickon Mitchell told a briefing on Tuesday. "We are talking hundreds of millions of dollars in losses and hundreds of millions of dollars to rebuild." Grenada's Carriacou and Petite Martinique islands face "almost complete devastation," he added, saying people who lost their homes were particularly vulnerable to the elements. Mitchell emphasized the need to rebuild structures resistant to storms, noting many of the country's wood houses are not insured as severe weather becomes more frequent due to record sea temperatures, which scientists say is due to fossil fuel-driven climate change. A team of insurers is set to arrive on Wednesday and the government plans to announce fiscal measures by early next week. St. Lucia posted early estimates of close to $2 million from damages including buildings, sea moss harvests and banana plantations. Rainfall and debris hindered assessments in Jamaica, whose agriculture sector initially reported over $6 million in damages. CARICOM chair Mohammed Ali said many long-term crops were lost and farmers would face issues for years to come in a "heart-breaking" initial assessment for agriculture. As a result, debt-saddled Caribbean economies may become more reliant on agricultural imports that are subject to inflation they do not control. Despite producing few emissions, Caribbean nations are among the world's most vulnerable to climate change, which is heating the oceans and increasing the frequency and intensity of severe storms. The region has long-called for more action from top-polluting wealthy nations, such as honoring their climate pledges and considering debt relief, but climate-related financing and loans have funneled billions back to rich countries. Sign up here. https://www.reuters.com/world/americas/caribbean-braces-economic-punch-after-seasons-deadly-first-hurricane-2024-07-09/

2024-07-09 20:15

NEW YORK, July 9 (Reuters) - Global oil demand will outpace supply next year, the U.S. Energy Information Administration said on Tuesday, reversing a prior forecast for a surplus. The change came after OPEC and its allies, collectively known as OPEC+, extended most of their deep oil output cuts into next year at a meeting last month. The producer group has been restricting output since late 2022 to shore up oil markets in the face of weakening demand growth, high interest rates and record U.S. output. If the market goes into a deficit, refiners will need to drain oil from inventories to meet demand. The deficit will be smaller next year than this year, the EIA said. Global oil demand will average about 104.7 million barrels per day (bpd) next year, while supply will be around 104.6 million bpd, the EIA said in its monthly short-term energy outlook. The EIA pegged global demand at around 104.5 million bpd and supply at 104.7 million bpd and in its previous forecast. Lower OPEC+ output is also deepening the supply deficit through the rest of this year, EIA projections showed. World oil demand will exceed output by around 750,000 barrels per day in the second half of 2024, based on EIA's outlook. Its earlier forecasts showed a smaller deficit of about 550,000 bpd in the second half this year. Withdrawals from global inventories will push oil prices higher, EIA said. Global benchmark Brent crude prices will average $89 a barrel in the second half this year, up from $84 a barrel in the first half, it said. The market could flip to a surplus again from the third quarter of next year if OPEC+ unwinds production cuts, the EIA said. The producer group said last month that it would slowly unwind some voluntary cuts from October. "We anticipate that the market will gradually return to moderate inventory builds in 2025 after the expiration of voluntary OPEC+ supply cuts in 4Q24 and after forecast supply growth from countries outside of OPEC+ begins to offset growth in global oil demand," EIA said. U.S. oil output will grow by 320,000 barrels per day this year to a record of 13.25 million bpd, slightly more than its previous forecast of 13.24 million bpd, EIA said. Sign up here. https://www.reuters.com/markets/commodities/global-oil-market-seen-supply-deficit-next-year-eia-says-2024-07-09/

2024-07-09 19:50

CAIRO, July 9 (Reuters) - Yemen's Houthis said on Tuesday that they targeted the Maersk Sentosa ship in the Arabian sea with several ballistic missiles, as well as two other ships, including one in the Gulf of Aden. Sign up here. https://www.reuters.com/world/middle-east/yemens-houthis-say-they-attacked-maersk-sentosa-ship-arabian-sea-2024-07-09/

2024-07-09 19:49

SANTIAGO, July 9 (Reuters) - Chilean officials on Tuesday said they will consider 81 proposals for lithium projects, putting the country on track to surpass a goal of four new projects by the end of 2026, even as questions remain about how the process will move forward. Chile in April called for proposals in more than two dozen salt flats that contain the battery metal, in line with the government's aims to boost production. It is currently the world's No. 2 producer, with output coming from just two companies, Chile's SQM and U.S.-based Albemarle. The firms interested in new projects are mostly Chile-based, as well as from Canada, Australia, Switzerland, the United States, China, Singapore, England, Germany and India, officials said. The companies, which officials declined to name, submitted proposals for 16 salt flats across several regions, as well as other types of deposits containing lithium. The Mining Ministry said the salt flats that attracted most interest are the ones with the best potential for extracting lithium, according to available information from Chile's geology service. The government will announce the process to award lithium extraction contracts next month, and potentially provide updates on projects in April or May of next year, Finance Minister Mario Marcel said. The Mining Ministry said in a statement it is looking at various factors as it plans how to award contracts, including financial capacity, estimated annual production, planned technology and mining experience. Some industry players say there is still lack of clarity about how the lithium contracts will be awarded and how the government will handle cases of overlapping ownership - given that in many areas, concessions for metals other than lithium have already been awarded. SONAMI, Chile's second-biggest mining association, said in a report released Tuesday ahead of the government announcement that prior statements from mining officials had raised more questions than answers, particularly around overlapping ownership and new technology known as direct lithium extraction (DLE). "It's not clear how they are looking at these aspects," SONAMI said. Marcel said the finalized list of contenders, after the government received proposals last month, is stronger than expected and could help Chile move faster to develop new projects by its goal for 2026. President Gabriel Boric's administration ends in March of that year. Boric has sought to boost the state role in the country's lithium industry notably across the Atacama salt flat, which has the highest lithium concentration in the world, while offering less explored deposits up to private developers. Sign up here. https://www.reuters.com/markets/commodities/chile-will-consider-81-lithium-projects-proposals-private-sector-2024-07-09/

2024-07-09 19:21

NEW YORK, July 9 (Reuters) - Some of the largest U.S. banks will probably report weaker profits for the second quarter as they earn less from interest payments and set aside more money to cover deteriorating loans, analysts said. As banks kick off earnings season on Friday, analysts predict provisions could rise for potential losses on commercial and industrial (C&I) loans, as well as those on commercial real estate. "There is a credit cycle during every economic expansion," said Betsy Graseck, a banking analyst at Morgan Stanley. "We're conservatively baking in normalization of the credit cycle," she said, referring to typical loss levels on bad loans across consumer and commercial loans. C&I loans pose greater risks to major banks than they did in 2023, according to the Federal Reserve's latest health check last month. Under the Fed's stress-test scenario, C&I loss rates are projected to rise to 8.1%, from 6.7% in last year's exam. Despite the lackluster outlook, Wall Street divisions should benefit from a pickup in dealmaking. Merger and acquisition volumes hit $1.6 trillion globally in the first half of the year, up 20% from a year earlier, Dealogic data showed. Equity capital market volumes climbed 10% during the same period. Analysts will also pay close attention to banks' commentary on interest income, as market participants increasingly expect the Fed to cut interest rates in the coming months. Banks have had an easier time hanging on to customer money as rates stabilize, dampening competition for deposits. "All the deposit customers that were going to move their deposits for a higher rate in a money market account or at an internet bank have probably done it," said Chris Kotowski, a banking analyst at Oppenheimer. Banks can then put those deposits to work by repricing loans at higher levels. Industrywide, net interest income (NII), or the difference between what banks earn on loans and pay out for deposits, will likely reach a trough in the second or third quarters before starting to climb as banks negotiate fresh loans at relatively higher rates, he said. Interest rates had slumped during the pandemic, which pushed mortgage rates to historic lows in 2021 and auto loans to multi-year lows, before the Fed started raising rates in early 2022. "Fixed assets that would include mortgages and auto loans are going to re-price from a very low rate," Kotowski said. Here are the main factors to watch for, according to analysts, as the six biggest U.S. banks announce their results: JPMORGAN The largest U.S. lender is expected to report a 13% decline in earnings per share (EPS) in the second quarter versus a year earlier as it invests more in the company, causing expenses to climb. BANK OF AMERICA The second-biggest U.S. bank will likely post a 9% drop in EPS, hurt by lower NII. WELLS FARGO Wells Fargo's EPS is expected to climb 3%, buoyed by investment-banking fees and lower provisions for credit losses. Still, its NII is predicted to remain lackluster. CITIGROUP Profits are forecast to rise, propelled by strength in the services division that Citi calls its "crown jewel," and higher investment banking fees. GOLDMAN SACHS Earnings are expected to more than double versus the second quarter of 2023, when they dropped to a three-year low. Goldman will probably benefit from a revival in deals, combined with fewer writedowns for its consumer business. MORGAN STANLEY Rival Morgan Stanley's EPS is expected to climb 33%, lifted by rising activity in mergers, acquisitions and capital markets. *LSEG mean estimates Sign up here. https://www.reuters.com/business/finance/us-bank-profits-face-pressure-lower-interest-payments-higher-credit-losses-2024-07-09/