US annual house price growth slows further in January

US annual house price growth slows further in January

WASHINGTON (Reuters) - U.S. single-family home prices moderated further on an annual basis in January, which together with declining mortgage rates could pull buyers back into the housing market.

The S&P CoreLogic Case-Shiller national home price index, covering all nine U.S. census divisions, increased 3.8% year-on-year in January, data showed on Tuesday, marking the ninth straight month of decelerating annual home price gains. That followed a 5.6% advance in December.

The moderate rise also reflected last year's large increase dropping out of the calculation. Monthly prices fell 0.2% in January after adjusting for seasonal fluctuations.

The housing market has been squeezed by the Federal Reserve's aggressive interest rate hikes to tame high inflation, with residential investment contracting for seven straight quarters, the longest such streak since the collapse of the housing bubble triggered by the 2007-2009 Great Recession.

But mortgage rates have resumed their downward trend, with the Fed last week indicating it was on the verge of pausing further increases in borrowing costs after the collapse of two regional banks caused financial market stress.

"Given the mortgage investor market response since Fed's March meeting, home price growth may surprise to the upside if mortgage rates remain favorable, especially in light of continued supply constraints," said Selma Hepp, chief economist at CoreLogic.

"But, ongoing volatility in mortgage rates and fallout from the banking crisis could put a damper on spring home-buying season, particularly if credit tightening impacts mortgage availability and consumer confidence takes another hit."

Annual house price growth remained strong in the Southeast, with double-digit gains in Miami and Tampa. Solid price increases were also recorded in Atlanta and Charlotte. The South experienced an influx of population as companies offered workers the flexibility to work anywhere during the COVID-19 pandemic.

House prices continued to decline in the West. Annual house prices fell in San Diego, Portland, San Francisco and Seattle. The region experienced rapid house price increases in prior years.

The cooling in overall house price inflation was reinforced by a separate report from the Federal Housing Finance Agency on Tuesday showing home prices climbed 5.3% in the 12 months through January after rising 6.7% in December. House prices rose 0.2% month-on-month after dipping 0.1% in December.


2023-03-28 21:57:00     Come from : Reuters

BoE's Bailey: Volatile markets are looking for weaknesses

BoE's Bailey: Volatile markets are looking for weaknesses

By Geoffrey Smith -- The recent volatility in banking stocks is a sign of financial markets looking for weaknesses, rather than a rerun of the last financial crisis, Bank of England Governor Andrew Bailey said on Tuesday.

"I don’t think we are at all in the position that we were in in 2007 and 2008, Bailey told the House of Commons Treasury Select Committee. "The U.K. banking system is in a strong position, both capital and liquidity-wise, and is not showing signs of stress in that respect."

Bailey was facing questions from lawmakers about the recent collapses of banks in the U.S. and Switzerland, which raised concerns in financial markets of broader instability in the global financial system. On Friday, in particular, European bank stock had sold off sharply amid concerns that Deutsche Bank (ETR:DBKGn) and others may be too exposed to commercial real estate, a sector that has been hard hit by the sharp rise in interest rates over the last year. 

"I think there are moves in markets that, if you like, test out firms," Bailey said of Friday's volatility. "I would not want to say that those in my estimation are based on identified weaknesses rather than testing out."

He added that Credit Suisse's woes were "an institutional-specific story about long-run issues," rather than being symptomatic of the broader sector. 

Bailey nonetheless warned that there could be real-world consequences from recent events, which have caused banks to pull back on lending. He acknowledged that "we see some evidence of some tightening credit conditions, but we do not see a critical development." 

Bailey, as with his counterparts in the U.S. and Eurozone, has acknowledged that tighter credit conditions could end up reducing the need for further increases in official interest rates, inasmuch as it will have the same impact on reducing demand. 

“We always take into account credit conditions when setting monetary policy,” Bailey said. "We are in a position of very heightened…tension and alertness and we will go on being vigilant."

Before Bailey spoke, data released earlier on Tuesday had underlined how little scope the Bank has for accommodating fears about banking vulnerabilities. The British Retail Consortium said that annual food price inflation hit a new record of 17%, tightening the cost of living squeeze on poor families in particular. Food accounts for nearly 10% of the Office for National Statistics' basket of goods and services that make up the consumer price index. 


2023-03-28 21:52:00     Come from :

Italy to unveil new $5.4 billion package to soften energy costs, officials say

Italy to unveil new $5.4 billion package to soften energy costs, officials say

By Giuseppe Fonte

ROME (Reuters) - Italy will detail on Tuesday a new package of measures worth almost 5 billion euros ($5.41 billion) to cut costly energy bills paid by families and firms, government officials said.

The office of Prime Minister Giorgia Meloni called a press conference at the end of the cabinet meeting scheduled for 1500 GMT to discuss the measures.

Rome earmarked over 21 billion euros in its 2023 budget to soften the impact of energy costs on the euro zone's third-largest economy in the first quarter of this year.

Meloni aims to revamp these measures using part of the funding initially set aside but not yet spent due to a recent drop in energy prices, the officials said.

The benchmark gas contract on the Dutch TTF hub hovers around 42 euros per megawatt hour (MWh) at present, sharply down from 73 euros in early 2023.

The government will extend until June an existing bonus aimed at cutting energy bills paid by low-income households, which benefits people with an annual income of up to 15,000 euros.

Separate tax bonuses will help firms whose spending for electricity and gas supplies in the first quarter of 2023 increased by more than 30% compared with the same period in the year 2019.

A flat-flee bonus to compensate gas costs for families will take effect from October until December.

Rome also intends to soften a windfall tax weighing on energy companies that have benefited last year from oil and gas prices.

The right-wing administration plans to apply a 50% one-off levy on the part of 2022 corporate income which is at least 10% higher than the average income reported between 2018 and 2021.

Italy said last November it expected to raise around 2.565 billion euros from the scheme, but now the Treasury wants to exclude part of the companies' reserves from the 2022 income which is needed to estimate the tax due, according to the draft.

($1 = 0.9235 euros)


2023-03-28 21:26:00     Come from : Reuters

Europe's banks in 'better place' than U.S. in terms of commercial property risk - JPMorgan

Europe's banks in 'better place' than U.S. in terms of commercial property risk - JPMorgan

By Marc Jones

LONDON (Reuters) - Europe's banks face less threat from some of the problems now showing in the commercial real estate markets than their U.S. counterparts, analysts at JPMorgan (NYSE:JPM) have said.

Economists are worried commercial property could be the next shoe to drop if problems in global banking markets trigger a broader credit crunch for the multi-trillion-dollar sector that was already under pressure.

Demand for office space has been sapped by the pandemic-era trend of working from home and though rising global interest rates have made it more expensive for firms to borrow, the structure of the European market has provided some comfort.

"Fundamentally, we believe that any contagion from either U.S. banks or U.S. CRE (commercial real estate) onto European peers is not justified, given different sector dynamics," JPMorgan analysts said in a research note published late on Monday.

Whereas the U.S. market is blighted by high office vacancy rates and negligible rental growth, they highlighted that Europe has far fewer empty properties and benefits from more inflation-linked rental contracts.

"Europe: 2 – US: 0!" JPMorgan said, summarising the situation as if it were a soccer match.

Policymakers' main fear is a so called "doom loop" where concerns about banks' health trigger a deposit flight and encourage banks to start calling in real estate loans in a bid to free up money.

That would accelerate a property sector downturn, aggravating underlying health concerns as it did during the 2007-08 global financial crisis and a number of other major crashes.

Analysts at Capital Economist estimated this week that U.S. commercial property prices will slump a further 18-20%, having already fallen 4-5% from their peak in mid-2022.

Lending to commercial property accounts for about 40% of all loans by smaller U.S. banks, defined by the Federal Reserve as being those outside the 25 largest by asset size. These banks account for about 70% of outstanding loans to the commercial real estate sector.

JPMorgan said an important part of its more positive view on European CRE was the willingness of European banks to continue providing finance to the sector as wholesale funding markets have started to clam up.

"In our opinion, liquidity is the crux of the matter, especially in the context of such an illiquid asset class as CRE," the bank's analysts said.

"Quite flippantly, we would be tempted to say that valuations don’t matter until you need to sell the assets, quickly!"


2023-03-28 20:50:00     Come from : Reuters

Reduced credit availability a 'headwind, not a hurricane' for U.S. economy - GS

Reduced credit availability a 'headwind, not a hurricane' for U.S. economy - GS

By Senad Karaahmetovic

Goldman Sachs analysts offered their latest thoughts on the banking crisis in the country. They believe it is “too early to have a confident view on the implications of the current banking turmoil for the U.S. economy.”

Analysts have flagged tighter credit conditions amid heightened financial stability risks as a headwind for companies.

“Reduced credit availability will prove to be a headwind that helps the Fed keep growth below potential despite the support from rising real income and better global growth, not a hurricane that pushes the economy into recession and forces the Fed to ease aggressively. The risks are clearly skewed toward larger negative effects,” they wrote in a note to clients.

The investment bank recently increased the chances of the U.S. entering a recession to 35% from the prior 20%. The market currently assigns around a 60% possibility.

“Our baseline growth forecast for 2023 of 1.1% on a Q4/Q4 basis remains well above the committee’s 0.4%, so it is not surprising that our baseline forecast of 5¼-5½% for the peak funds rate—with 25bp hikes in May and June followed by no cuts until 2024Q2—is also higher than the committee’s 5-5¼%. Because of the downside risks, our probability-weighted forecast for 2024Q2 is a substantially lower 4%. However, even this estimate is above market pricing of 3½%,” analysts further noted.

The banking sector crisis also prompted Goldman Sachs to lower Eurozone growth numbers. On the other hand, China's growth forecast is increased to 6% YoY.


2023-03-28 18:53:00     Come from :

Factbox: Swiss female pensioners vs the government: European court's first climate case

Factbox: Swiss female pensioners vs the government: European court's first climate case

GENEVA (Reuters) - A case involving thousands of retired Swiss women is being heard at a European Court in France, the culmination of a six-year legal battle in which they claim their government's insufficient action on climate change violated their human rights.

The case, which campaign group Greenpeace initiated on behalf of the women, will be heard on March 29 in the Grand Chamber of the European Court of Human Rights in Strasbourg.

The case has twice been rejected by domestic courts.

Switzerland argues the case is inadmissible, saying the case is without foundation and questioning whether the applicants count as victims.

In a sign of its importance, eight other governments (Romania, Latvia, Austria, Slovakia, Norway, Italy, Portugal and Ireland) have joined the case. At least one has echoed Bern in calling for its dismissal.

Six lawyers, including two elite UK King's Counsel lawyers alongside the original team, have prepared the case.

Here are some of their arguments:

- The case documents, or application in legal jargon, alleges four violations of the European Convention of Human Rights (Arts 2, 6, 8 and 13) including the right to life.

- They say the women's age and gender places them in one of the categories cited by the U.N. Intergovernmental Panel on Climate Change as being at highest risk of temperature-related mortality. It also cites the IPCC saying heatwaves are becoming more frequent due to climate change.

- The case uses emerging evidence that older women are less able to regulate their body temperatures than others. It cites several reports including a 2014 World Health Organization document which says the majority of European studies show women are more at risk of dying from heatwaves.

- It says that around 30% of heat-related deaths in Switzerland can be attributed to climate change in recent years, citing a 2021 study published in Nature.

- Switzerland is aiming to cut greenhouse gas emissions in half by 2030 and to achieve net zero by 2050. Lawyers for the applicants says its targets are "woefully inadequate".

- They take particular aim at Switzerland's strategy of purchasing emissions reductions abroad and accounting for them in national targets - a strategy that came under media scrutiny during the COP27 climate summit.

- The lawyers call for the Chamber to order rarely granted so-called "General Measures" which in this case mean concrete emission reduction targets within a fixed timeframe.

(This story has been corrected to make it clear that the court is European, not an EU court) 


2023-03-28 18:34:00     Come from : Reuters

CFTC hits Binance, Micron earnings, Netanyahu backs down - what's moving markets

CFTC hits Binance, Micron earnings, Netanyahu backs down - what's moving markets

By Geoffrey Smith -- Bitcoin wobbles after U.S. regulators clamp down on Binance. House price and consumer confidence data are due, Walgreens and Micron report earnings and oil extend gains after surging on a combination of factors. Here's what you need to know in financial markets on Tuesday, March 28th.

1. Crypto hit by CFTC action against Binance

Cryptocurrencies had the wind taken out of their sails as the Commodity Futures Trading Commission accused Binance of illegally selling its derivatives trading services in the U.S., the latest in a series of regulatory measures that appear aimed at walling off crypto from the mainstream financial universe.

The CFTC’s charges revolve largely around how Binance facilitated market-making for large, professional high-frequency outfits based in Chicago and elsewhere, not least by instructing them to log on via Virtual Private Networks to disguise their physical location.

“Give them a heads up to ensure they don’t connect from a us Ip. Don’t leave anything in writing,” founder and CEO Changpeng Zhao wrote in an email cited by the CFTC.

Bitcoin, which has profited recently from a surge of negative news flow from the traditional financial sector, fell to its lowest in a week but bounced at the $27,000 level.

2. Fed blames SVB management for collapse; house price, consumer confidence data due

The Federal Reserve’s top banking supervisor blamed Silicon Valley Bank executives for the collapse of the bank, calling it a “textbook case of mismanagement” that left the bank prey to a sudden loss of confidence as interest rates rose.

In testimony to Congress, Michael Barr batted away suggestions that the bank’s supervisors had been asleep at the wheel. His comments came hours after the Federal Deposit Insurance Corp. said it faced losses of around $20 billion on its deposit insurance fund in resolving the SVB case. While First Citizens (NASDAQ:FCNCA) bank agreed to buy most of SVB’s loan book with the help of cheap financing from the FDIC on Monday, a large part of its loans will remain on the FDIC’s books.

Barr’s testimony continues in the House of Representatives later Tuesday.

The U.S. data calendar meanwhile includes updates on house prices and the Conference Board's consumer confidence survey.

3. Stocks drift ahead of open; Micron, Walgreens set to report

U.S. stock markets are set to edge lower at the opening, lacking conviction despite the apparent calming of tensions over the stability of second-tier banks, which were extending Monday’s gains in premarket trading.

By 06:25 ET, Dow Jones futures were up 39 points or 0.1%, but S&P 500 futures were down 0.1%, and Nasdaq 100 futures were down 0.2%.

Stocks likely to be in focus later include Lyft (NASDAQ:LYFT), up 5% in premarket after appointing a new CEO, and Meta (NASDAQ:META), after reports that the Facebook owner will cut bonuses for some executives. Salesforce (NYSE:CRM) is also in focus after Elliott Management said it no longer intends to nominate directors to the company’s board with the software giant performing better than expected in the last quarter.

Walgreens Boots Alliance (NASDAQ:WBA) reports earnings before the open, while chipmaker Micron (NASDAQ:MU) leads a long list of names reporting after the bell.

4. Israel simmers as Netanyahu pauses controversial judicial reform

Israel came off the boil after Prime Minister Benyamin Netanyahu delayed the passage of his controversial judicial reform bill until the next session of parliament in May. Netanyahu was responding to massive demonstrations that swept the country at the weekend.

The bill’s critics say it undermines democracy, by allowing the government too much power over the appointment of judges. It’s a particularly controversial point given Netanyahu’s own legal problems in recent years.

The shekel rose to its highest in six weeks in response.

5. Oil extends gains after China forecasts solid rise in 2023 imports

Crude oil prices extended Monday’s chunky gains, which came in response to news of Turkey suspending exports from Kurdistan through a pipeline to the Mediterranean.

Prices were also underpinned by research from China’s largest oil company suggesting that the country’s imports will rise by more than 6% this year to 540 million tons, reflecting the end of COVID-19-related restrictions on economic activity.

By 06:40 ET (10:40 GMT), U.S. crude futures were up 0.5% at $73.16 a barrel, while Brent was up 0.3% at $77.89 a barrel.

The American Petroleum Institute releases weekly data on U.S. stockpiles at 15:30 ET.


2023-03-28 18:25:00     Come from :

Canada to ramp up clean-tech push in budget to level playing field with US

Canada to ramp up clean-tech push in budget to level playing field with US

By Steve Scherer

OTTAWA (Reuters) - Canadian Finance Minister Chrystia Freeland on Tuesday will present this year's budget, which will have a major focus on scaling up investment in clean technology and will include investments in healthcare and help for low-income households.

Countries across the globe are vying for a portion of the low-carbon economy of the future. In Canada, the pressure to step up green investments is even more as the government seeks to level the playing field with the United States, which passed a series of massive incentives in the Inflation Reduction Act (IRA) last year.

Last week Freeland said Canada is at a "crucial crossroads" for the green transition and that it would be "reckless" not to make major investments in clean tech. But she has also said she does not want to fuel inflation and slowing growth means fiscal responsibility is warranted.

"Of course the federal government needs to better position Canada to compete with the U.S. for investment in the energy transition," said Randall Bartlett, senior director of Canadian economics at Desjardins, in a note. "But it can't break the bank to do it."

Freeland will deposit the document to parliament at around 4 p.m. ET (2000 GMT).

Prime Minister Justin Trudeau, who has set a target for net-zero carbon emissions by 2050, has made fighting climate change a cornerstone of his leadership. But analysts have warned that too much government investment can add to price pressure just as the central bank is still trying to get inflation back to its target range following eight interest rate hikes over the past year.

"In a year in which the central bank is still applying high interest rates to contain growth, fiscal policy should not add stimulus that would only be countered by further rate hikes," said Avery Shenfeld, chief economist at CIBC Capital Markets, in a note.

While no price tag for the green investments has yet emerged, one measure will be a 30% investment tax credit to boost clean-tech manufacturing, especially in the electric vehicle (EV) supply chain, two sources told Reuters last week.

The budget will also include a system to lock in future carbon credit prices, a move meant to boost investments by giving businesses certainty to develop low-carbon technologies, and investments focused on increasing the capacity of the electricity grid, on battery manufacturing and on mass timber construction, sources told Reuters this month.

Canada will spend more than C$2 billion ($1.5 billion) on a rebate aimed at helping low-income families bear the brunt of high inflation, the Canadian Broadcasting Corp reported on Monday, citing a source.

The budget will also include an increase in federal healthcare spending promised earlier this year to the provinces, which administer the public health system.


2023-03-28 18:06:00     Come from : Reuters

US regulators to face sharp questions from Congress over bank collapses

US regulators to face sharp questions from Congress over bank collapses

By Pete Schroeder and Hannah Lang

WASHINGTON (Reuters) - Lawmakers are expected to put top U.S. bank regulators on the defensive over the unexpected failures of regional lenders Silicon Valley Bank and Signature Bank (NASDAQ:SBNY) when they testify before Congress on Tuesday.

Top regulatory officials for the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and Treasury Department are testifying before congressional committees on the swift collapse of the two banks earlier this month, which set off a broader loss of investor confidence in the banking sector.

Regulators have vowed to review their rules and procedures after the twin failures while insisting the overall system remains sound. Tuesday's hearing at the Senate Banking Committee will give lawmakers the chance to press watchdogs on what went wrong on their watch, and push preferred policy prescriptions.

In prepared remarks released before the hearing, top officials from the Fed and FDIC said depositor funds are safe and sound. But they both said they are reviewing what led to the bank failures, and what rules need to be changed to prevent such collapses in the future.

"There will be politicking at both hearings with progressives and conservatives looking to score political points," said Jaret Seiberg with TD Cowen.

"But we also expect substance as lawmakers press the officials on what went wrong at these banks and what the message should be for uninsured depositors."

The turmoil set off fresh recriminations in Washington, as some Democrats and Republicans sharply criticized regulators for allowing the banks to get to such a state.

Critics have noted how both firms, but particularly SVB, rapidly grew in size and ended up with huge amounts of uninsured deposits. Those funds quickly fled at signs of trouble, according to Fed Vice Chair for Supervision Michael Barr in his prepared testimony.

"It's very clear that the regulators had the authority to do their jobs, to supervise. They just didn't," said Sen. Tim Scott of South Carolina, the top Republican on the Senate Banking Committee, at a banking industry conference last week.

Barr promised in his testimony an "unflinching" look at how SVB was supervised, but also noted it ultimately falls to bank management to address shortcomings, not supervisors.

Some Democrats, including major bank critic Senator Elizabeth Warren of Massachusetts, have also argued a 2018 bank deregulation law is to blame. That law, mostly backed by Republicans but also some moderate Democrats, relaxed the strictest oversight for firms holding between $100 billion and $250 billion in assets, which included SVB and Signature.

"The officials sitting before us today know that their predecessors rolled back protections," said Senate Banking Committee Chairman Sherrod Brown, a Democrat from Ohio, in his prepared opening statement.

"We will be watching all of the regulators to make sure they assess the damage, hold those accountable responsible for their actions, and fix what is broken."

In their remarks, both Barr and FDIC Chairman Martin Gruenberg indicated they are looking into tightening rules for banks and applying stricter oversight for firms similar to SVB.

The hearing is expected to be the first of several. The House Financial Services Committee will hear from the same regulators Wednesday, and congressional leaders have already said they want to question former CEOs of the two banks on what went wrong.

Regulators will be able to highlight some positives. The FDIC announced Monday that it had found a buyer for SVB's deposits and loans in First Citizens Bancshares. While bank stocks remain under pressure, no U.S. firms have faltered in the two weeks since the Biden administration announced broad depositor guarantees and new emergency liquidity for banks in need.

Gruenberg said in his prepared testimony that the "vast majority" of banks are not seeing material deposit outflows.


2023-03-28 17:05:00     Come from : Reuters