WASHINGTON, Sept 26 (Reuters) – U.S. consumer confidence dropped to a four-month low in September, weighed down by persistent worries about higher prices and rising fears of a recession, though households remained generally upbeat about the labor market.
The second straight monthly decline in confidence reported by the Conference Board on Tuesday also reflected higher interest rates and concerns about the political environment.
The nation faces a potentially disruptive shutdown of the federal government on Saturday amid political wrangling. Confidence fell across all age groups, and was most pronounced among consumers with annual incomes of $50,000 or more.
“Inflation is slowing, but prices are still higher than they were before the pandemic and this is taking a toll on consumer confidence,” said Christopher Rupkey, chief economist at
FWDBONDS in New York.
The Conference Board said its consumer confidence index dropped to 103.0 this month, the lowest reading since May, from an upwardly revised 108.7 in August. Economists polled by Reuters had forecast the index easing to 105.5 from the previously reported 106.1. Consumers’ perceptions of the likelihood of a recession over the next year ticked back up.
A sharp decrease in the expectations measure accounted for the decline in confidence, which economists partially attributed to the looming government shutdown, with Congress so far failing to pass any spending bills to fund federal agency programs in the fiscal year starting on Oct. 1.
Hundreds of thousands of federal workers will be furloughed and a wide range of services, from economic data releases to nutrition benefits, suspended beginning on Sunday.
“Consumers also expressed concerns about the political situation and higher interest rates,” said Dana Peterson, chief economist at The Conference Board in Washington.
The cutoff date for the preliminary survey was Sept. 18. Millions of Americans will also start repaying their student loans in October and most have run down their pandemic savings.
The survey showed consumers increasingly concerned about their family finances.
The Federal Reserve last week left its benchmark overnight interest rate unchanged at the 5.25%-5.50% range. The U.S. central bank, however, stiffened its hawkish stance, projecting another rate hike by year end and monetary policy staying significantly tighter through 2024 than previously expected.
The Fed has hiked the policy rate by 525 basis points since March 2022.
Though consumers continued to fret over the higher cost of living, their inflation expectations over the next year remained stable and they showed no intentions of drastically pulling back on purchases of motor vehicles and other big-ticket items like television sets and refrigerators over the next six months.
Fewer, however, expected to buy a house, with the rate on the popular 30-year fixed-mortgage the highest in more than 22 years and home prices reaccelerating.
Consumers’ 12-month inflation expectations were unchanged at 5.7% for the third straight month.
Consumer spending remains underpinned by a tight labor market, which is keeping wage growth elevated.
The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, widened to 27.3 this month compared to 26.7 in August. This measure correlates to the unemployment rate in the Labor Department’s closely followed employment report.
Stocks on Wall Street fell. The dollar rose against a basket of currencies. U.S. Treasury prices were lower.
HOUSE PRICES ACCELERATE
A separate from the Commerce Department showed new home sales plunged 8.7% to a seasonally adjusted annual rate of 675,000 units in August after racing to a 17-month high in July.
Economists had forecast new home sales, which account for a small share of U.S. home sales, falling to a rate of 700,000 units. New home sales are counted at the signing of a contract, making them a leading indicator of the housing market. They, however, can be volatile on a month-to-month basis. Sales increased 5.8% on a year-on-year basis in August.
Though new home sales remain supported by a dearth of previously owned homes on the market, the resurgence in mortgage rates is reducing affordability for prospective home buyers.
The rate on the 30-year fixed mortgage vaulted above 7% in August and climbed to an average of 7.19% last week, the highest since July 2001, according to data from mortgage finance agency Freddie Mac. Mortgage rates are rising in tandem with U.S. Treasury yields, which have surged on worries that soaring oil prices could hamper the Fed’s fight against inflation.
“While we expect higher rates to hurt new home sales, we think they will be more resilient than existing home sales as builders seem willing to scale up their use of incentives to motivate sales,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics in New York.
A third report from the Federal Housing Finance Agency showed annual home price growth quickened for a second straight month in July, largely reflecting the tight supply in the market for previously owned homes. House prices jumped 4.6% on a year-over-year basis in July after rising 3.2% in June. Prices shot up 0.8% month-on-month after advancing 0.4% in June.
The resurgence in house prices was seen feeding through to higher inflation, likely giving the Fed cover to maintain its hawkish posture for some time.
“The Fed will see the reacceleration of house prices as a reason to keep interest rates higher for longer,” said Bill Adams, chief economist at Comerica Bank in Dallas. “Renting households are seeing some relief in new lease prices, but since two thirds of Americans are homeowners, the Fed cannot afford to look past house prices’ influence on the cost of living.”
Reporting by Lucia Mutikani; Additional reporting by Amina Niasse; Editing by Chizu Nomiyama and Andrea Ricci
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A Swedish flag flutters in front of residential houses in Stockholm, Sweden, September 14, 2023. REUTERS/Marie Mannes/File Photo Acquire Licensing Rights
FRANKFURT/OSLO, Sept 25 (Reuters) – Troubled Swedish landlord SBB is exploring the sale of a controlling stake in its residential arm, which owns 23,000 apartments, as it overhauls its business to meet debt deadlines next year, its chief executive told Reuters.
CEO Leiv Synnes said the company’s sale of control in a schools property business to Canadian investor Brookfield was just the start of a sweeping overhaul of its operations, and that selling a minority or controlling stake in its residential arm could be next.
“This is the first step,” Synnes said, referring to the sale of control in EduCo that allowed the repayment of an inter-company loan, releasing 7.8 billion Swedish crowns ($706 million) of cash. “We need to take more steps.”
Synnes said he was in discussions with investors about its 39-billion-crown ($3.5 billion) residential arm as he seeks to close a financing gap. The company said it was also mulling a stock-market listing for that business.
“There are many investors that are looking to expand their business in the Nordics,” said Synnes.
SBB’s problems are unfolding as Sweden struggles to contain a wider property crisis, triggered by high debts, rising interest rates and a wilting economy.
TURNING FOCUS TO COMMUNITY ARM
Selling control of this business would focus SBB on its community arm, which owns care homes, government buildings, hospitals, police stations, fire stations and army barracks.
Long popular with investors, SBB is at the epicentre of a property crash that threatens to engulf the Nordic state’s economy.
The $13 billion group, which owns swathes of property across Sweden, racked up a pre-tax loss of 11 billion Swedish crowns ($1.09 billion) in the second quarter, while its cash dwindled.
The EduCo deal, which will make Brookfield majority owner, with the Swedish firm left with a 49.84% stake, secures extra cash, sending SBB’s (SBBb.ST) shares up by roughly a third and boosting its bonds.
“The fact that SBB is freeing up 8 billion crowns must be seen in a very positive light. In a crisis, it is almost all about having liquidity, and SBB is getting it now,” Carlsquare analyst Bertil Nilsson said.
SBB group built up vast debt by buying public property, including social housing, government offices, schools and hospitals.
It is now scrambling to salvage its finances after seeing its credit rating downgraded to junk, with some looking at the government as a potential saviour. Its shares have lost more than 90% of their value since peaking in 2021.
The Swedish real estate industry’s issues have alarmed investors and prompted the Swedish central bank to issue several warnings.
Earlier this year, it cautioned that problems in heavily indebted commercial property companies could spill over and hit the economy more widely, threatening a domino effect on banks, who have lent ever more to property companies.
($1 = 11.0415 Swedish crowns)
Reporting by Terje Solsvik, Jesus Calero and Chiara Elisei; writing by John O’Donnell; editing by Anna Ringstrom, Alexander Smith and Bernadette Baum
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Construction sites are photographed in Frankfurt, Germany, July 19, 2023. REUTERS/Kai Pfaffenbach Acquire Licensing Rights
BERLIN, Sept 22 (Reuters) – German housing prices fell by the most since records began in the second quarter as high interest rates and rising materials costs took their toll on the property market in Europe’s largest economy, government data showed on Friday.
Residential property prices fell by 9.9% year-on-year, the steepest decline since the start of data collection in 2000, the federal statistics office said. Prices fell by 1.5% on the quarter, with steeper declines in larger cities than in more sparsely populated areas.
In cities such as Berlin, Hamburg and Munich, apartment prices fell by 9.8% and single and two-family house prices dropped by 12.6% on the year.
For a decade, low interest rates have fuelled a property boom in Europe’s largest real estate investment market. A sharp rise in rates and increasing construction costs have put an end to the run, tipping a string of developers into insolvency as deals froze and prices fell.
Building permits for apartments in Germany declined 31.5% in July from a year earlier, the statistics office disclosed on Monday, as construction prices rose by almost 9% on the year.
Germany aims to build 400,000 apartments a year, but has struggled to meet the goal.
German housing industry association GdW on Friday sounded the alarm over the situation calling for government support for construction companies.
“The construction crisis in Germany is getting worse day by day and is increasingly reaching the middle of society,” GdW, which represents around 3,000 housing companies nationwide, said in a statement.
GdW called for a cut in value added tax (VAT) to 7% from the current level of 19% for affordable rentals and government funding loans with a 1% interest rate to support companies.
The government is scheduled to hold a summit with the industry on Monday to discuss the situation.
GdW and the Haus&Grund owner’s association said they were boycotting the summit as they had too little influence on its agenda.
The German cabinet plans to present an aid package for the industry by the end of month after announcing plans to promote the construction sector, including reducing regulatory and bureaucratic requirements.
Reporting by Riham Alkousaa and Klaus Lauer, editing by Kirsti Knolle and Sharon Singleton
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WASHINGTON, Sept 21 (Reuters) – The number of Americans filing new claims for unemployment benefits dropped to an eight-month low last week, pointing to persistent labor market tightness even as job growth is cooling.
The report from the Labor Department on Thursday also showed unemployment rolls in early September were the smallest since January. It was published a day after the Federal Reserve held interest rates steady but stiffened its hawkish stance, with a further rate increase projected by the end of the year and monetary policy to be kept significantly tighter through 2024 than previously expected.
“This economy is just not showing any sign of slowing down which hints that inflation will not be coming back down to target,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “The Fed was wise to keep another interest rate hike in their back pockets just in case, and it now looks like another rate hike is warranted.”
Initial claims for state unemployment benefits dropped 20,000 to a seasonally adjusted 201,000 for the week ended Sept. 16, the lowest level since January. Economists polled by Reuters had forecast 225,000 claims for the latest week. Claims are in the lower end of their 194,000-265,000 range for this year.
Claims could, however, increase in the coming weeks as a partial strike by the United Auto Workers (UAW) union forces automobile manufacturers to temporarily lay off workers because of shortages of some materials.
The UAW last week launched a targeted strike against Ford (F.N), GM (GM.N) and Stellantis (STLAM.MI), impacting one assembly plant at each company. It has threatened to broaden the work stoppages, which for now only involve about 12,700 of the affected 146,000 UAW members.
Though striking workers are not eligible for unemployment benefits, the walkout has snarled supply chains.
Ford has furloughed 600 workers who are not on strike, while GM expected to halt operations at its Kansas car plant, affecting 2,000 workers. Chrysler parent Stellantis said it would temporarily lay off 68 employees in Ohio and expects to furlough another 300 workers in Indiana.
Unadjusted claims rose by only 67 to 175,661 last week. There were notable declines in filings in Indiana and California, which mostly offset sizeable increases in South Carolina, New York and Georgia.
Fed Chair Jerome Powell said on Wednesday that “the labor market remains tight, but supply and demand conditions continue to come into better balance.”
Employment growth has been slowing and job openings falling. Labor market resilience is propping up the economy even as recession fears linger. The leading indicator, a gauge of future U.S. economic activity, fell 0.4% in August after dropping 0.3% in July, the Conference Board said in a second report on Thursday.
It has dropped for 17 straight months. Since March 2022, the U.S. central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.
The claims data together with the Fed’s hawkish stance pushed stocks on Wall street lower. The dollar gained versus a basket of currencies. U.S. Treasury prices fell, with the yield on the benchmark 10-year bond rising to a nearly 16-year high.
HOUSING FALTERING
The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls component of September’s employment report.
The strike is unlikely to have an impact on payrolls as it started towards the end of the survey week. Workers most likely received pay for that week. Claims fell between the August and September survey period.
Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will offer more clues on the state of the labor market in September.
The so-called continuing claims declined 21,000 to 1.662 million during the week ending Sept. 9, also the lowest level since January, the claims report showed. That suggests laid-off workers are quickly finding employment.
While the labor market remains unbowed, the housing market is faltering after showing signs of stabilizing earlier this year as mortgage rates resume their upward trend in tandem with the 10-year Treasury note, which has spiked on worries soaring oil prices could hamper the Fed’s fight against inflation.
Existing home sales slipped 0.7% last month to a seasonally adjusted annual rate of 4.04 million units, the National Association of Realtors said in a third report.
Existing home sales are counted at the closing of a contract. Last month’s sales likely reflected contracts signed in July, before the recent run-up in mortgage rates, which lifted the rate on the popular 30-year fixed mortgage above 7%.
Home sales last month were restrained by persistently tight supply, with inventory falling 14.1% from a year earlier to 1.1 million, the lowest on record for any August.
As a result, the median house price accelerated 3.9% from a year earlier to $407,100, the fourth-highest reading. It hit a record $413,000 in June 2022.
“The prospects for improved sales in the coming months look bleak,” said Ben Ayers, senior economist at Nationwide in Columbus, Ohio. “2023 could end in a whimper for the real estate sector as any substantial pull-back in rates is likely far off into 2024.”
News on manufacturing was downbeat. Manufacturing together with housing have borne the brunt of the Fed’s aggressive monetary policy tightening.
A fourth report from the Philadelphia Fed showed factory activity in the mid-Atlantic region slumped in September. Firms in the region that covers eastern Pennsylvania, southern New Jersey and Delaware reported decreases in new orders and shipments. They continued to report a decline in employment.
The Philadelphia Fed’s business conditions index fell to -13.5 this month from 12.0 in August. It was the index’s 14th negative reading in the past 16 months.
“Softer demand for goods and higher borrowing costs are hurdles for activity,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “But re-shoring of supply chains, infrastructure projects and a stabilization in demand could provide support to manufacturing output over time.”
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama, Paul Simao and Andrea Ricci
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U.S Representative Andy Barr (R-KY), Rep. Mike Gallagher (R-WI), and Rep. Blaine Luetkemeyer (R-MO) attend a House Select Committee on the Chinese Communist Party hearing entitled “The Chinese Communist Party’s Threat to America,” in Washington, U.S., February 28, 2023. REUTERS/Nathan Howard/File Photo Acquire Licensing Rights
Sept 19 (Reuters) – The chair of the U.S. House of Representatives’ committee on China on Tuesday planned to meet with a semiconductor industry group to express concerns over U.S. investments in China’s chip industry, according a source familiar with the matter.
Representative Mike Gallagher, an influential Republican lawmaker whose select committee has pressed the Biden administration to take a tougher stance on sending U.S. technology to China, planned to meet with the Semiconductor Industry Association, which represents major chip firms such as Nvidia (NVDA.O) and Intel (INTC.O) whose sales to China have been affected by U.S. export rules, the source said.
Gallagher planned to tell the group he believes that U.S. rules enacted last October that cut off the sale of advanced artificial intelligence chips to China should be tightened to cover less advanced chips, the source said. The source added that Gallagher also aimed to talk with the group about reducing the number of semiconductor manufacturing machines that could be sent to China.
Also among the planned discussion topics is U.S. investment in Chinese chip firms. Intel, Qualcomm (QCOM.O) and other firms have venture capital arms that have invested in Chinese technology companies, the source added.
Gallagher also will express his concerns that a massive Chinese effort to build up capacity to build less advanced chips used in automobiles, washing machines and other everyday products could one day result in China dumping those chips on the U.S. market and drive U.S. makers of such chips out of business, the source said.
A representative for the Semiconductor Industry Association did not immediately return a request for comment.
Reporting by Stephen Nellis in San Francisco
Editing by Nick Zieminski
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[1/2]People on a property tour visit a show flat of a real estate property developed by Sunac China Holdings in Xishuangbanna Dai Autonomous Prefecture, Yunnan Province, China, June 22, 2019. Picture taken June 22, 2019. REUTERS/Lusha Zhang/File Photo Acquire Licensing Rights
HONG KONG, Sept 19 (Reuters) – Chinese developers Sunac (1918.HK) and Country Garden (2007.HK) brought some relief to the crisis-hit property sector by forging debt deals with creditors, but the outlook remained clouded by uncertainty about a recovery in home sales.
Shares in Sunac China Holdings surged as much as 14% in early trade on Tuesday after creditors approved its $9 billion offshore debt restructuring plan, the first green light of such a debt overhaul by a major Chinese developer.
The stock, however, gave all its gains later and dropped more than 7% in the afternoon trade after reports, citing court documents, showed Sunac has filed for U.S. bankruptcy protection under Chapter 15.
Under the U.S. bankruptcy code, the move shields non-U.S. companies that are undergoing restructurings from creditors that hope to sue them or tie up assets in the United States. The step is seen as procedural in large offshore debt revamp processes.
China Evergrande Group (3333.HK), which is seeking to restructure a total of $31.7 billion in one of the largest such exercises in the world, also sought protection under Chapter 15 last month.
TROUBLED SECTOR
Separately, cash-starved Country Garden won approval from creditors to extend repayment on another onshore bond, the last in the batch of eight bonds it has been seeking extensions for, two sources familiar with the matter said on Tuesday.
The developments come as Beijing steps up efforts to revive the property sector, which accounts for roughly a quarter of the world’s second-largest economy, with a raft of support measures unveiled over the last few weeks.
Sunac said late on Monday that creditors holding 98.3% of the total value of the bonds who attended the vote had approved the restructuring plan proposed and agreed to by some creditors in March.
The developer will seek approval of the plan by a Hong Kong court at a hearing scheduled for Oct. 5.
As part of the restructuring terms, a portion of its debt would be exchanged into convertible bonds backed by its Hong Kong-listed shares along with new notes with maturities of between two and nine years.
“I will treat it as a positive … We haven’t seen much progress on the offshore market, so this shows at least some Chinese developers are trying to reach an agreement,” said Gary Ng, senior economist at Natixis Corporate and Investment Bank.
If the plan could be implemented well, and depending on whether the recovery of China’s property market could generate sufficient cash flows, investors would be able to get something back, he added.
PROPERTY SECTOR OUTLOOK
While Sunac is among a string of Chinese developers that have defaulted on their offshore debt obligations since an unprecedented liquidity crisis hit the property sector in 2021, Country Garden has not missed any offshore payments yet.
The latest debt agreements with creditors will give some breathing room to Chinese developers and help them avoid default or a messy liquidation process, but the success of the agreements will depend on a recovery in the property sector.
Some offshore bondholders say they don’t have many options apart from agreeing to debt restructuring proposals, given their returns will likely be very low if they choose to liquidate a cash-strapped developer.
Even as Beijing implements measures to prop up the sector, house prices have continued to decline – latest data show new home prices fell at their fastest pace in 10 months in August, while falls in real estate investment and sales deepened.
ANZ Senior China Economist Betty Wang said the support measures could spur some “genuine demand” especially ahead of the traditional sale season during late September/early October in top-tier cities.
“However, the pace and the extent of such a turnaround will be much smaller than in previous cycles,” she said in a report published on Tuesday.
“It’s also questionable whether it will kick off a sustainable rebound especially considering the uncertain job outlook, deteriorating income inflows, a shift in expectations, and potential increase in housing supply in the long-term.”
Reporting by Donny Kwok and Xie Yu in Hong Kong, Steven Bian in Shanghai, and Kevin Huang in Beijing; Writing by Anne Marie Roantree and Sumeet Chatterjee; Editing by Lincoln Feast
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Tata Motors logos are pictured outside their flagship showroom in Mumbai May 28, 2013. REUTERS/Vivek Prakash/File Photo Acquire Licensing Rights
Sept 18 (Reuters) – Indian automaker Tata Motors (TAMO.NS) said on Monday it will raise the prices of its commercial vehicles by up to 3%, its third hike this calendar year to offset the residual impact of past input costs.
The price hike, effective Oct. 1, will be applicable across its range of commercial vehicles, the automaker added.
The company previously raised prices by 1.2% in January and by 5% in March to ensure its vehicles comply with the new emission norms.
India implemented stricter norms through phase II of Bharat Stage 6 from April 1, including testing real-time driving emissions, leading to increased costs for automakers.
Earlier in the day, ratings agency Fitch said in a report that India’s commercial vehicle sales volume will slow down to low-to-mid-single digits due to rising ownership costs.
The implementation of the latest emission norms will lead to nearly a 5% rise in prices of commercial vehicles from April 2023, Fitch added.
Reporting by Ashna Teresa Britto; Editing by Sohini Goswami
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Sept 18 (Reuters) – Growth in India’s commercial vehicle sales volume will slow down to low-to-mid-single digits due to rising ownership costs, Fitch Ratings said in a report on Monday.
The ratings agency said increasing regulatory requirements, elevated inflation and high interest rates have pushed up the ownership costs, thereby weighing on purchase decisions.
There was a 34% growth in commercial vehicle sales at nearly 962,000 units in the financial year 2023, up from the 569,000 units sold in fiscal year 2020, according to data from the Society of Indian Automobile Manufacturers (SIAM).
“The 3.3% Y/Y drop in commercial vehicle wholesale volume in the second quarter of FY23 marked the first yearly decline since March 2020,” Fitch said, adding that this was a result of the purchases made ahead of the price hikes by automakers and vehicle availability issues after the adoption of new emission norms.
The latest rules require the measurement of emissions in real time, leading to a near-5% rise in prices of commercial vehicles from April 2023.
“We expect faster volume for medium and heavy commercial vehicles than for light commercial vehicles, due to India’s rising infrastructure activities and the vulnerability of light commercial vehicles to potentially weaker rural demand due to uneven rainfall,” Fitch wrote in the report.
Reporting by Ashna Teresa Britto; Editing by Sohini Goswami
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Paramilitary police officers stand guard in front of the headquarters of the People’s Bank of China, the central bank (PBOC), in Beijing, China September 30, 2022. REUTERS/Tingshu Wang/File Photo Acquire Licensing Rights
Sept 15 (Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.
Asian markets are set to end the week strongly following risk-friendly moves in the U.S. and Europe on Thursday, although a deluge of top-tier economic data from China on Friday could sour the mood at a stroke.
The latest indicators from the region’s largest economy to be released include house prices, fixed asset investment, retail sales, industrial production and unemployment, all for August.
The annual pace of retail sales and industrial production growth is expected to pick up, but fixed asset investment growth is predicted to slow to a new low of 3.3% going back to the 1990s, if pandemic-related distortions in early 2020 are excluded.
The People’s Bank of China insists it will take “appropriate” steps to support the economy, although a growing number of economists are skeptical Beijing will meet its 5% GDP growth target this year and many are cutting their 2024 outlooks.
The PROC on Thursday announced its second 25-basis point cut to banks’ reserve requirement ratio this year. Unsurprisingly, the move stopped the yuan’s recent mini-revival in its tracks, and pressure on the currency on Friday will probably be to the downside again.
China’s deteriorating trade relations with the West, meanwhile, is a darkening cloud that shows no sign of lifting.
Beijing has hit back at a European Commission probe into China’s electric vehicle subsidies as protectionist, warning it would damage economic relations, and analysts have warned that if the probe results in punitive tariffs, Beijing will take retaliatory action.
However, all that could be parked for another day if investors decide to run with Thursday’s bullish momentum.
It was a case of ‘good news is good news’ for Wall Street as investors welcomed hot U.S. retail sales and accelerating producer prices as a sign of economic resilience rather than fret about the hawkish rate implications.
Coupled with falling euro zone bond yields and implied rates after the European Central Bank’s ‘dovish hike’ – perhaps the central bank’s last in the cycle – risk assets got a shot in the arm, paving the way for a positive open in Asia on Friday.
The big three U.S. indexes rose between 0.8% and 1.0%, European stocks had their best day in six months and the MSCI Asia ex-Japan Index had its best day in 10 days on Thursday. The rise in oil to new 2023 highs and another dollar surge failed to dampen investors’ mood.
Another positive portent for Asian markets on Friday: the VIX gauge of implied S&P 500 equity volatility – Wall Street’s so-called ‘fear index’ – registered its lowest close on Thursday since before the pandemic.
Here are key developments that could provide more direction to markets on Friday:
– China ‘data dump’ (August)
– Indonesia trade (August)
– New Zealand manufacturing PMI (August)
By Jamie McGeever; Editing by Josie Kao
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
[1/2]U.S. Senator Ted Cruz speaks at an event during which NASA announces the crew of the Artemis II space mission to the moon and back in Houston, Texas, U.S., April 3, 2023. REUTERS/Go Nakamura/File photo Acquire Licensing Rights
WASHINGTON, Sept 13 (Reuters) – A federal moratorium on commercial spaceflight safety regulations should be extended to support more innovation in the space sector, U.S. Senator Ted Cruz said on Wednesday, ahead of the scheduled expiration of a years-old ban on Oct. 1.
There are currently no regulations on the safety of privately built space vehicles. The fast-growing sector since 2004 has been shielded from federal safety regulations by what is widely called a “learning period.”
“Now is not the time to impose new regulations on commercial space,” Cruz said, speaking on the sidelines of an industry conference in Washington. “Allowing the learning period to expire would only serve to stifle innovation and undercut American innovation.”
The moratorium, established by the Commercial Space Launch Amendments Act of 2004, was most recently extended in 2015.
The law requires private space companies that send humans into space to have passengers sign “informed consent” documents acknowledging the absence of federal safety regulations.
Some space industry groups have supported an extension of the moratorium that would last between six months to as long as a few more years. Though little consensus has been reached between industry and lawmakers on the length of any extension, discussion on the issue is ramping up as the expiration date nears.
In an April study tasked by the Federal Aviation Administration, the RAND Corporation recommended allowing the moratorium to expire on Oct. 1 to let the agency begin establishing industry standards and rules.
The moratorium’s language complicates the FAA’s ability to start standards discussions and collect meaningful safety information from companies that could inform safety regulations, said Doug Ligor, the lead author of the RAND study.
“Regulatory moratoriums are incredibly unusual,” Ligor said. “It’s not something that other domains have had – aeronautics, maritime, rail, medical – yet those industries are also competitive.”
The FAA in July launched a Commercial Human Spaceflight Occupant Safety Rulemaking Committee to start collecting companies’ recommendations on spaceflight regulations for when the moratorium expires.
“It’s very important that we don’t sit on our hands and begin to prepare for the future,” Kelvin Coleman, head of the FAA’s commercial space office, said at the conference in Washington on Wednesday. He added an extension seemed likely.
“From what we’re hearing, it’ll probably get extended,” he said.
Cruz, the ranking member of the Senate Commerce Committee, represents Texas, where Elon Musk’s space company SpaceX bases the development hub for its next-generation Starship rocket.
The state’s rural Van Horn region is where Jeff Bezos’ Blue Origin launches tourists and researchers to the edge of space aboard the company’s New Shepard rocket.
SpaceX, Blue Origin and Virgin Galactic are the primary U.S. space companies catering to wealthy customers willing to pay large sums of money to experience the exhilaration of supersonic rocket speed, microgravity and the spectacle of the Earth’s curvature from space.
Reporting by Joey Roulette; Editing by Chris Reese, Leslie Adler and Daniel Wallis
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