[1/4]U.S. Treasury Secretary Janet Yellen gives a statement to the press during her visit in Mexico City, Mexico December 6, 2023. REUTERS/Daniel Becerril Acquire Licensing Rights
MEXICO CITY, Dec 7 (Reuters) – The U.S. and Mexico agreed on Wednesday to cooperate on stronger screening of investments to reduce national security risks and discussed integrating cross-border payments systems, but U.S. Treasury Secretary Janet Yellen insisted that the moves were not motivated by concerns about China.
The Treasury and Mexican Finance Ministry signed an agreement to exchange information on technical information and best practices as Yellen wrapped up a three-day visit to Mexico City.
The Biden administration is promoting Mexico as a premier investment destination for U.S. supply chains and wants to ensure that it has a robust screening regime in place to handle a growing influx of factory investment.
The effort is aimed at helping Mexico develop a screening body similar to the Treasury-run Committee on Foreign Investment the U.S. (CFIUS), which reviews purchases of American companies by foreign-owned entities and other inbound investments.
“Like our own investment screening regime, CFIUS, increased engagement with Mexico will help maintain an open investment climate while monitoring and addressing security risks, making both our countries safer,” Yellen said in announcing the memorandum of intent with Mexican Finance Minister Rogelio Ramirez de la O.
FENTANYL VS WEAPONS
Yellen’s trip focused on enhancing economic ties and boosting cooperation to stem the flow of the deadly opioid fentanyl to the United States via Mexico, where precursor chemicals from China are often mixed.
Ramirez asked for help in fighting the flow of weapons from the United States into the hands of Mexican criminal gangs that he said often outgun police departments and Mexico’s military.
“On this side of the border we’re doing everything we can to detect and prevent” the shipping of fentanyl to the U.S., he said. “So we have also asked for the same level of cooperation from the U.S. with these (arms) shipments.”
“NEAR-SHORING” BOOM
Mexico is attracting a major influx of manufacturing investments to supply the U.S. market, raising concerns that China or other countries could use it as a back door to get around restrictions on U.S. export controls for sensitive technologies such as semiconductors.
The near-shoring boom brought Mexico $32.2 billion in foreign direct investment in the first three quarters of 2023, close to the full-year 2022 total of $36 billion.
High-profile projects include an estimated $5 billion Tesla (TSLA.O) electric vehicle factory in northern Mexico that has prompted Chinese suppliers to announce plans to invest over $1 billion nearby.
While CFIUS’ increased scrutiny in recent years has sharply reduced Chinese investment in the United States, Yellen said the investment screening talks with Mexico were “not just China-focused.” She said China was welcome to make investments in Mexico to supply the U.S. as long as these could pass national security screenings and meet new tax credit content rules limiting EV battery value chains to 25%.
“If Chinese involvement triggered those rules, which are meant to avoid undue dependence on China, then that’s a no,” Yellen said earlier.
Ramirez, asked whether Mexico was worried increased cooperation with the U.S. would strain its relationship with China, Ramirez said Mexico’s trading relationship with its northern neighbor was “overwhelmingly dominant” and a higher priority than with other countries.
The Treasury and other members of CFIUS, which include the U.S. departments of State, Defense, Homeland Security, and Commerce, regularly work with governments to improve their investment screening, including recently in Europe, Yellen said. More than 20 countries have implemented or enhanced their regimes over the past decade.
PAYMENTS COOPERATION
Yellen said that Treasury and Mexican Finance Ministry officials on Thursday also discussed cross-border payment systems, including possibly integrating them more deeply, which could enhance trade and investment benefits.
Possible deeper integration of the payment systems between the two countries was “not about China,” Yellen said.
Financial cooperation with the U.S. enabled Mexico to look at issues of interest to the country “in particular digital payments and reducing costs to send remittances,” Ramirez said.
Reporting by David Lawder; Additional reporting by Kylie Madry; Editing by Richard Chang
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A gas pump selling E15, a gasoline with 15 percent of ethanol, is seen in Mason City, Iowa, United States, May 18, 2015. Over the past few months, privately held retailers Kum & Go and Sheetz have become the first significant chains to announce plans to start selling E15, 50 percent more than the typical U.S. blend. REUTERS/Jim… Acquire Licensing Rights
Nov 24 (Reuters) – The White House is stalling action on requests by Farm Belt states to allow regional sales of gasoline blended with higher volumes of ethanol after oil industry warnings that the move could cause regional supply disruptions and price spikes, according to two sources familiar with the matter.
The decision underscores concerns within President Joe Biden’s administration over fuel prices, as opinion polls show inflation and the economy as key vulnerabilities for his 2024 re-election bid. In an NBC News poll released on Sunday, just 38% of respondents approved of Biden’s handling of the economy.
Governors from eight Midwestern states – Illinois, Iowa, Kansas, Minnesota, Nebraska, North Dakota, South Dakota and Wisconsin – petitioned the Environmental Protection Agency last year to let them sell gasoline blended with 15% ethanol, or E15, all year, arguing it would help them lower pump prices that soared following Russia’s invasion of Ukraine in February 2022.
The EPA last March issued a proposal that would approve the request by the governors. The agency subsequently missed deadlines to finalize the proposal after oil refiners including HF Sinclair Corp (DINO.N) and Phillips 66 (PSX.N) warned that a patchwork approach to approving E15 sales would complicate fuel supply logistics and raise the risk of spot shortages.
U.S. gasoline typically contains 10% ethanol.
The two sources familiar with the administration’s thinking, speaking on condition of anonymity, said the White House decided to delay action on the matter following the oil industry’s warnings in part because of concern that higher pump prices in certain states could hurt Biden’s re-election chances.
White House and EPA officials declined to comment on the matter.
Ethanol, a domestically produced alternative fuel most commonly made from corn, is cheaper by volume than gasoline. Adding more of it to the fuel mix can lower prices by increasing overall supply. But the U.S. government restricts sales of E15 gasoline in summer months due to environmental concerns over smog.
The ethanol industry for years has pushed to lift the restrictions on E15 sales nationwide, arguing the environmental impacts have been overstated.
Nebraska and Iowa sued the EPA in August for missing its statutory deadlines on the request by the governors. In its October response, the EPA did not deny it that missed the deadlines and did not offer an explanation.
The oil and ethanol lobbies have produced dueling studies that show how allowing E15 in some states would impact prices, with predictable results. Oil industry-backed studies showed price increases, while ethanol industry-backed studies showed any price increases offset by utilizing lower-cost ethanol.
University of Houston energy economist Ed Hirs said the average U.S. consumer does not understand oil markets, leaving the White House and Biden’s re-election campaign vulnerable to accusations that approving the requests by the governors caused fuel prices to spike, even if something else was to blame.
“There is an unwritten rule that high gas prices mean the incumbent won’t get re-elected,” Hirs said.
Reporting by Jarrett Renshaw and Stephanie Kelly; Editing by Will Dunham
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WASHINGTON, Nov 21 (Reuters) – U.S. existing home sales dropped to the lowest level in more than 13 years in October as the highest mortgage rates in two decades and a dearth of houses drove buyers from the market.
The report from the National Association of Realtors on Tuesday also showed that the median house price last month was the highest for any October. Barring a rebound in November and December, home resales this year are on track for their worst performance since 1992.
“The combination of high prices, high mortgage rates, and millions of homeowners unwilling to move, given they’ve locked in low rates, has frozen the market,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia.
Existing home sales tumbled 4.1% last month to a seasonally adjusted annual rate of 3.79 million units, the lowest level since August 2010 when the sales were declining following the expiration of a government tax credit for homebuyers.
Home resales are counted at the closing of a contract. October’s sales likely reflected contracts signed in the prior two months, when the average rate on the popular 30-year fixed-rate mortgage jumped to levels last seen in late 2000.
Economists polled by Reuters had forecast home sales would slide to a rate of 3.90 million units. Sales fell in the Northeast, West and the densely populated South. They were unchanged in the Midwest, the most affordable region.
Home resales, which account for a big chunk of U.S. housing sales, plunged 14.6% on a year-on-year basis in October.
The rate on the popular 30-year fixed-rate mortgage averaged 7.31% in the final week of September, before peaking at 7.79% in late October, the highest level since November 2000, according to data from mortgage finance agency Freddie Mac.
Though it has since retreated following data this month showing the labor market cooling and inflation subsiding, the rate averaged a still-high 7.44% last week.
Stocks on Wall Street were trading lower as investors awaited minutes of the Federal Reserve’s Oct. 31-Nov. 1 meeting later in the day. The dollar fell against a basket of currencies. U.S. Treasury prices rose.
TIGHT SUPPLY
There were 1.15 million previously owned homes on the market last month, down 5.7% from a year ago. Most homeowners have mortgage rates under 5%, making many reluctant to sell.
Lawrence Yun, the NAR’s chief economist, told reporters that realtors will be speaking with their representatives in the U.S. Congress about a government tax incentive for homeowners who have been living in their homes for a long period to encourage them to put their houses on the market.
Yun also noted that even if mortgage rates continued to slide, in tandem with U.S. 10-year Treasury yields, affordability would remain a challenge in the absence of adequate supply. The lack of previously owned houses is boosting demand for new homes.
At October’s sales pace, it would take 3.6 months to exhaust the current inventory of existing homes, up from 3.3 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand.
Builders have been breaking more ground on new housing projects, but are being constrained by higher borrowing costs.
“Homebuilders should take the opportunity to supply the market to meet demand,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.
With supply still tight, multiple offers were the norm in some areas, keeping house prices on an upward trend on a year-over-year basis. The median existing house price rose 3.4% from a year earlier to $391,800, the highest for any October. About 28% of the homes sold last month were above the listing price.
Properties typically remained on the market for 23 days in October, up from 21 days a year ago. Sixty-six percent of homes sold in October were on the market for less than a month.
First-time buyers accounted for 28% of sales, as they did a year ago. This share is well below the 40% that economists and realtors say is needed for a robust housing market.
All-cash sales accounted for 29% of transactions compared to 26% a year ago. Distressed sales, including foreclosures, represented only 2% of transactions, virtually unchanged from the prior year.
Reporting by Lucia Mutikani; Editing by Paul Simao
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A piece of equipment called a distributor used to hold trays of limestone for capturing carbon is seen at the Heirloom Carbon Technologies facility in Brisbane, California, U.S. February 1, 2023. REUTERS/Nathan Frandino/File Photo Acquire Licensing Rights
Nov 9 (Reuters) – California climate technology company Heirloom on Thursday unveiled what is says is the first U.S. commercial plant to suck planet-warming carbon dioxide from the air, a milestone in the effort to scale up nascent carbon removal technologies and hit global climate goals.
Scientists expect the world will need to remove billions of tonnes of carbon-dioxide from the air annually. Direct Air Capture such as that used by Heirloom can secure the CO2, but it is not yet clear whether it can do so at a price that makes the technology practical.
The new facility, which uses crushed limestone to capture 1,000 tonnes a year, is part of a ramp up that Heirloom says will cut costs. Current industry prices for carbon removal by direct air capture are around $600-$1,000 a tonne, one person familiar with the situation said.
Some of Heirloom’s first sales for capture and storage, in 2021, were more than $2,000 per tonne, and the U.S. government is aiming eventually for $100 a tonne.
The new plant, about an hour and a half from San Francisco Bay in Tracy, California, has tall stacks of trays holding limestone open to the air. The rock naturally absorbs CO2 and Heirloom has treated it to do so in a few days. Rock that has captured CO2 is heated with renewable energy to release the gas, and then reused. Heirloom works with startup CarbonCure to store the gas from the new plant in concrete.
U.S. Secretary of Energy Jennifer Granholm, who was due to visit the site on Thursday, in a statement called the plant a blueprint for beating climate change. The Department of Energy is spending billions in grants to built Direct Air Capture demonstration hubs. Heirloom is one of the winners of the largest tier grant.
Occidental Petroleum (OXY.N), another hub grant winner, aims to marry acquired DAC technology with its own expertise managing resources underground, where most of the carbon dioxide is expected to be stored.
BlackRock Inc, the world’s biggest money manager, on Tuesday said it will invest $550 million in Occidental’s West Texas plant.
Reporting By Peter Henderson
Editing by Marguerita Choy
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U.S. Senator Bob Casey (D-PA) delivers remarks at the Belmont Water Treatment Center during a visit to Philadelphia, Pennsylvania, U.S., February 3, 2023. REUTERS/Elizabeth Frantz Acquire Licensing Rights
Nov 9 (Reuters) – Two U.S. senators plan to introduce a bipartisan bill on Thursday that would require private equity firms to make public how much they invest in China and other countries of concern.
The bill, set to be introduced by Democratic Senator Bob Casey and Republican Senator Rick Scott, is the latest effort to track U.S. investments in China.
“The American people deserve to know where and how their savings are being invested,” Casey said in a statement.
The United States has sought to crack down on U.S. investment in China over fears U.S. dollars and know-how are aiding Beijing’s technological advances to modernize its military.
U.S. private investment firms have poured more than $80 billion into China between 2018 and 2022, some via pension plans, according to Casey’s office.
The new congressional measure would require private equity funds to annually disclose assets invested in China, Iran, Russia and North Korea to the U.S. Securities and Exchange Commission, which would then be required to make public a report based on the information.
It would also require disclosure of certain information about private security sales.
Rick Scott’s office did not immediately respond to an emailed request for comment.
Casey has also co-sponsored a measure that would require government notification of investments in certain sensitive technology sectors in China. That measure has been added as an amendment to the Senate’s National Defense Authorization Act (NDAA) and may or may not survive reconciliation with the House’s version.
The new bill also comes in the wake of an executive order on outbound investment to prohibit some U.S. investments in China in semiconductors and microelectronics, quantum computing and artificial intelligence, and require notification of others. The order has not yet been implemented.
Reporting by Karen Freifeld; Editing by Sharon Singleton
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WASHINGTON, Oct 31 (Reuters) – U.S. labor costs increased solidly in the third quarter amid strong wage growth while house price inflation accelerated in August, the latest signs that the Federal Reserve could keep interest rates high for some time.
The reports on Tuesday pose a threat to efforts by the U.S. central bank to bring inflation to its 2% target. Fed officials started a two-day policy meeting on Tuesday. The U.S. central bank is expected to leave interest rates unchanged but maintain its hawkish bias at the conclusion of that meeting as a recent spike in U.S. Treasury yields and stock market sell-off have tightened financial conditions.
“Those wage increases are likely to keep inflation running above target while higher house prices could lead to a pick-up in shelter inflation,” said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York. “For now the Fed will remain on-hold, but the evident upside risk to inflation means Chair (Jerome) Powell and committee will keep potential further rate hikes on the table.”
The Employment Cost Index (ECI), the broadest measure of labor costs, rose 1.1% last quarter after increasing 1.0% in the April-June period, the Labor Department’s Bureau of Labor Statistics reported. Economists polled by Reuters had forecast the ECI would rise 1.0%.
Labor costs increased 4.3% on a year-on-year basis, the smallest gain since the fourth quarter of 2021, after advancing by 4.5% in the second quarter. Growth in annual compensation is gradually slowing after peaking at 5.1% last year, in line with some easing in labor market conditions. It, however, remains well above the pre-pandemic pace.
The rise in compensation helps to explain the surge in consumer spending last quarter, which contributed to the fastest economic growth rate in nearly two years.
The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack and a predictor of core inflation because it adjusts for composition and job-quality changes. Since March 2022, the Fed has raised its policy rate by 525 basis points to the current 5.25%-5.50% range.
Wages increased 1.2% in the third quarter after climbing 1.0% in the prior three months. They were up 4.6% on a year-on-year basis after advancing by the same margin in the second quarter. Strong wage growth is being driven by worker shortages that still persist in some services industries.
September’s job openings data on Wednesday will shed light on the state of demand for labor.
Though consumers continue to worry about the economy’s outlook, more are planning vacations over the next six months and are not contemplating scaling back in a major way on purchases of motor vehicles and other big-ticket items, according to a survey from the Conference Board on Tuesday.
Their concerns about the economy center around the violence in the Middle East as well as domestic politics, likely reflecting the protracted battle to elect a speaker in the U.S. House of Representatives.
The Conference Board’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, rose to 26.3 from 25.5 in September. This measure correlates to the unemployment rate from the Labor Department. Overall, the consumer confidence index dropped moderately to 102.6 this month from 104.3 in September.
“The U.S. consumer is in okay financial shape,” said Bill Adams, chief economist at Comerica Bank in Dallas. “For well-off Americans, inflation is a source of frustration but not enough to force cutbacks in overall spending.”
An employee works on solar panels at the QCells solar energy manufacturing factory in Dalton, Georgia, U.S., March 2, 2023. REUTERS/Megan Varner Acquire Licensing Rights
Stocks on Wall Street were trading lower. The dollar gained versus a basket of currencies. U.S. Treasury prices rose.
CONSUMER CONFIDENCE EBBS
The compensation report showed private-sector wages gained 1.1% after rising 1.0% in the April-June quarter. They advanced 4.5% on a year-on-year basis. There were notable increase in wages in the financial activities and education and health services sectors. But wage growth slowed in the leisure and hospitality industry, which had experienced worker shortages.
Manufacturing also reported a moderation in wage gains.
State and local government wages shot up 1.8% after increasing 0.8% in the prior quarter. They were driven by rises in education and health services as well as public administration. State and local government wages increased 4.8% on a year-on-year basis, the most since the government started tracking the series in 2001.
Inflation-adjusted wages for all workers rose 0.9% on a year-on-year basis after jumping 1.7% in the second quarter. While slowing, wages should continue to underpin spending.
Benefits rose 0.9% last quarter after climbing by the same margin in the April-June period. They increased 4.1% on a year-on-year basis.
Economists expected the higher wages and benefits to pressure corporate profits, with Nationwide chief economist Kathy Bostjancic noting that “some companies are losing a bit of their pricing power.”
A third report from the Federal Housing Finance Agency showed house prices increased 0.6% in August, driven by an acute shortage of previously owned homes. House prices rose 0.8% in July. While lofty house prices are boosting household wealth, they could keep inflation elevated in the near-term.
In the 12 months through August, house prices accelerated 5.6% after advancing 4.6% in July. With the rate on the popular fixed 30-year mortgage near 8%, some economists see limited scope for house prices to keep rising, which would result in rents contributing less to inflation.
Higher rents were the major drivers of inflation in September after cooling somewhat in prior months.
Even as house prices continue to march higher, there are signs that shelter inflation could moderate next year.
A fourth report from the Commerce Department’s Census Bureau showed the rental vacancy rate jumped 6.6% in the third quarter, the highest since the first quarter of 2021, from 6.3% in the April-June period.
“We still think it is likely that the surge in mortgage rates will slow the rise in prices in the secondary market going forward,” said Lou Crandall, chief economist at Wrightson ICAP in New York.
Reporting by Lucia Mutikani; Editing by Paul Simao and Deepa Babington
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A look at the day ahead in U.S. and global markets from Mike Dolan
A more modest yearend schedule of Treasury debt sales than many feared helped bonds rally overnight while the Bank of Japan closed out a scary October for world markets on Tuesday with another modest tightening tweak.
A hectic Halloween of policy meetings, big macro reports and another slew of company earnings is seeing most world markets shave off the sharpest edges of a rough month, just as the Federal Reserve kicks off its latest two-day gathering.
But relief in Treasuries, the villain of the piece for several weeks, is probably the most significant marker for the remainder of the year.
On Monday, the U.S. Treasury said it expects to borrow $776 billion in the fourth quarter of the year, less than $852 billion it has previously indicated and below Wall St forecasts.
Officials said the reduced tally was down to an increased revenue estimate and that was mainly because tax payments from California and other states that had been previously deferred due to natural disasters were now flowing to Treasury coffers.
Given that the announcement in July of third-quarter borrowing of more than trillion dollars was largely responsible for the bond market selloff since, the more benign forecast for the final three months dragged 10-year benchmark yields back further from bruising 16-year peaks above 5%.
With hopes the resurfaced risk premium for holding long-term debt may ease as a result, 10-year yields were as low as 4.82% on Tuesday – some 20 basis points off recent highs.
Even though the Bank of Japan further loosened its grip on long-term interest rates on Tuesday by re-defining 1.0% as a loose “upper bound” rather than a rigid cap, markets took some solace it wasn’t more draconian. Even though 10-year Japanese government yields jumped as much as 7bps to 0.96%, the yen weakened again sharply past 150 per dollar and the Nikkei 225 index of leading stocks rose (.N225).
And there were further soothing noises for world bonds, even if not for global growth, from surprisingly weak Chinese business surveys for October. Chinese stocks (.CSI300) underperformed and closed lower yet again.
Adding to the mix on Monday was a retreat in crude oil prices to their lowest since the October 7 attacks on Israel, as Israel’s land invasion into Gaza advanced slowly and pressure to up stuttering humanitarian aid to the besieged citizens there increased.
Crude prices steadied around $83 per barrel on Tuesday, with market speculation about a rise in U.S. shale oil output circulating following recent major acquisitions by Big Oil firms.
In Europe, falling energy stocks (.SXEP) bucked a more positive wider market due to a 4.2% fall in BP (BP.L) after third-quarter earnings missed analysts’ forecasts.
Overall, the picture pointed to another positive day for Wall Street stocks, with futures marginally positive ahead of the open as the Fed meeting gets underway. The S&P500 (.SPX) rebounded after an awful month on Monday to clock its best day’s gain since August – but it remains on course to record its third straight month of losses since 2020.
The U.S. central bank is expected to leave policy rates unchanged again on Wednesday as it assess the final-quarter trajectory of inflation and the economy after a bumper Q3.
With the October jobs report due Friday, the latest consumer confidence reading for this month tops the economic diary on Tuesday in the meantime. The likes of pharma giant Pfizer and construction bellwether Caterpillar are on a heavy earnings slate.
In other positive news, General Motors (GM.N) and the United Auto Workers struck a tentative deal late on Monday, ending the union’s unprecedented six-week campaign of coordinated strikes that won record pay increases for workers at the Detroit Three automakers.
Key developments that should provide more direction to U.S. markets later on Tuesday:
* U.S. Oct consumer confidence, Oct Chicago business survey, Oct Dallas Fed service sector survey, Q3 employment costs, Aug house prices
* Federal Reserve starts 2-day policy meeting
* U.S. corporate earnings: Pfizer, Caterpillar, AMD, Amcor, Amgen, Marathon, MSCI, Caesars, Global Payments, Sysco, Eaton, Franklin Resources, Allegion, Assurant, AMETEK, Equity Residential, GE Healthcare, First Solar, Incyte, Paycom, Match, Bio-Techne, WEC Energy, Hubbell, Echolab, Zebra, ONEOK, Xylem
* U.S. Treasury auctions 12-month bills
By Mike Dolan, editing by Christina Fincher, <a href=”mailto:mike.dolan@thomsonreuters.com” target=”_blank”>mike.dolan@thomsonreuters.com</a>. Twitter: @reutersMikeD
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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.
Coronavirus disease (COVID-19) treatment pills Paxlovid and molnupiravir are seen in boxes, at Misericordia hospital in Grosseto, Italy, February 8, 2022. REUTERS/Jennifer Lorenzini/File Photo Acquire Licensing Rights
WASHINGTON, Oct 27 (Reuters) – Most people will retain access to Pfizer’s (PFE.N) Paxlovid and Merck’s (MRK.N) Lagevrio COVID-19 oral antiviral treatments for little or no cost even after the U.S. government starts handing over their distribution to the commercial market next month, health officials said on Friday.
The government has been overseeing distribution of the treatments, alongside vaccines and tests, but has transferring that work to traditional commercial channels. Commercial ordering for the treatments is set to start on Nov. 1.
The U.S. government paid around $530 per course for Paxlovid, the most commonly prescribed at home COVID-19 treatment in the country, and made it available at no cost.
Pfizer said last week it had set the price for Paxlovid at nearly $1,400 per course before rebates and other discounts to insurers and pharmacy benefit managers are taken into account.
“The launch of these products, which is what’s going to happen on Nov. 1, is not going to bring sudden changes because there’s still an ample supply of federally-owned therapeutics with millions of treatment courses still in the field,” said a U.S. Department of Health and Human Services (HHS) official.
“Most people who need therapeutics will continue to be able to access the treatment they need at low or no cost, both during this transition, as well as after this transition to the commercial market,” he said on a call with journalists.
Providers will be able to order government-supplied Lagevrio until Nov. 10 and Paxlovid until Dec. 15, the official said, and the government is encouraging them to keep distributing the federal-owned supply they have at no cost until it expires or runs out.
Under an agreement with Pfizer allowing the return of 7.9 million courses, the credits for the returned doses will underwrite a program keeping Paxlovid free of charge for patients insured under the Medicare and Medicaid programs through the end of 2024, and to uninsured and underinsured patients through 2028, the official said.
Returns will begin on Nov. 15, the official said, and will be accepted through the end of the year. The government is recommending returns start in December enough time for the establishment of patient assistance programs and securing of commercially-labeled doses.
Reporting by Ahmed Aboulenein
Editing by Marguerita Choy
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WASHINGTON, Oct 25 (Reuters) – Sales of new U.S. single-family homes surged to a 19-month high in September as the annual median house price dropped by the most since 2009 amid discounts offered by builders to woo buyers, but mortgage rates flirting with 8% could curb demand.
A chronic shortage of previously owned houses is driving buyers to new construction, a situation that builders are taking advantage of by giving a range of incentives to improve affordability. The bulk of homes sold last month were in the $150,000 to $499,999 price range, the report from the Commerce Department showed on Wednesday.
“Homebuilders are offering buyers interest rate buydown incentives that funnel demand into the newly built segment,” said Bill Adams, chief economist at Comerica Bank in Dallas. “They are also shrinking floorplans to boost affordability. That is leading to very different dynamics in different parts of the housing market.”
New home sales rebounded 12.3% to a seasonally adjusted annual rate of 759,000 units last month, the highest level since February 2022. August’s sales pace was revised up to 676,000 units from the previously reported 675,000 units.
Economists polled by Reuters had forecast new home sales, which account for a small share of U.S. home sales, rebounding to a rate of 680,000 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 accelerated 33.9% on a year-on-year basis in September.
Last month, new home sales jumped 22.5% in the Northeast and increased 14.6% in the densely populated South. They rose 7.5% in the West and advanced 4.7% in the Midwest.
LIMITED SUPPLY
Data last week showed home resales dropped to a 13-year low in September as soaring mortgage rates and tight supply combined to sideline first-time buyers from the existing homes market.
Single-family housing starts and building permits increased in September. But dark clouds are gathering over the new construction market, with confidence among builders deteriorating for a third straight month in October.
Nevertheless builders are trying to maintain the new housing market momentum. The National Association of Home Builders reported last week that about a third of builders reported cutting home prices in October, a 10-month high, with the average price discount at 6%.
“These smart moves are doing more than just grabbing buyers’ attention, they’re making homeownership a reality for many who might have been left out in the cold given the current market conditions,” said Dan Hnatkovskyy, co-founder and CEO of NewHomesMate, a marketplace for new construction homes. “This helping hand is not only making things easier for buyers but is also bringing some much-needed movement to the market.”
The median new house price in September was $418,800 a 12.3% drop from a year ago. That was the largest percentage decline since February 2009. Houses in the $150,000 to $499,999 price range accounted for the bulk of transactions. There was also a notable rise in sales in the $500,000 to $749,000 price bracket.
With a separate report from the Mortgage Bankers Association on Wednesday showing the popular 30-year fixed-rate mortgage averaging 7.9% last week, the highest since September 2000, new homes sales could slow in the months ahead.
Indeed, the MBA reported that the volume of mortgage applications dropped to levels last seen in 1995.
Mortgage rates have risen in tandem with a surge in the 10-year U.S. Treasury yield, which is hovering just below 5%. Government yields have spiked on concerns that the Federal Reserve could keep interest rates higher for longer as the economy continues to show resilience.
Since March 2022, the U.S. central bank has hiked its benchmark overnight interest rate by 525 basis points to the current 5.25% to 5.50% range.
There were 435,000 new homes on the market at the end of last month, up from 432,000 in August. At September’s sales pace it would take 6.9 months to clear the supply of houses on the market, down from 7.7 months in August.
The housing market likely stabilized in the third quarter, thanks to strong homebuilding and new home sales.
Economists expect the government’s snapshot of gross domestic product for the July-September quarter to show residential investment rebounding after contracting for nine straight quarters.
“With mortgage rates continuing to rise and homebuilder optimism surveys softening, we expect new sales to soften over the remainder of the year,” said Doug Duncan, chief economist at Fannie Mae.
Reporting by Lucia Mutikani; additional reporting by Ann Saphir; Editing by Chizu Nomiyama and Andrea Ricci
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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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