Yields on benchmark U.S. Treasury notes fell on Thursday as the United States and Iran reached an agreement on a memorandum of understanding to extend their ceasefire for another 60 days, a step toward ending their three-month-old war. "What the numbers point to today is simply that we have a stagflation problem," said Peter Cardillo, chief market economist at Spartan Capital Securities.
* Musalem, Cook say rate hike may be needed if inflation doesn't ease. * April PCE inflation rose 3.8% year-on-year, driven by higher energy prices. * Debate intensifies over AI's potential to cool inflation, with Musalem and Goolsbee skeptical. By Ann Saphir.
* Crude drifts higher amid continued closure of the Strait of Hormuz. * US GDP revised lower, orders for capital goods unexpectedly drop. * Fed rate hike expectations rise as U.S. inflation data seen above target. * Dollar weakens against euro, yen. By Stephen Culp.
* Canadian dollar gains 0.4% against the greenback. * Rebounds from six-week low at 1.3869. * Current account deficit widens to C$7.18 billion. * Bond yields ease across the curve. By Fergal Smith. The Canadian dollar rebounded from a six-week low against its U.S. counterpart on Thursday as the prospect of a deal to extend the ceasefire in the Middle East boosted risk appetite.
One of new Federal Reserve Chairman Kevin Warsh's favorite inflation measures came in cool again on Thursday, offering evidence for his belief inflation is improving and against the view of a growing number of other policymakers that interest rate hikes may be needed to tamp down rising price pressures.
* Dallas Fed's trimmed mean inflation measure may currently understate true price pressures. * Core PCE inflation rose 3.3% year-over-year, fastest since 2023, per Commerce Department. * Warsh has said he prefers "trimmed averages" to core inflation measures. By Ann Saphir.
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A growing number of U.S. central bankers say there may be a case for raising interest rates if inflation does not ease soon, even as they express skepticism over the power of AI to help that process along. The combination sets the table for a heated debate at Federal Reserve Chairman Kevin Warsh's first policy-setting meeting next month.
* Musalem says he would be concerned if disinflation doesn't resume in coming quarters. * April PCE inflation rose 3.8% year-on-year, driven by higher energy prices. * Musalem cautions against betting that AI-driven productivity will curb inflation. By Ann Saphir.
* Crude drifts higher amid continued closure of the Strait of Hormuz. * US GDP revised lower, orders for capital goods unexpectedly drop. * Fed rate hike expectations rise as U.S. inflation data seen above target. * Dollar weakens against euro, yen. By Stephen Culp.
* Personal Consumption Expenditures Price Index rises 3.8% on year-over-year basis in April. * Core PCE inflation advances 3.3% on year-over-year basis, versus Fed's 2% target. * Consumer spending gains 0.5% * Income at the disposal of households after adjusting for inflation falls 0.5% By Lucia Mutikani.
Yields on benchmark U.S. Treasury notes fell late Thursday morning following a media report that the United States and Iran had made a breakthrough in their efforts to end their three-month-old war.
St. Louis Federal Reserve President Alberto Musalem on Thursday offered a skeptical view of the expectation that artificial intelligence will reduce inflation by fueling a surge in productivity, arguing it would be a mistake for the U.S. central bank to count on that possibility by easing monetary policy.
Federal Reserve Bank of New York President John Williams said on Thursday central bank monetary policy is in the right place given the outlook, adding he expects inflation to be high in the near term with the pressures easing later in the year. "Right now monetary policy for the Fed is, is right where we want it to be," Williams said at the Reykjav?k Economic Conference in Iceland.
Yields on benchmark U.S. Treasury notes retreated from earlier highs on Thursday morning following a batch of mixed economic data showing weaker growth, softening consumer income, steady inflation and falling orders in a key durable goods category. Meanwhile markets continued to shrug off persistent violence in the US conflict with Iran as Washington and Tehran work toward an agreement.
Federal Reserve Bank of New York President John Williams said on Thursday central bank monetary policy is in the right place given the outlook, adding he expects inflation to be high in the near term with the pressures easing later in the year. "Right now monetary policy for the Fed is, is right where we want it to be," Williams said at the Reykjav?k Economic Conference in Iceland.
Estimated U.S. economic growth for the first quarter was revised lower on Thursday and a closely watched measure of price pressures came in largely in line with expectations. Gross domestic product increased at a 1.6% annualized rate last quarter, the Commerce Department's Bureau of Economic Analysis said in its second estimate of first-quarter GDP on Thursday.
U.S. economic growth was not a strong as initially thought in the first quarter, and momentum is set to slow this quarter, with the war with Iran stoking inflation and squeezing households finances. Gross domestic product increased at a 1.6% annualized rate last quarter, the Commerce Department's Bureau of Economic Analysis said in its second estimate of first-quarter GDP on Thursday.
U.S. economic growth was not a strong as initially thought in the first quarter, and momentum is set to slow this quarter, with the war with Iran stoking inflation and squeezing households finances. Gross domestic product increased at a 1.6% annualized rate last quarter, the Commerce Department's Bureau of Economic Analysis said in its second estimate of first-quarter GDP on Thursday.
By Jamie McGeever. A gap is widening between two key measures of underlying U.S. inflation. The Bureau of Economic Analysis on Thursday released April's personal consumption expenditures figures, one of two closely watched measures of price changes across a wide range of goods and services. Annual headline PCE inflation rose to 3.8% from 3.5% in March, on the back of soaring energy prices.
Brazil's economy is expected to have grown faster in the first quarter against the last three months of 2025 aided by stronger manufacturing activity, a Reuters poll showed. The service sector also contributed to the recovery, particularly in commerce, professional and household segments supported by a healthy job market, analysts said.
Federal Reserve Bank of New York President John Williams said Thursday it's hard to spot fundamental shifts in the level of productivity as they are happening.
The number of Americans filing claims for unemployment benefits increased marginally last week amid relatively low layoffs, despite the dragging war with Iran. Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 215,000 for the week ended May 23, the Labor Department said on Thursday.
The number of Americans filing claims for unemployment benefits increased marginally last week amid relatively low layoffs, despite the dragging war with Iran. Initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 215,000 for the week ended May 23, the Labor Department said on Thursday.
U.S. inflation increased at its fastest pace in three years in April, driven by higher energy prices due to the Iran war and cementing economists' views that the Federal Reserve would hold interest rates unchanged well into next year. Surging price pressures are eroding household income and threatening to restrain consumer spending and economic growth this year.
Bulgaria is keen to respect?its commitment to NATO and increase its defence spending to 5% of its gross domestic product, Prime Minister Rumen Radev said on Thursday. Previously president of Bulgaria, Radev resigned from that role ahead of parliamentary elections in April, which he won with a landslide.
* EU considers broadening import quotas, tariffs on Chinese goods -FT. * EU wants to shield certain industries. * Chinese govt spokesperson says EU is not seeing whole trade picture. * Says China does not deliberately pursue trade surplus with Europe. By Colleen Howe and Julia Payne.
Outstanding loans in Brazil were up 9.3% in the 12 months through April, central bank data showed on Thursday, slowing from the 9.8% expansion registered in the previous month.
Brazil's producer price index rose 2.63% in April, up from a revised 2.28% increase in the previous month, statistics agency IBGE said on Thursday, marking the highest monthly increase since March 2022.
* Investors more cautious on chances of swift end to Iran war. * US economic data in focus after hawkish Fed remarks. * Yen support likely to hinge on intervention risks, US data. By Stefano Rebaudo.
Swiss inflation is currently within the Swiss National Bank's target range, SNB Chairman Martin Schlegel said on Thursday, with the central bank relying mainly on its interest rate to steer monetary policy. The SNB would also use foreign-exchange interventions "if necessary", Schlegel said, according to slides presented at an event in Reykjavik, Iceland.
A selloff in government bonds is testing one of the most basic assumptions in markets: that Treasuries and other high-quality debt will cushion portfolios when stocks fall. Long-dated bonds have come under pressure since the Iran war started, as investors demand more compensation for inflation, U.S. economic strength and expected increases in bond supply driven by deficit spending.
* Rising inflation and deficits weaken bonds' role as portfolio diversifiers. * Analysts highlight diminished negative correlation between stocks and Treasuries. * Some investors favor shorter maturities, but Treasuries remain key global asset. By Karen Brettell.
* EU considers broadening import quotas, tariffs on Chinese goods -FT. * EU wants to shield certain industries. * Chinese govt spokesperson says EU is not seeing whole trade picture. * Says China does not deliberately pursue trade surplus with Europe. By Colleen Howe and Julia Payne.
* Investors more cautious on chances of swift end to Iran war. * US economic data in focus after hawkish Fed remarks. * Yen support likely to hinge on intervention risks, US data. By Stefano Rebaudo.
* U.S. launches strikes on Iran military site. * Dollar rises to one-week high. * U.S. PCE data due at 1230 GMT. * Silver, platinum hit near one-month lows. By Pablo Sinha. Gold prices fell to a two-month low on Thursday as fresh U.S. attacks on Iran boosted the dollar and pushed oil prices higher, stoking concerns about rising inflation and clouding the interest rate outlook.
Euro zone bond yields rose on Thursday after the U.S. and Iran traded strikes, threatening their ceasefire agreement and pushing oil prices up around 3%. Germany's 10-year bond yield rose 2 basis points to 3.005%. The two-year German bond yield, which is more sensitive to European Central Bank interest rate expectations, rose 4 bps to 2.617%. Yields move inversely to prices.
If Donald Trump is indeed backing off and allowing the Federal Reserve to do what it needs to do, then the U.S. president may have to park his administration's long-assumed preference for a weaker dollar too.
Federal Reserve Vice Chair Philip Jefferson said on Thursday it was appropriate to focus on returning inflation to the central bank's 2% target given the U.S. labour market has been "very resilient" to the current energy shock.
* Bare-bones budget aims to preserve fiscal space as Iran war fans economic risks. * Budget projects achieving surplus sooner than expected in fiscal 2030. * Finance Minister Willis says budget aims to bolster economy for years ahead. * Government downgrades GDP forecast for 2027 fiscal year. * Budget boosts spending on defence, schools but flags deeper public service cuts.
Chicago Federal Reserve President Austan Goolsbee on?Thursday amped up his warning that mounting expectations for the productivity-boosting potential of AI could send inflation higher and force the Fed and other central banks to raise interest rates.
Chicago Federal Reserve President Austan Goolsbee on Thursday amped up his warning that mounting expectations for the productivity-boosting potential of AI could send inflation higher and force the Fed and other central banks to raise interest rates.
Federal Reserve Governor Lisa Cook on Wednesday said she feels the U.S. central bank should hold short-term interest rates steady for now but, with tariffs, the Iran war and a surge in AI-related investment pushing prices higher, she is prepared to hike rates if needed.
Chicago Federal Reserve President Austan Goolsbee told CNBC on Thursday that energy inflation tied to the war in Iran has lasted longer than expected. Goolsbee also sounded a warning for Asian economies in the interview, saying that, because they are energy importers, "it's more just a stagflationary shock of the old-fashioned variety."
New Zealand on Thursday forecast a budget deficit of NZ$15.06 billion for the fiscal year ending June 30 2026, narrower than a deficit of NZ$16.93 billion projected in its half-year fiscal update in December. Net debt excluding advances was forecast to peak at 46.1% of gross domestic product in 2027/28.
The U.S. dollar, long stuck in a tight trading range, could be in for a break higher as the Federal Reserve shifts its focus to fighting worrisome signs that inflation is heating up. In the first half of last year, the dollar slumped nearly 11%. Since then, it has settled into a narrow trading range, frustrating both those anticipating deeper losses and those hoping for a meaningful rebound.
Federal Reserve Vice Chair Philip Jefferson said on Wednesday that the current setting of monetary policy is in the right place amid ongoing upside risks to the inflation outlook.
* Fed's Jefferson says monetary policy is well positioned. * Jefferson says while inflation expected to ease later this year, there are risks. * Jefferson says job market mostly stable. By Michael S. Derby. Federal Reserve Vice Chair Philip Jefferson said on Wednesday that the current setting of monetary policy is in the right place amid ongoing upside risks to the inflation outlook.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.
Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.
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