Fed mulls bigger rate hikes to cool US economy

WASHINGTON - The United States is prepared to speed up interest rate hikes –- and could raise them higher than anticipated -- if needed to cool inflation and a strong jobs market, Federal Reserve Chair Jerome Powell said.

An "unseasonably warm" January across much of the country was likely behind the robust employment, consumer spending, manufacturing and inflation figures, which pointed to a partial reversal of earlier softening trends, Powell told the Senate Banking Committee. 

"If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," he said.

He added that the "ultimate level of interest rates" is likely to be higher than previously anticipated as well.

Stocks fell sharply following Powell's comments, with the Dow Jones Industrial Average closing 1.7 percent lower.

The dollar strengthened sharply against the euro and other major currencies, while the two-year US Treasury yield surged above five percent. 

Chance of bigger hike 

The US central bank has already raised its benchmark lending rate 8 times since early last year, as it contends with inflation that remains stubbornly above its long-term target of two percent.

It raised rates last month by a quarter percentage point to 4.50-4.75 percent, its highest level since the global financial crisis.

Powell's comments raise the likelihood of the Fed lifting rates by 50 basis points at its next meeting this month, Evercore ISI economists Krishna Guha and Peter Williams wrote in a note to investors.

"We must accept that this option appears to be somewhat more live than we had previously believed," they said, though adding that a quarter-point hike was still the more likely option.

Markets are now roughly evenly split on the chances of a larger half-point rate hike, said Joe Manimbo, senior market analyst at Convera.

Despite its forceful moves, the Fed's favored inflation measure, the personal consumption expenditures (PCE) price index, rose slightly to reach an annual rate of 5.4 percent in January.

Core PCE inflation, which excludes volatile energy and food prices, also rose 4.7 percent.

At the same time, the labor market remains "extremely tight," with close to two jobs available for every one unemployed person in December, Powell said.

US job creation surged in January, with employers creating more half a million new jobs and driving the unemployment rate to its lowest level since the 1960s.

A strong labor market supports incomes and, in turn, demand.

"To restore price stability, we will need to see lower inflation in this sector, and there will very likely be some softening in labor market conditions," Powell said.

Debt ceiling pressure

At Tuesday's hearing, Powell also faced questions about ongoing negotiations between the Biden administration and Republicans in Congress over raising the debt ceiling.

"Whatever else may happen Congress really needs to raise the debt ceiling," Powell said, adding to calls for the two sides to come to an agreement.

The United States hit its $31.4 trillion borrowing cap in January, kicking off frantic talks between Congress and the White House to raise the limit and allow the US to meet pre-existing spending commitments. 

Republicans in Congress have asked for spending cuts in exchange for their support, while the Biden administration has said it wants to separate any talks over the upcoming budget from the debt limit vote.

The nonpartisan Congressional Budget Office warned last month that the country risks defaulting on its debt as soon as July if an agreement is not reached. 

Powell's appearance comes shortly after the US central bank released a semiannual report on monetary policy, which pointed to a tight labor market, robust job gains, historically low unemployment and elevated nominal wage growth.

"The process of getting inflation back down to two percent has a long way to go and is likely to be bumpy," Powell said. "We will stay the course until the job is done."

Agence France-Presse

Markets drop again as traders brace for another big Fed hike

HONG kong - Markets fell Monday as traders extended last week's rout across risk assets, with expectations high that the Federal Reserve will this week announce another outsized interest rate hike.

With recent data showing US inflation rooted at four-decade highs, investors are increasingly pessimistic about the outlook for the global economy.

Some observers have warned of a sharp recession in many countries caused by the huge rate increases, which are hitting families in the pocket.

And with uncertainty rife owing to a range of issues, including Russia's war in Ukraine and China's lockdown-induced slowdown, equities are in danger of revisiting the lows they hit in June.

Several central banks are due to make rate announcements this week, with Japan and Britain among the biggest, although the main event is Wednesday's Fed decision.

There had been a hope that after two 75-basis-point increases in a row, and economic data showing weakness, officials would take their foot off the pedal this month.

But last Tuesday's disappointing consumer price figures shocked traders and ramped up bets for a third successive 75-point rise, while some have predicted a whole percentage point move.

Policymakers, including Fed boss Jerome Powell, have repeatedly said their ultimate aim is to bring inflation under control, even if that means sending the economy into recession.

"It is clear that the Fed will project hawkish messaging, once again reiterating that it will bring down inflation unconditionally," said Vasileios Gkionakis at Citigroup.

Wall Street's worst week since June ended with more losses after FedEx reported Thursday that it shipped fewer packages than expected over the summer owing to weakness in the global economy.

That came as CEO Raj Subramaniam said he expects a global recession.

Asian equity investors continued the selling on Monday.

Hong Kong closed down one percent, even after reports that the city's government was considering ending mandatory hotel quarantine for incoming travelers.

Shanghai was also down despite news that megacity Chengdu was ending a two-week Covid-19 lockdown that saw 21 million people affected.

Sydney, Seoul, Singapore, Taipei, Manila and Wellington were also in the red, though Mumbai and Bangkok inched up and Jakarta was flat. Tokyo was closed for a holiday.

Frankfurt and Paris both opened lower. London was closed for the funeral of Queen Elizabeth II.

The prospect of more big Fed rate hikes is also keeping the dollar at multi-decade highs against its major peers, with the yen feeling most of the pressure as the Bank of Japan refuses to tighten policy.

"Speculative selling of the yen is readily justified by the ongoing widening in US-Japan yield differentials," said Ray Attrill, of National Australia Bank.

"Until or unless something happens to arrest or reverse this spread widening, the yen is susceptible to additional selling pressure."

The Japanese unit last week hit a fresh 24-year low of 144.99 to the dollar, though it has bounced slightly after comments from BoJ officials that signaled they were ready to intervene to provide support.

Oil prices dipped despite the news out of Chengdu as demand fears are fuelled by the growing fear of recession around the world.

Agence France-Presse

US Senate Democrats plan debt-limit vote, Biden hints filibuster could go

WASHINGTON - Senate Democrats are set to try again on Wednesday to extend the US government's borrowing authority to head off a catastrophic default, after President Joe Biden suggested they could change the chamber's rules to bypass a Republican roadblock.

Republicans for months have refused to help raise the self-imposed $28.4 trillion borrowing cap, instead trying to force Democrats to use a different parliamentary maneuver to do so in hopes of scoring political points with voters.

With less than two weeks to go before the Treasury Department expects to run out of ways to meet the government's expenses, Democrats are looking at all their options.

Biden said on Tuesday that it was "real possibility" that Democrats might use their current razor-thin majority to drop the Senate's filibuster rule, which requires 60 of the chamber's 100 members to agree to pass most legislation.

Biden, himself a former Senator, had previously opposed changes to the filibuster, which is meant to help maintain government stability through election cycles.

If Democrats follow through, they could easily suspend the debt ceiling before the deadline of about Oct. 18. That would head off the risk of a crippling default and allow them to focus on passing two mammoth spending bills that make up the bulk of Biden's domestic agenda.

In an effort to underline the severe economic risks of a default, Biden will meet on Wednesday with a group including CEOs of major corporations including JPMorgan Chase & Co , Intel Corp and Nasdaq Inc.

Many Democrats have long argued that the Senate should dump the filibuster entirely, saying it prevents progress on climate change, voting rights and other priorities. The chamber already allows federal judges, including Supreme Court justices, to win approval on a straight majority vote.

Centrist Democratic senators including Joe Manchin and Kyrsten Sinema have said repeatedly they are not willing to dump the filibuster, which would leave the party short of the votes they need to change the rule, however. They could not be reached for comment on whether Biden's words would change their minds.

Democratic Senators John Hickenlooper and Ron Wyden on Tuesday said they were open to dropping the filibuster requirement for the debt-limit vote. Manchin declined to comment when asked about it prior to Biden's remarks.

The Senate was due to hold a Wednesday afternoon procedural vote that would allow them to begin debating a bill that would suspend the debt limit until December 2022, after the elections that will determine control of Congress for the next two years.

That passed the Democratic-controlled House of Representatives last week but Republicans have stalled it in the Senate with the filibuster.

Without a quick resolution, some government services might be suspended, such as delivering Social Security benefit checks to the elderly.

Even a close call would likely be damaging. A 2011 debt ceiling dispute, which Congress resolved two days before the borrowing limit was due to have been reached, caused stocks to tumble and prompted a first-ever credit downgrade for US debt.

The Bipartisan Policy Center on Wednesday issued forecasts on when some federal payments could be postponed as a result of the standoff. Among them: Unemployment insurance payments due Oct. 20 could be delayed five days, federal salaries for civilian employees due Oct. 29 could be pushed back to Nov. 9 and Medicare payments to doctors could be delayed from Nov. 1 to Nov. 19.

Moody's Investors Service said on Tuesday it expects Washington will raise the debt limit.

Democratic Senator Mark Warner said Congress was already risking US creditworthiness, however.

"We're in the danger zone right now," he told reporters on Tuesday.

(Reporting by Andy Sullivan and Susan Cornwell, additional reporting by Richard Cowan and Steve Holland; Editing by Scott Malone, Sonya Hepinstall and Nick Zieminski)

-reuters-

JPMorgan CEO Dimon sees US economic boom through 2023

NEW YORK - JPMorgan Chase & Co Chief Executive Officer Jamie Dimon said on Wednesday the United States could be in store for an economic boom through 2023 if more adults get vaccinated and federal spending continues.

"I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE (quantitative easing), a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom," Dimon wrote in his annual letter to shareholders published on the bank's website.

"This boom could easily run into 2023 because all the spending could extend well into 2023."

As head of the biggest US bank, Dimon is widely seen as the face of America's banking sector, and he used the letter to share his views on the country's economic health and to press for policies to help address inequality and improve the criminal justice system.

The average US consumer's finances are in "excellent shape," Dimon said, and the stock market's high valuations are justified. The price of US treasuries, however, are not, he wrote.

The economic growth Dimon projects the United States could see in the next two years will create opportunities to "deal with issues stemming from inequality," Dimon wrote.

He called for raising the federal minimum wage, improving training for jobs at high schools and colleges and making it easier for people with criminal records to get jobs.

Dimon, who has called for higher taxes to pay for federal stimulus, said corporations could support many of these initiatives if the government adopted rigorous budgeting, transparency and discipline when it comes to its spending.

"We must remember that the concepts of free enterprise, rugged individualism and entrepreneurship are not incompatible with meaningful safety nets and the desire to lift up our disadvantaged citizens," Dimon wrote. (Reporting By Elizabeth Dilts Marshall; Editing by Muralikumar Anantharaman)

-reuters-

Biden to unveil $2 trillion 'once-in-a-century' infrastructure plan

WASHINGTON - President Joe Biden will on Wednesday propose a $2 trillion infrastructure plan aimed at modernizing the United States' crumbling transport network, creating millions of jobs and enabling the country to "out-compete" China.

The first phase of Biden's "Build Back Better" program, which he will unveil in a speech in Pittsburgh, will detail massive investment spread over eight years.

It plans to inject $620 billion into transport, including upgrading 20,000 miles (32,000 kilometers) of roads and highways, repairing thousands of bridges and doubling federal funding for public transit.

The president, whom Donald Trump tried to caricature as "Sleepy Joe" and a man without strong ideas or motivation, intends to make the bold infrastructure plan one of his flagship policies.

"He views his role as laying out... a broad vision, a bold vision for how we can invest in America, American workers, our communities," White House spokeswoman Jen Psaki said.

The investment would be partly paid for by raising corporate tax from 21 percent to 28 percent.

"The President is proposing to fundamentally reform the corporate tax code so that it incentivizes job creation and investment... and ensures that large corporations are paying their fair share," a senior administration official said ahead of the speech.

The new legislative offensive comes soon after Congress passed a nearly $2 trillion Covid-19 economic stimulus plan.

And Biden's speech is set to open a bitter battle in Congress, where the Democrats hold only a narrow majority and will face strong opposition from the Republicans.

The coming months will test the negotiating skills of the Democratic president, a veteran of Washington politics and deal-making, to the limit, and the chances of his infrastructure plan passing into law remain uncertain.

URGENCY OF THE MOMENT

"It's an important initiative to start the process with the president being very clear that he's got a plan, and that he's open to hearing what others think," the administration official said.

"But what he is uncompromising about is the urgency of the moment and the need to really deliver for the American people and make good on building back better in this moment."

The plan also vows to "spark the electric vehicle revolution" by building a network of 500,000 EV chargers, replacing 50,000 diesel transit vehicles and electrifying 20 percent of the famous yellow school buses.

And it aims to make infrastructure more resilient to climate change.

With much of the country's creaking infrastructure dating back to the 1950s, the dream of new roads, bridges, railways and airports is shared by many Americans.

But building a political consensus to transform Biden's plan into reality is no easy task.

Both his predecessors Barack Obama and Trump had great ambitions and made heady promises over infrastructure investment, but struggled to make any progress.

The issue keeps coming back to the same question: how to pay for it?

Biden's new transportation secretary Pete Buttigieg, who ran against him in the Democratic primaries, will be on the front lines of the battle, trying to ensure that this time, the stars are all aligned.

"I think that there's a tremendous opportunity now to have bipartisan support for a big, bold vision on infrastructure," the youthful politician said.

"Americans don't need a lot of selling to know that we've got to do big things when it comes to our infrastructure."

Agence France-Presse

US economy contracts in 2020; worst performance since 1946

WASHINGTON - The US economy contracted at its sharpest pace since World War 2 in 2020 as COVID-19 ravaged services businesses like restaurants and airlines, throwing millions of Americans out of work and into poverty.

The Commerce Department's snapshot of fourth-quarter gross domestic product on Thursday also showed the recovery from the pandemic losing steam as the year wound down amid a resurgence in coronavirus infections and exhaustion of nearly $3 trillion in relief money from the government.

The Federal Reserve on Wednesday left its benchmark overnight interest rate near zero and pledged to continue injecting money into the economy through bond purchases, noting that "the pace of the recovery in economic activity and employment has moderated in recent months."

President Joe Biden has unveiled a recovery plan worth $1.9 trillion, and could use the GDP report to lean on some lawmakers who have balked at the price tag soon after the government provided nearly $900 billion in additional stimulus at the end of December.

The economy contracted 3.5% in 2020, the worst performance since 1946. That followed 2.2% growth in 2019 and was the first annual decline in GDP since the 2007-09 Great Recession. The economy plunged into recession last February

In the fourth quarter, GDP increased at a 4.0% annualized rate as the virus and lack of another spending package curtailed consumer spending, and partially overshadowed robust manufacturing and the housing market. GDP growth for the last quarter was in line with forecasts in a Reuters poll of economists.

The big step-back after a historic 33.4% growth pace in the July-September period left GDP well below its level at the end of 2019. With the virus not yet under control, economists are expecting growth to further slow down in the first quarter of 2021, before regaining speed by summer as the additional stimulus kicks in and more Americans get vaccinated.

The services sector has borne the brunt of the coronavirus recession, disproportionately impacting lower-wage earners, who tend to be women and minorities. That has led to a so-called K-shaped recovery, where better-paid workers are doing well while lower-paid workers are losing out.

The stars of the recovery have been the housing market and manufacturing as those who are still employed seek larger homes away from city centers, and buy electronics for home offices and schooling. Manufacturing's share of GDP has increased to 11.9% from 11.6% at the end of 2019.

A survey last week by professors at the University of Chicago and the University of Notre Dame showed poverty increased by 2.4 percentage points to 11.8% in the second half of 2020, boosting the ranks of the poor by 8.1 million people.

Rising poverty was underscored by persistent labor market weakness. In a separate report on Thursday, the Labor Department said 847,000 more people filed new claims for state unemployment benefits last week. The economy shed jobs in December for the first time in eight months. Only 12.4 million of the 22.2 million jobs lost in March and April have been recovered.

-reuters-

China and US economies diverge over coronavirus response

WASHINGTON - The United States and China dealt with the spread of the devastating coronavirus pandemic in vastly different ways, and that split is reshaping the global battle between the world's two leading economies.

About 11 months after the Wuhan outbreak, China's official GDP numbers this week show not only that the economy is growing, up 4.9% for the third quarter from a year earlier, but also that the Chinese are confident enough the virus has been vanquished to go shopping, dine and spend with gusto.

China's total reported death toll is below 5,000 and new infections are negligible, the result of draconian lockdowns, millions of tests, and strict contact tracing that set the stage for an economic rebound.

"China's success in containing the virus has allowed its economy to rebound more quickly, and with relatively less policy support, as compared with other large economies," said former senior US Treasury official Stephanie Segal, a senior fellow at the US-based Center for Strategic and International Studies.

China’s economic rebound shows upside to ‘stringent lockdowns, testing, tracking’: analysts

China's super rich got $1.5 trillion richer during pandemic: report

In the United States, 221,000 people are dead from COVID-19 after a delayed federal response, partisan battles over mask-wearing and lockdowns, and plenty of public events that do not follow public health guidelines. The country is in the midst of a new wave of infections.

Entertainment venues, restaurants and tourist spots are closed or only partially open, millions of people are out of work indefinitely , GDP is expected to shrink this quarter and the United States faces a gap in economic output that could last years.

"Obviously the US government bungled it," said Harry Broadman, a former senior US trade official and managing director with Berkeley Research Group. The singular authority of China's Communist Party helped Beijing enforce contact tracing and lockdowns, Broadman said. Other democracies, including New Zealand and South Korea, stamped out the virus as China did.

The real difference between the United States and China is Washington "has been arguing over stimulus issues on Capitol Hill and it's still far too little and too late," said Broadman, who has served under both Republican and Democratic presidents. "That has created more and more uncertainty on the part of business."

Ahead of a Nov. 3 re-election bid, US President Donald Trump has blamed China for the spread of the virus and asserted his administration had done all it could to contain it. Asked during a town hall due to be broadcast on Sinclair Broadcast Group on Wednesday if he would have done anything differently, Trump said, "No, not much."

White House spokesman Brian Morgenstern said on Wednesday that China does not accurately report anything, "let alone data regarding coronavirus infections and economic growth." He said Trump was rebuilding a strong and inclusive economy with the expected arrival of new treatments and vaccines in what the spokesman called record time.

The US Federal Reserve on Wednesday released data that showed a slight to modest recovery in the US economy, although the picture varied greatly from sector to sector.

RIPPLE EFFECTS

Experts cite longer-term concerns about China's economic prospects, including the high debt levels of its state-owned companies.

"Reliance on investment-led growth, fueled by credit expansion, builds up even further leverage and risks in an already weak financial system, and will further pull down efficiency and the sustainable growth rate," said Mark Sobel, a former senior US Treasury official.

But for now, the divergent responses to the virus will have an impact on the fierce political and economic rivalry between Beijing and Washington with ripples felt around the world, experts said.

"China's economy in 2021 is going to be 10% bigger than it was in 2019, and every other major economy is going to be smaller," said Nicholas Lardy, an economist with the Peterson Institute for International Economics.

That means China's "role in the global economy is going to continue to expand," Lardy predicts, making any attempts by US policymakers to discourage other countries from deals with Beijing, or otherwise "decouple" China from the global economy, more difficult.

China's exports have been stronger than expected, bolstered by demand for medical goods overseas. While the IMF projects global trade volume will fall by 10.4% in 2020, China's overall share of global trade has grown.

Beijing is experiencing other benefits as well. "We see signs of China's success in the exchange rate and equity market performance at a time when many other economies are under pressure," Segal said.

China's fiscal deficit for 2020 will expand by 5.6 percentage points to 11.9% of GDP - a smaller-scale increase than the massive stimulus that Beijing deployed during the 2008-2009 financial crisis, the IMF's Fiscal Monitor shows.

By contrast, the United States will see a 12-percentage point increase in its 2020 fiscal deficit as a share of GDP, to nearly 19%.

While China's consumption is improving, retail sales are still down 7.2% over the first three quarters, with urban residents' disposable incomes down 0.3% over the same period. Strict lockdowns earlier in the year led to months of lost wages for many workers.

In Beijing, officials are highlighting their leadership role.

"China's epidemic control and prevention is at the forefront of the world, and China's companies are supporting the global resumption of work and production through their own resumptions," said Liu Aihua, spokeswoman for the National Bureau of Statistics, at a news conference where she announced the third quarter GDP results.

Meanwhile, the United States still lacks a robust contact tracing system, or enough testing, Lardy said. These are things the US could have "done much better at without being an authoritarian single party state," he added.

-reuters-

Fed's appetite for further easing, higher inflation in focus

The U.S. Federal Reserve last month signaled that interest rates are likely to stay at zero through 2023, vowing to wait on rate hikes until inflation reaches 2 percent and is set to rise moderately above that level for a time.

How much above 2 percent, for how long, and how the central bank might speed the process forward - the new guidance doesn't say.

Minutes of the Fed's September meeting to be published Wednesday at 2 p.m. EDT (1800 GMT) should provide a window into the Fed's internal debate on those issues and, perhaps, some new answers on what it will mean in practice.

With an ongoing pandemic that's claimed more than 210,000 U.S. lives and a recession that has left millions without jobs, it's clear there is a lot at stake.

Fed Chair Jerome Powell warned Tuesday that the outlook for the U.S. economy is "highly uncertain," and that too little policy support could lead to more household and business insolvencies and "recessionary dynamics" where a weak recovery feeds on itself.

The minutes may show how widely shared that concern is.

In remarks since the September meeting, St. Louis Fed President James Bullard for one has said he expects the U.S. economy to notch a near-full recovery from the coronavirus recession by year's end.

On the other end of the spectrum is Boston Fed President Eric Rosengren, who has warned that a second wave of Covid-19 this fall and winter could set the recovery back and create a credit crunch.

With just a few weeks until Nov. 3 when Americans pick their next president, which way the economy develops could spell a very different policy environment for whoever wins at the ballot box.

The Fed's September decision drew two dissents. Dallas Fed President Robert Kaplan thought it tied the Fed's hands unnecessarily. Minneapolis Fed President Neel Kashkari wanted an even higher bar for future rate hikes.

But even among those who supported the decision, the minutes may show a range of views on how it should be carried out. Of particular interest will be any evidence of appetite for adding to the Fed's $7.1 trillion stash of bonds and other assets to ease policy further, either soon or once the recovery is further along.

Fed policymakers appear divided on how high the Fed should try to push inflation, which for years has failed to meet the Fed's 2 percent target and is expected to end this year well below that level.

Chicago Fed President Charles Evans wants to get core inflation up to 2.5 percent, and for it to stay there for a while. Kaplan, by contrast, said last week he would be uncomfortable with 2.5 percent inflation, and worries about excess risk-taking with rates at zero for too long

-reuters-

Unemployment claims in US show layoffs continue to batter economy

More than five months after the coronavirus pandemic began throttling the economy, layoffs remain widespread, the U.S. government reported Thursday, the latest sign of the labor market’s painstakingly slow recovery.

Last week, 833,000 workers filed new claims for state unemployment benefits, while 759,000 new claims were filed by freelancers, part-time workers and others under a federal program called Pandemic Unemployment Assistance. Both figures, which are not seasonally adjusted, were increases from the previous week.

“It’s pretty bad at this stage in the crisis,” said Gregory Daco, chief U.S. economist at the forecasting firm Oxford Economics. “I feel like this is a very fragile labor market at a critical juncture.”

There has been progress from the early days of the pandemic, when weekly tallies of new claims surged past 6 million. But recent improvements have been more arduous.

Of the 22 million jobs lost in March and April, more than 9 million have been regained. And most analysts expect that the monthly jobs report, scheduled for release Friday, will show a dip in August from double-digit unemployment rates.

But the damage to the economy has been wide and deep. As of mid-August, more than 29 million Americans were receiving some sort of unemployment insurance.

The report Thursday was the first to be affected by a change in the way the Labor Department accounts for predictable seasonal patterns, like temporary holiday workers who are laid off in January.

The seasonally adjusted figure for the week was 881,000. The number looks much lower than the previous week’s adjusted figure of just over 1 million, but the drop can be attributed to the altered methodology. Because the change means seasonally adjusted numbers cannot be compared with those tallied until now, The Times is emphasizing the unadjusted figures.

The unadjusted number of 833,000 last week was an increase from 826,000 the week before.

Daco said he was particularly concerned about the increase last week in new claims for Pandemic Unemployment Assistance, the program for those generally ineligible for state jobless benefits. The total of 759,000 was up from 608,000 a week earlier.

“It could reflect a weakening economy in some of the states worst impacted by the health crisis,” he said, “or it could be that some of the workers that had returned are finding that it’s not possible or sustainable to return to their primary economic activity in the current environment.”

Help wanted, depending on the industry.

Some businesses are hiring. Postings at the job search site Indeed rose slightly last week, although the total is still more than 20% below what it was this time last year.

The hospitality, tourism, and sports and fitness sectors are in the worst shape, with postings down more than 40% from where they were a year ago. Listings for higher-wage jobs in banking, finance and software development are also much more scarce.

Construction, driving and warehouse jobs seem to be the most plentiful.

The job site ZipRecruiter has seen a gradual increase in job listings over the past couple of months, but the pace of growth began to slow in mid-August, said Julia Pollak, the company’s economist.

Consumers pulled back on spending after a $600 weekly jobless benefit supplement ceased in July. At the same time, many small businesses are running out of the money they received through the federal Paycheck Protection Program.

A recent survey from the National Federation of Independent Business found that 1 out of 5 small-business owners said they would have to shut down if economic conditions did not improve in the next six months.

Congressional negotiations on a new relief package remain at a standstill.

The Labor Department report provided no fundamental change in the jobs picture that would resolve the stalemate between Republicans and Democrats in Congress over a new economic relief package.

With the end of the $600-a-week jobless benefit supplement, most states are moving ahead with plans to provide unemployed workers with a temporary replacement: a weekly $300 supplement paid out of federal disaster relief funds.

As of Wednesday, 45 states had applied for a grant from the Federal Emergency Management Agency. Six of those — Arizona, Louisiana, Missouri, Montana, Tennessee and Texas — have started paying out benefits, according to the Labor Department, but a vast majority have not.

Most will probably not be able to gear up to start payments until mid-September or later. The supplement is expected to last four or five weeks.

South Dakota is the only state that has confirmed it is not taking part. Gov. Kristi Noem says her state doesn’t need the money.

A handful of states, including Kentucky, Montana and West Virginia, have plans to boost the supplement with an additional $100.

-Patricia Cohen and Gillian Friedman, The New York Times-

US GDP contracts 4.8 percent as virus hit, ends decade of growth

WASHINGTON - The decade of US economic expansion ended dramatically in the first quarter when GDP shrank 4.8 percent as the coronavirus hit, according to government data released Wednesday.

It was the biggest decline in GDP in 12 years as the pandemic forced businesses to close, halting purchases and investment, the Commerce Department reported.

The drop in the January-March quarter was slightly worse than expected, but the report noted it could not quantify the full economic effects of the virus. Most of the business shutdowns and stay-at-home orders only took effect in the final weeks of March.

The data was a sharp reversal from the last quarter of 2019, when the economy grew by 2.1 percent at a time when analysts were more concerned about whether President Donald Trump's trade policies would continue to weigh growth down in 2020

The arrival of the coronavirus pandemic has upended that, leading to more than 50,000 deaths and about 26 million job losses since mid-March as the economy came undone.

As stores, offices and restaurants were shuttered, personal consumption plunged 7.6 percent in the first quarter, the Commerce Department said, as spending collapsed in a wide variety of sectors, including healthcare, motor vehicles and parts.

Exports fell as people traveled less, the report said, while imports also decreased.

However, analysts expect GDP to contract by double digits in the second quarter, when the data will show the full effects of the pandemic's shutdowns.

"Thus ended the expansion which began in the third quarter of 2009; killed by COVID-19," Ian Shepherdson of Pantheon Macroeonomics said. 

"But these data capture only the squall before the second quarter hurricane, so it's not going to change anyone's mind on the future trajectory of the economy."

news.abs-cbn.com

US small businesses seek $5.4 billion in virus relief loans

WASHINGTON - Small and medium-size US businesses have applied for more than $5.4 billion in government-backed loans as a key pillar of the country's coronavirus relief plan took effect, the Trump administration said. 

Jovita Carranza, who heads the federal Small Business Administration, said late Friday on Twitter that 17,503 companies -- those with 500 or fewer employees -- had filed applications through local banks for loans totaling more than $5.4 billion.

Friday was the first day the companies were able to apply for the money, intended in large part to help them pay employees' salaries.

The loans, which could eventually total $350 billion, constitute a central part of the $2.2 trillion coronavirus relief plan adopted by Congress and then signed into law by President Donald Trump on March 27.

"I will immediately ask Congress for more money to support small businesses... if the allocated money runs out," Trump tweeted Saturday.

But things were "so far, way ahead of schedule," he said, adding that Bank of America and community banks "are rocking!"

On Friday, most applications were submitted to local banks. Some of the biggest US banks said they had encountered difficulties with administrative procedures, although Bank of America reported that it had processed tens of thousands of applications by the end of the day.

Treasury Secretary Steven Mnuchin told the Fox Business Network that "our expectation is starting next week" all big banks would be ready.

Companies that receive the money and do not fire their workers -- or that otherwise re-hire those they have laid off -- will have their debt forgiven.

The funds are intended to help hundreds of thousands of restaurants, hair salons and other small- and medium-size businesses pay wages and rent for eight weeks, allowing them to keep staff on the payroll during virus-enforced closures. 

"If we run out of money, we're going to go back to Congress and get more money," Mnuchin said. "This is a great, great program with bipartisan support."

But Mnuchin said he was working with key bank executives to iron out any kinks and expected the largest banks to be taking part in the coming week.

Mnuchin also said money transfers to households would start within two weeks, down from the previously estimated three weeks. A family of four can receive up to $3,000 under the larger relief package.

The first economic effects of the crisis struck across the United States in March, when 701,000 jobs were lost. The unemployment rate rose to 4.4 percent.

Agence France-Presse

Federal Reserve ramps up help to US economy on life support

WASHINGTON - The Federal Reserve launched an unprecedented effort on Monday to flood the US economy with money amid the chaos caused by the coronavirus pandemic, as Congress debated a rescue plan for American workers and companies.

Like patients around the world battling the disease itself, the US economy is on life support, with some forecasters projecting a 14 percent contraction in the April-June quarter while the global economy could shrink 1.5 percent this year.

About a third of Americans have been ordered to stay at home, and the Fed warned of "severe disruptions" from the virus as it rolled out another series of measures to pump funds into the economy, including buying unlimited amounts of government debt -- a move akin to printing money.

But while that should provide oxygen to the financial system and keep businesses open, lawmakers continued haggling over an emergency aid package, with Democrats in the House unveiling a proposal that would cost a whopping $2.5 trillion as they demanded more funds to help workers directly and more strings on any aid going to corporations.

President Donald Trump signaled his approval of the Fed's move last weeks to slash the benchmark lending rate to zero, saying central bank chair Jerome Powell had "done a really good job," in a reversal of previous criticism over his refusal to lower rates.

The president also praised the strong US dollar but acknowledged it makes "trade much tougher" -- an unusual statement from an American president, who typically don't comment on the currency's value.

Treasury Secretary Steven Mnuchin spent the day meeting with congressional leaders, and played down Democratic concerns about taxpayers coming to the rescue of major corporations. 

"I want to be clear, there are no bailouts," he said on Fox Business Network. "This isn't corporate welfare. This helps all American workers."

EXISTENTIAL THREAT

Mnuchin said the Fed's measures would provide $4 trillion in needed liquidity into the US economy.

The Fed had already announced it would buy at least $500 billion of Treasury debt as well as $200 billion of mortgage-backed debt, but now has committed to buying "in the amounts needed to support smooth market functioning." 

The Fed's New York branch, which handles the financial transactions, said it would start out by purchasing $75 billion per-day in Treasuries and $50 billion per-day in mortgage-backed securities.

In the latest action, the Fed revived facilities it last used during the 2008 global financial crisis, and expanded others announced in recent days, including buying debt issued by US municipalities and by corporations. 

In addition, the Fed said it would soon unveil a program to lend directly to small- and medium-sized companies -- those that have been hardest hit by the near complete shutdown of the US economy as authorities fight to contain the spread of the virus.

"While great uncertainty remains, it has become clear that our economy will face severe disruptions," the Fed said in a statement, pledging to use all available tools to contain the damage.

"Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate."

CONGRESSIONAL INTERVENTION

Economists praised the effort, but said massive stimulus from Congress is still needed.

"The downturn is not avoidable. The economic carnage associated with downturn can be mitigated so that there is an economy left to ramp up," said Diane Swonk, chief economist at Grant Thornton.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, offered an equally dire warning: "The near-term threat to the economy is existential."

The central bank actions represent "an all-out effort to ensure that the business sector can continue to exist even as economic activity temporarily collapses. The Fed is now effectively the direct lender of last resort to the real economy, not just the financial system."

The central bank pledged to "continue to use its full range of tools to support the flow of credit to households and businesses."

One of the programs, the Term Asset-Backed Securities Loan Facility (TALF), will help backstop recent student loans, car loans and credit card debt as well as small business loans.

Agence France-Presse

US Fed creates new mechanism to ensure credit available

WASHINGTON --- Amid fears the American financial system will lock up, the Federal Reserve on Tuesday announced yet another mechanism to ensure credit will be available to US homes and businesses.

The credit facility will provide funding for up to 90 days to major financial institutions known as primary dealers, the Fed said.

"The facility will allow primary dealers to support smooth market functioning and facilitate the availability of credit to businesses and households," the central bank said in a statement.

source: news.abs-cbn.com

Trump economic stimulus against coronavirus off to slow start

WASHINGTON — President Donald Trump's push for economic stimulus measures to combat market turmoil caused by the growing coronavirus crisis got a slow start Tuesday after talks with skeptical lawmakers.

The outbreak has prompted US airlines to cancel flights, the Federal Reserve to make its first emergency rate cut in 12 years and the stock exchange to experience its worst session since 2008, though some of that ground was gained back in Tuesday's trading.

This spells trouble for the US economy but also threatens Trump's reelection campaign, which is based heavily on his touting of booming stock prices and low unemployment.

Trump promised to announce "major" economic measures on Tuesday and he made a rare trip to Capitol Hill for talks with his Republican party lawmakers.

The biggest item on his wish list is a cut in payroll taxes. But even allies in Congress and reportedly some aides in the White House are skeptical, questioning the cost.

By day's end there was a notable lack of detail about Trump's entire relief plan, especially how the tax cut would be funded.

"Let us put the proposal out in concrete details," Trump's economic adviser Larry Kudlow told a news conference, asking for more time when pushed to explain.

Trump says he wants to help hourly employees and small businesses, which could be hurt most by the need to take time off for quarantine or treatment in case of coronavirus infections. 

Measures are also being proposed to include aid for workers in the gig economy who worry about calling in sick.

The administration earlier in the day unveiled steps to help airlines and the cruise industry and agreements by insurance companies to waive copay charges for people seeking tests for the virus.

Given the emphasis on quarantine to keep people from spreading COVID-19, paid sick leave is seen as particularly important, yet is not guaranteed in the US.

"The vast majority of low wage workers have zero paid sick hours," said Arthur Wheaton, a professor at Cornell University who specializes in labor.

"The most vulnerable or precarious workers in the country have the least protections or security in case of sickness or emergencies," he added, arguing that workers in the gig economy -- drivers for delivery companies or ride-sharing services -- are even worse off.

Fight for $15, an organization representing McDonald's workers, called on the fast food giant to provide paid sick leave to workers whose immediate relatives show symptoms of potential infection and to keep paying workers even if they end up quarantined or if the outbreak requires a restaurant to shut.

LAYOFFS 

With few employees and sensitive to drops in demand, small businesses are also seen as vulnerable.

"Business cycles usually hit small retail establishments and restaurants... relatively lightly compared to heavy industries. This one, I think, is going to be the reverse," Alan Blinder, a former Fed vice chair.

Amanda Ballantyne, national director of The Main Street Alliance, which works with small businesses, said employers are asking for expanded unemployment benefits or other forms of direct support.

"There's a feeling of unpredictability and anxiety. Some businesses have already started contemplating temporary layoffs," she said, adding "there's a real need for some kind of stimulus money and emergency support."

Fears for the wider US economy are real: in a report last week, the Fed said the virus has already disrupted travel and access to goods for US industry, and businesses are fearful it may get worse.

Investors expect the Fed to cut the benchmark borrowing rate again at the March 17-18 policy meeting to stem the economic uncertainty.

Trump's talk of a tax cut has meanwhile been condemned by the Democratic opposition and also by some economists.

"A payroll tax cut is the politically most expedient way to shovel money to those who need it least," tweeted Justin Wolfers, an economics professor at the University of Michigan.

Agence France-Presse 

Global economy faces 'tornado' as coronavirus sends markets into tailspin

The fast-spreading coronavirus and a plunge in oil prices set off a chain reaction in financial markets on Monday, a self-perpetuating downward cycle that could inflict serious harm on the global economy.

What started last month as unease about a potential economic slowdown in China has evolved into a borderline panic, with the S&P 500 crashing nearly 8 percent on Monday. The mayhem is threatening to roil the underlying global financial system and the abilities of companies large and small to survive a potential economic monsoon — a downward spiral that is fed and intensified by these destructive forces.

The odds of such a storm grew after an unexpected fight between Russia and Saudi Arabia. After failing to reach an agreement about how much oil to produce and sell on international markets, Saudi Arabia announced it would quickly ramp up production.

Oil prices had been falling as investors fretted about a possible recession. On Monday, those prices plummeted more than 20 percent— the sharpest decline since the first Persian Gulf War.

The S&P 500 has tumbled 19 percent during the past few weeks, and Monday was its worst one-day decline in more than a decade. The free fall has vaporized more than $5 trillion in stock market wealth.

Less than 10 minutes after markets opened in the United States on Monday morning, the sell-off became so steep that automatic “circuit breakers” kicked in and halted trading. It was the first time that had happened since the current circuit breakers were set in 2013. The S&P’s 7.6 percent drop came on the 11th anniversary of the start of the current bull market, one of the longest ever. A 20 percent drop from the high point would signal what’s known as a bear market, a marker the S&P 500 has only narrowly avoided for now.

The public health crisis is now threatening to turn into a financial one, which in turn could amplify the virus’ economic fallout.

“There’s panic,” said Dan Krieter, an analyst at BMO Capital Markets. “We’re heading into what looks to be a global recession, including the US.”

Asia shares try to find a floor after COVID 19 triggers free fall
Asia-Pacific economies face $211 billion hit from virus, says S&P
President Donald Trump told reporters at a White House coronavirus briefing on Monday evening that “we are going to take care of and have been taking care of the American public.” He said he would meet with the Senate on Tuesday to discuss a payroll tax cut and help for hourly wage earners.

The downward cycle — there are signs it is underway — might play out like this: As the virus disrupts manufacturing supply chains as well as travel, consumer spending would fall and businesses would falter, and stock prices would plummet. The threat to corporate profits would send investors in search of havens like government bonds, sending those prices up and their yields down, in turn straining the banking industry. Banks would limit financing for businesses, which would cut production or lay off workers to hoard capital.

Already, investors have hustled to safety, shunning corporate bonds and driving up the financing costs for many companies. And as they piled into US government bonds, long-term interest rates fell to historic lows; benchmark 10-year Treasury bonds, whose interest rates until last week had never sunk below 1 percent, were recently yielding half that.

Hoping to forestall that spiral, the Federal Reserve on Monday said it would increase the volume of short-term loans available to banks to make it easier for them to continue lending. It was the second time in a week — after an emergency interest-rate cut last Tuesday — that the Fed had moved to stem potential fallout as the coronavirus sent markets gyrating.

Even for people who don’t have money in the markets, the developments are ominous. Large and small businesses hire or fire workers and buy equipment and raw materials based on their own financial strength and their expectations for how the economy will perform in the future. As companies retrench, it affects workers and suppliers, which then have to tighten their own belts.

LAYOFFS RISE; WAGES DECLINE. CONSUMERS SPEND LESS

Businesses in need of cash would normally turn to their banks for help in moments like this. But as banks get squeezed by sliding interest rates, their ability and appetite to lend to struggling companies diminish — the type of situation the Fed was trying to head off by increasing its short-term lending. At the same time, panicky investors don’t want to buy risky corporate debt, severing another potential lifeline for many companies. Investors are also yanking their money from mutual funds that invest in leveraged loans, a risky type of corporate debt that has become a popular way for many companies to finance their operations in recent years.

The result could be a surge in bankruptcies as companies — in particular in the shale industry, where many drillers are deep in debt — tip over a financial cliff. More workers lose their jobs. Families cancel vacations and postpone big purchases.

Round and round the cycle goes, further sapping the economy.

“Markets want to hear that the global economy is open for business, and the problem is, it isn’t easy to say that going forward,” said Patrick Chovanec, chief strategist at the investment advisory firm Silvercrest Asset Management.

It is possible, of course, that investors’ gloom will prove to be overblown.

At some point, for example, the coronavirus is likely to stop spreading; it already appears to be easing in China and South Korea. If that happens soon, any economic damage from closed factories and canceled conferences and restricted travel may prove fleeting.

Perhaps Russia and Saudi Arabia will quickly reach an agreement. And until they do, there is a silver lining to rock-bottom oil prices: The resulting cheap fuel will be a boon to consumers and to industries like trucking and airlines.

All is not lost. Even after the decline on Monday, the S&P is still up 140 percent over the last 10 years. And the scorching bond market rally — bond prices go up as yields go down — has delivered outsize returns to many individual investors. Mutual funds and ETFs holding longer-term US government bonds were up 22 percent so far this year as of Friday, according to Morningstar.

In addition, low interest rates are good for people who own or are looking to buy a home. A mortgage refinancing boom is underway, and many borrowers will pocket substantial monthly savings.

“This is a temporary headwind to the economy,” said Rick Rieder, chief investment officer of global fixed income at BlackRock. “It’s temporary, but it’s a tornadolike headwind, so it’s going to be powerful for a period of time.”

He added that the amount of uncertainty in the markets is higher now than it was at the peak of the financial crisis. “I don’t even remember in 2009 the uncertainty being so high,” he said.

Governments and central banks are scrambling to defuse the precarious financial situation. In addition to the Fed cutting interest rates and making it easier for banks to borrow money, the Trump administration and Congress are discussing ways to stimulate the economy.

But that is unlikely to offer much immediate help.

“Many investors are anticipating fiscal stimulus within days, but that’s not typically how DC acts — even in emergency situations,” Henrietta Treyz, director of economic policy at Veda Partners, an investment advisory and consulting firm in Bethesda, Maryland, said in a note to clients on Monday. “It takes weeks to pass even the most urgent of legislation, and there are very few ideas circulating on Capitol Hill right now.”

In the meantime, the signs of stress are multiplying, especially in normally mundane corners of the financial markets.

In recent days, for instance, investors that buy ultra-short-term debt issued by companies — including a popular variety known as commercial paper — have started growing jumpy. Investors like money-market mutual funds are demanding much higher interest rates.

That drives up many companies’ borrowing costs, which makes it more expensive for them to operate. It also shows that institutional investors fear that an increase in corporate defaults could be imminent.

The good news is that the US banking industry is, overall, much stronger than it was in 2008 as an intense financial crisis enveloped the world.

The energy industry, though, is shaping up to be among the hardest hit sections of the US economy. Demand for energy was already set to decline with an economic slowdown. Then Saudi Arabia and Russia initiated a pricing war.

Shares of companies like Marathon Oil and Apache Corp. fell more than 40 percent on Monday, while Exxon Mobil stock fell 12 percent, and Chevron slid 15 percent.

Some of the companies that pioneered the shale boom, including Chesapeake Energy and Range Resources, were already in trouble, and their woes are likely to intensify. Chesapeake’s stock goes for pennies; its bonds are trading at a level that reflect investor expectations of a default. Range Resources, an early natural gas driller in Pennsylvania, is, like many of its peers there, slashing its capital spending.

That is likely to hurt the local economies in which the gas companies operate — another reminder of how the economy is in danger of getting sucked into a steep, sinking spiral.


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Fed chief reasserts independence in talks with Trump

WASHINGTON -- Federal Reserve Chairman Jerome Powell reasserted the independence of the US central bank during White House talks with President Donald Trump on Monday, the Fed said.

Powell attended the meeting, which comes amid an unprecedented campaign of public attacks on the central bank, at the invitation of the president, and was joined by Treasury Secretary Steven Mnuchin, the Fed said in a statement.

Trump, who has lambasted Powell in harsh, personal terms over monetary policy, tweeted that the meeting was "good & cordial," adding that "everything was discussed" including interest rates, inflation, foreign exchange and the Fed's balance sheet policies.

In a second tweet Monday evening, however, Trump said that during the meeting he protested "that our Fed Rate is set too high relative to the interest rates of other competitor countries."

"Too strong a Dollar hurting manufacturers & growth!" he added.

The Fed said Powell's comments were consistent with last week's congressional testimony and did not concern "expectations for monetary policy," except to say it will depend entirely on new economic information.

"Powell said that he and his colleagues on the Federal Open Market Committee will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis," the statement said.

Powell has long insisted policymakers disregard politics when setting policy. 

But Trump has repeatedly hammered the central bank, calling policymakers "boneheads" and "clueless," and accusing them of mistakenly raising interest rates in 2018 and being too slow to lower them this year.

The Fed's policy-setting Federal Open Market Committee has cut interest rates three times this year, saying that Trump's trade war in particular poses a danger to the economy, which has slowed since the start of the year.

But, after the most recent cut, Powell said last month the central bank will hold its fire for now as officials wait to see how the economy progresses.

Trump and Powell had last met in February, over dinner at the White House.

source: news.abs-cbn.com

US Fed faces balancing act in delivering rate cut

WASHINGTON -- The Federal Reserve is widely expected to announce its third interest rate cut of the year on Wednesday, another move to help bolster a softening American economy.

But where will it go from there? Markets will be watching intensely for clues, leaving to central bank chief Jerome Powell the delicate task of managing investor expectations.

The Fed is due announce its decision at 1800 GMT (2 a.m. Thursday in Manila), and Powell scheduled to hold a news conference 30 minutes later.

President Donald Trump on Tuesday resumed his regular schedule of bashing the central bank on Twitter, saying it "doesn't have a clue!"

"We have unlimited potential, only held back by the Federal Reserve."

But the president's demands notwithstanding, some influential voices are calling for a pause in the stimulus so the Fed can assess global economic and trade developments, which may improve.

The United States and China say they have reached another truce in trade war while a no-deal Brexit now appears less likely.

But those developments could just as easily turn sour and economic data in recent weeks have sent more worrying signals, which means Powell will have to balance whether to signal a pause in rate cuts or hint that the central bank will continue the easing cycle.

"Unfortunately, I think clear communication by Jay Powell to the markets has been a bit of a challenge for him, particularly when he speaks extemporaneously or off the cuff," Kathy Bostjancic, chief US financial economist at Oxford Economics, told AFP.

FED MEMBERS SPLIT

The Fed chairman has struggled on prior occasions to send clear-but-nuanced signals. 

He declared July's rate cut was a "mid-cycle adjustment," a head-scratcher that markets initially thought meant the Fed would go no further.

Bostjancic said Powell was unlikely to signal a "hard stop" this time either, preferring instead to tell the public that policymakers will take things one meeting at a time.

"They'll keep the phrase 'we'll act as appropriate' to sustain the expansion but at the same time at the press conference he can emphasize that it's a meeting-by-meeting basis," Bostjancic said.

Early Wednesday could bring more unwelcome news as a much-anticipated third-quarter GDP is expected to show a sharp slowdown in the economy. And October jobs numbers due Friday are likewise forecast to show weaker hiring.

Futures markets as of Tuesday expected a rate cut this week, but did not see another change in benchmark lending rates before June of next year.

A rate cut this week would mean the Fed has erased 3 of the 4 rate increases from last year, implemented at a time when the economy was picking up steam and before the tariff battles with China and Europe began to slow activity and freeze investment.

As he works to strike the right tone, Powell is also contending with broadening divergences among Fed members.

The normally dovish Charles Evans of the Chicago Federal Reserve Bank said earlier this month that interest rate policy is already "in a good place" as it is.

But Dallas Fed President Robert Kaplan, who in January will become a voting member of the Fed's rate-setting Federal Open Market Committee, said policymakers should avoid suggesting they will stop here.

"This is a really fragile time where this could break either way. The jury is still very much out," he said, according to The Wall Street Journal.

source: news.abs-cbn.com

Global shares lose steam on weak US retail sales, Brexit in focus

TOKYO -- Global stocks barely moved on Thursday as soft US retail sales data raised concerns about the health of the world's largest economy and risk of global recession, while sterling was volatile as negotiations on a Brexit deal continued.

Both MSCI's broadest index of Asia-Pacific shares outside Japan and Japan's Nikkei were little changed in early trade while US stock futures lost 0.15 percent.

The S&P 500 shed 0.20 percent the previous day after data showed US retail sales contracted in September for the first time in 7 months, in a potential sign that manufacturing-led weakness could be spreading to the broader economy.

"It looks like the trade war has claimed yet another victim, in addition to diminished business confidence and reduced investment spending, as consumers are starting to chicken out," said Chris Rupkey, chief financial economist at MUFG Union Bank.

Given US consumption has been one of few remaining bright spots in the global economy, the data fanned worries about a global recession.

US Treasury Secretary Steven Mnuchin said on Wednesday that US and Chinese trade negotiators were working on nailing down a Phase 1 trade deal text for their presidents to sign next month.

But he also said there were no plans for another high-level meeting on the trade deal outlined last week.

"While the US suspended a hike in tariffs, it hasn't gone as far as scrapping the tariffs altogether, so it is hard to expect a quick pick-up in the economy," said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.

Losses in equities were offset by a solid start to the earnings season, though that is partly because investors have already marked down their expectations substantially, with earnings for S&P 500 companies expected to show a decline of 3 percent for the quarter, according to Refinitiv data.

Bank of America shares rose 2 percent following its quarterly results. Netflix rose 9.9 percent in after-hours trade after its earnings beat Wall Street estimates.

In the currency market, soft US retail sales took the shine out of the dollar.

The dollar index fell 0.3 percent on Wednesday and last stood at 97.964, having touched its lowest since Aug. 27.

Against the yen the dollar slipped to 108.73 yen, after peaking at 108.90 on Tuesday.

The euro stood at $1.1075, up 0.04 percent so far in Asia, near a one-month high of $1.1085 hit in US trade on Wednesday.

Sterling traded at $1.2823, having risen to as high as $1.2877 on Wednesday, its loftiest level since mid-May.

It has risen more than 5 percent in the past 5 sessions on the prospect that the United Kingdom and the European Union can strike a fresh deal to avoid a no-deal exit in the summit on Thursday and Friday.

Investors have welcomed optimistic comments from key officials during last few days. British culture minister Nicky Morgan said late on Wednesday there is a good chance of a deal.

Still, many doubts remained, not the least of which is if British Prime Minister Boris Johnson can ensure his government and factious parliament approve the plan.

In one sign of investor caution, in currency option markets, risk reversal spreads in sterling turned in favor of pound puts after briefly favoring pound calls earlier this week, meaning demand to protect the currency's downside is stronger than that for the upside.

The Turkish lira steadied off seven-week lows as US President Donald Trump's sanctions for Turkey's military incursion into Syria were perceived to be lighter than expected.

Lira bears also suffered a flashback of their suffocating March squeeze as the authorities moved to keep a lid on volatility by restricting the supply of lira to overseas counterparts.

The lira stood at 5.8825 per dollar

Oil prices eased after US data showed a larger-than-expected build in US crude stocks.

Brent crude futures fell 0.82 percent to $58.93 a barrel while US West Texas Intermediate (WTI) crude lost 1.01 percent to $52.82 per barrel. 

source: news.abs-cbn.com