United States:
U.S. Payrolls Top Estimates With 196,000 Rise as Wages Cool
U.S. hiring rebounded more than forecast in March and the prior month was stronger than first reported, potentially relieving some concerns about a cooling economy. Wage gains eased and the unemployment rate held near a 49-year low. Payrolls rose 196,000 after a 33,000 advance, a Labor Department report showed Friday. The median estimate in a Bloomberg survey saw an increase of 177,000 after an initially reported 20,000 gain in February. Treasury yields pared their gains briefly, but recovered to pre-report levels. U.S. stock futures advanced. The jobless rate was unchanged at 3.8 percent, while average hourly earnings increased 3.2 percent from the prior year, below all estimates and down from the best pace of the expansion. The data signal the labor market is solid enough to support economic growth in coming months even if job gains are moderating from last year’s pace. Unemployment near historic lows bodes well for consumer spending, though weaker wage gains suggest inflation will be even more muted as Fed policy makers wait to see how the U.S. economy weathers a global slowdown.
Europe:
U.K. House Prices Decline as Market Remains Volatile
U.K. house prices dropped in March after a stunning gain the previous month, mortgage lender Halifax said, extending an erratic run for its property index. The 1.6 percent drop followed a 6 percent jump in February and a 3 percent plunge in January. On a three-month basis, prices were up 2.6 percent compared with a year earlier. Halifax expects values to rise around that pace this year. Still, that rate of gains would be well below levels seen just a few years ago, as Brexit uncertainty takes its toll on the housing market. London is bearing the brunt of the turmoil, and a report from Nationwide last week showed prices in the capital are falling at the fastest pace since the financial crisis a decade ago. The picture is brighter elsewhere in the U.K., but activity remains lower and building up money for a deposit remains a challenge for buyers, Halifax said. “These conflicting challenges, when combined with the ongoing uncertainty around Brexit, have had an impact across the country but most notably in London,” said Russell Galley, managing director at Halifax. “We continue to expect subdued price growth for the time being.”
ECB Seen Paying Banks to Make Loans Amid Bleak Economic Outlook
The European Central Bank will pay banks to lend as it tries to find ways to support economic growth that looks increasingly shaky, according to a survey. The cost of new long-term funding for banks which raise credit growth above a certain level will be lower than the main refinancing rate, with a median estimate pointing to a difference of 20 basis points. At current conditions, that would effectively provide lenders with a source of interest income as they struggle with weak profitability and a slower expansion. An announcement on the exact details of the longer-term refinancing operations is most likely in June. Officials unveiled their general plan in March, alongside a pledge to keep interest rates unchanged for longer. The worsening outlook has also prompted policy makers to float ideas on how they can maintain support after years of weak inflation pushed the ECB to the limits of its toolbox. It’s looking at ways to mitigate the side effects of its negative interest rates, something discussed at the March policy meeting and since publicly highlighted by President Mario Draghi. “The ECB, like other central banks, cannot do much to directly affect either growth or inflation. Their main impact is on liquidity, which is very important, but that is all they can do,” said Argyll Europe director Alastair Winter. “Growing awareness of central bank impotence is spooking investors as much as the fears over lack of growth.”
Asia:
China Keeps Gorging on U.S. Pistachios Despite Tariff Threat
U.S. pistachio growers like Jim Zion braced for the worst last year when the nut got caught up in America’s escalating trade tensions with China — complete with potential tariffs of as much as 45 percent. “We were concerned that with the trade war, we were going to see a dramatic reduction in shipments,” said Zion, managing partner of Meridian Growers in Fresno, California. “China is one of our largest markets.” But that didn’t happen. U.S. pistachio exports to China rose 7 percent to a record 108 million pounds in the crop year through August, according to the Administrative Committee for Pistachios, and another 10 percent in the six months since. Turns out that a bit of luck — the second-largest producer, Iran, had a bad crop — coupled with the China’s big appetite for pistachios, sustained demand, price threat and all. Chinese “consumers really want these nuts and the U.S. has them,” said Roland Fumasi, an analyst for RaboResearch. “They don’t have a lot of choices. That’s what is driving this.” The new tariffs on pistachios were announced in April as part of China’s retaliation to President Trump’s steel and aluminum levies, with additional taxes announced in June bringing the potential tariff rate to as high as 45 percent — up from just 5 percent originally. But with the nut a popular gift for holidays like the Chinese New Year, buyers haven’t curbed their demand from the U.S., the world’s biggest supplier. About two-thirds of American pistachio shipments went to international markets last year, with China and Hong Kong the biggest customers by far. There could also be more at play — including lower-than-expected tariffs being collected. With China and the U.S. still in talks about potentially ending their trade war, China has since rolled back some U.S.-specific agricultural tariffs. China may also not be collecting the full tariffs while the talks on a potential deal are ongoing. Chinese President Xi Jinping on Thursday said the two sides had “reached new consensus” on issues like the text of a trade agreement, according to Xinhua. Trump said a deal was probably still weeks away.
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