월스트리트저널 읽기 - Economy, Beijing, Stocks etc.

<WEDNESDAY, OCTOBER 25, 2023>

 

◈ High Borrowing Costs Pose Threat to Resilient Economy (높은 차입 비용은 회복력 있는 경제에 위협이 된다)

 

 

Add surging interest rates to the list of threats staring down the U.S. economy.

 

The yield on the U.S. 10year Treasury note touched 5% on Monday for the first time in 16 years, after climbing rapidly in recent weeks. That is among many borrowing costs—including for other long-term government debt, mortgages, credit cards, auto purchases and business loans—that could slow the surprisingly resilient economy.

 

Rising rates come on top of other potential impediments for the economy. Those include the possibilities of the conflict in the Middle East raising energy prices, prolonged labor strikes resulting in wider job losses and a partial government shutdown next month.

 

Meanwhile, higher yields lift borrowing costs for the U.S. government, amid ballooning federal budget deficits and debt.

 

The economy has remained strong over the past year, despite the Federal Reserve sharply raising short-term rates to combat inflation by moderating economic activity. If higher long-term rates persist, they could increase the risks of a broader and deeper downturn rather than a hoped-for soft landing, in which inflation cools without a recession.

 

◈ Beijing Lifts Bond Issuance, Deficit Target (베이징, 채권발행·적자목표 상향)

 

China ramped up efforts to stimulate its beleaguered economy, issuing additional sovereign bonds and raising its budget- deficit target, the first time it revised its budget outside the regular legislative session in more than a decade.

 

The country’s top legislative body on Tuesday approved a plan to raise 1 trillion yuan, equivalent to around $137 billion, in additional sovereign debt, half for use before the end of this year and half for next year, the official Xinhua News Agency reported. Policy makers said the bond issuance was intended for infrastructure projects in the wake of severe flood-ing and other natural disasters, Xinhua reported.

 

The latest stimulus, which follows a flurry of piecemeal measures such as interest-rate cuts and the lowering of mortgage costs for home buyers, signals that Beijing continues to worry about the weakness of the economic rebound it had counted on after doing away with all pandemic restrictions.

 

◈ Lower Heating Bills Forecast for Winter (겨울철 난방비 인하 전망)

 

 

Ample stockpiles of natural gas and expectations for a warmer-than-normal winter have forecasters from Wall Street to Washington calling for gas to cost much less than last year, when big utility bills busted household budgets, shocked business owners and helped drive inflation.

 

U.S. households that heat with natural gas, about 60 million of them, should expect their bills this winter to be about $601, on average, according to the Energy Information Administration. That is 21% lower than last winter, when the average residential gas expense between Nov. 1 and March 31 amounted to $764.

 

“Even if this winter is colder than forecast, we still expect households heated by natural gas to pay less for heat this winter,” said EIA Administrator Joe DeCarolis.

 

Natural-gas prices also influence winter power bills for the 56 million households warmed with electric heat, since gas is the main fuel burned to generate power these days.

 

The EIA expects such households, predominantly in the South and West, to pay $1,060 for electricity this win-ter, about the same as last winter.

 

◈ Banks Face Shake-Up of Rules For Loans to Low-Income Areas(은행들, 저소득층에 대한 대출 규제 개편에 직면하다)

 

 

WASHINGTON—Top U.S. banking regulators struggled for more than five years to update antiredlining rules aimed at making banks lend more in lower-income communities. On Tuesday, they completed a revamp of them for the era of online banking.

 

The 1977 Community Rein-vestment Act sought to end banks’ historical practice of denying or limiting financial services in minority neighborhoods. The current rules, which are nearly 30 years old, generally require banks to serve everyone in the communities surrounding their branches, including lower-income people. Regulators say those requirements are outdated in a world in which much financial activity happens over the Internet and with mobile phones, so they updated them to focus more on where banks do business, rather than just their physical locations.

 

“The final rule takes a critical step forward in modernizing the CRA regulations,” Michael Barr, the Federal Reserve’s vice chair for banking supervision, said.

 

Banks said a 2022 proposed version of the new rules would have made it too challenging to get the highest rating when regulators assess banks for their compliance with the requirements, potentially leading firms to pull back on their investments in low-income communities. Industry lawyers have compared the dynamic to a professor telling a class that nobody will likely get a perfect test score, leading students to try less to do well.

 

◈ Coca-Cola Benefits From Higher Prices (코카콜라, 가격 인상으로 이익을 얻다)

 

 

Coca-Cola reported higher earnings and revenue for the third quarter, which were boosted by higher prices and a slight increase in sales volumes.

 

The beverage giant lifted its outlook for the year in light of its performance so far, although it expects a stronger headwind from currency translation.

 

Coke Chief Executive Officer James Quincey said U.S. inflation was slowing and that he expects the company’s price increases to continue to moderate through the end of the year and into next.

 

Shares of the company closed up 2.9% on Tuesday.

 

Coca-Cola’s third-quarter sales rose 8% to $12 billion, topping the $11.44 billion expected by analysts, according to FactSet.

 

◈ Europe Leads Way in Green Steel Due to Carbon Taxes (탄소세 때문에 유럽이 녹색 철강에서 선두를 달리다)

 

 

Steel is one the world’s most polluting industries, but Europe is leaping forward in making the metal green.

 

By 2030, the continent is expected to be home to nearly 50 green and low-carbon steel projects, according to the Leadership Group for Industry Transition’s compilation of projects. In comparison, the U.S. only has two such projects.

 

“There is certainly more investment in European green-steel capacity, driven by the fact carbon has a cost in Europe,” said Colin Richardson, steel lead at Argus Media, a commodities-pricing agency. “[European Union] policy is essentially designed to mean that cost rises over time, incentivizing polluters to reduce the amount of emissions [allowances] they need to purchase.”

 

◈ Stocks Gain on Strong Corporate Outlooks(기업 전망 호조로 주가 상승)

 

 

Makers of everything from Post-it Notes to jet engines to business software clued in Wall Street on their 2023 outlooks, and markets were cautiously optimistic.

 

The three major stock indexes opened in the green and didn’t look back. The Dow Jones Industrial Average rose 0.6%. The S& P 500 climbed 0.7%, while the tech-heavy Nasdaq Composite edged 0.9% higher.

 

Wall Street hopes companies can reverse three quarters of year-over-year declines in profits that have weighed on stock valuations. Firms’ projections, meanwhile, could provide hints about if and when the Fed’s interest-rate hikes will begin to weaken the U.S. economy.

 

오늘도 경제신문으로 세상을 봅니다.

 

2023.10.24 - [경제신문 읽기] - 월스트리트저널 읽기 - Bond, Economy, S&P

월스트리트저널 읽기 - Bond, Economy, S&P