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Which Interest Rate Should You Care About?

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Which Interest Rate Should You Care About?

Watch out for interest rates.

Not the short-term rates controlled by the Federal Reserve. Barring an unforeseen financial crisis, they’re not going anywhere, especially not after the jump in inflation reported by the government on Wednesday.

Instead, pay attention to the 10-year Treasury yield, which has been bouncing around since the election from about 4.8 to 4.2 percent. That’s not an unreasonable level over the last century or so.

But it’s much higher than the 2.9 percent average of the last 20 years, according to FactSet data. At its upper range, that 10-year yield may be high enough to dampen the enthusiasm of many entrepreneurs and stock investors and to restrain the stock market and the economy.

That’s a problem for the Trump administration. So the new Treasury secretary, Scott Bessent, has stated outright what is becoming an increasingly evident reality. “The president wants lower rates,” Mr. Bessent said in an interview with Fox Business. “He and I are focused on the 10-year Treasury.”

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Treasuries are the safe and steady core of many investment portfolios. They influence mortgages, credit cards, corporate debt and the exchange rate for the dollar. They are also the standard by which commercial, municipal and sovereign bonds around the world are priced.

What’s moving those Treasury rates now is bond traders’ assessments of the economy — including the Trump administration’s on-again, off-again policies on tariffs, as well as its actions on immigration, taxes, spending and much more.

Mr. Bessent, and President Trump, would like those rates to be substantially lower, and they’re trying to talk them down. But many of the president’s policies are having the opposite effect.

The president needs the bond market on his side. If it comes to disapprove of his policies, rates will rise and the economy — along with the fortunes of the Trump administration — will surely suffer.

Mr. Bessent may be focusing on Treasury rates, or yields, partly to relieve pressure on the Federal Reserve, which President Trump frequently berated in his first term and on the campaign trail.

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The Fed’s independence is sacrosanct among most economists and many investors. During the campaign, Mr. Trump repeatedly called on the Fed to lower rates. Yet any threat to the Fed’s ability to operate freely could panic the markets, which, clearly, is not what Mr. Trump wants.

To the contrary, when the markets are strong, he frequently cites them as a barometer of his popularity. In 2017, he boasted about the performance of the stock market an average of once every 35 hours, Politico calculated.

Shortly after the November election, I wrote that the markets might restrain some of Mr. Trump’s actions. But I wouldn’t go too far with this now. Few government departments or traditions seem to be off limits for the administration’s aggressive changes in policy or reductions in work force, masterminded by Mr. Trump’s sidekick, the billionaire disrupter-in-chief, Elon Musk. Just look at The Times’s running tabulation of the actions taken since Jan. 21. It’s dizzying.

Still, so far, at least, the administration has been remarkably circumspect when it comes to the Fed. That doesn’t mean President Trump has entirely constrained himself: He has continued to mock the Fed, saying in a social media post that it has “failed to stop the problem they created with Inflation” and has wasted its time on issues like “DEI, gender ideology, ‘green’ energy, and fake climate change.”

Nonetheless, Mr. Bessent said specifically that Mr. Trump “is not calling for the Fed to lower rates.” Instead, the Treasury secretary said, “If we deregulate the economy, if we get this tax bill done, if we get energy down, then rates will take care of themselves and the dollar will take care of itself.” The president has not contradicted him. So far, trying to control the Fed is a line that Mr. Trump hasn’t yet crossed. The bond market is another matter.

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Treasury rates haven’t usually garnered the big headlines frequently devoted to the Federal Reserve.

The Fed is easier to explain. When it raises or lowers short-term rates, it’s clear that somebody took action and caused a measurable change.

In reality, when we report that the Fed is cutting or increasing rates, we mean that it is shifting its key policy rate, the federal funds rate. That’s what banks charge one another for borrowing and lending money overnight. It’s important as a signal — a red or green light for stock traders — and “it influences other interest rates such as the prime rate, which is the rate banks charge their customers with higher credit ratings,” according to the Federal Reserve Bank of St. Louis. “Additionally, the federal funds rate indirectly influences longer- term interest rates.”

What causes shifts in longer-term rates is much harder to pinpoint because they are set by an amorphous force: the market, with Treasuries at the core. Day to day, you won’t hear much about it unless you’re already a bond maven.

How does any market set prices? Supply and demand, the preferences of buyers and sellers, trading rules — the textbooks say these and other factors determine market prices. That’s true for tangible things like milk, eggs, gasoline, a house or a car. Treasury prices — and those of other bonds, which use Treasuries as a reference — are more complicated. They include estimates of the future of interest rates, of inflation and of the Fed’s intentions.

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The Fed sets overnight rates, which are involved indirectly in bond rates for a simple reason. The interest rate for a 10-year Treasury reflects assumptions about many, many days of overnight rates, chained together until they span the life of whatever bond you buy. Inflation matters because when it rises more quickly than anticipated, it will reduce the real value of the stream of income you receive from standard bonds.

That happened in 2022. Inflation soared and so did yields, while bond prices, which move in the opposite direction, fell — creating losses for bond funds and for individual bonds sold under those conditions.

That’s why the increase in inflation in January, to an annual rate of 3 percent for the Consumer Price Index from 2.9 percent the previous month, immediately pushed up the 10-year Treasury yield, which stands above 4.5 percent. Trump administration policies are weighing on bond prices and yields, too.

Mr. Bessent has pointed out that oil prices are a major ingredient in inflation and, therefore, bond yields. But whether Mr. Trump will be able to bring down oil prices by encouraging drilling — while eliminating subsidies and regulations that encourage the development of energy alternatives — is open to question.

Some Trump policies being sold as promoters of economic growth — like cutting regulations and tax rates — could have that effect. But others, like reducing the size of the labor force — which his deportations of undocumented immigrants and restrictions on the arrival of new immigrants will do — could slow growth and increase inflation.

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So could the tariffs that he has been threatening, delaying and, in some cases, already imposing. Expectations for future inflation jumped in the University of Michigan’s monthly survey in January. Joanne Hsu, the survey’s director, said that reflects growing concerns about the Trump tariffs among consumers.

“These consumers generally report that tariff hikes will pass through to consumers in the form of higher prices,” she wrote. She added that “recent data show an emergence of inflationary psychology — motives for buying-in-advance to avoid future price increases, the proliferation of which would generate further momentum for inflation.”

None of that augurs well for the 10-year Treasury yield. Nor does a warning issued by five former Treasury secretaries — Robert E. Rubin, Lawrence H. Summers, Timothy F. Geithner, Jacob J. Lew and Janet L. Yellen — who served in Democratic administrations.

They wrote in The New York Times that incursions of Mr. Musk’s cost-cutting team into the Treasury’s payment system threaten the country’s “commitment to make good on our financial obligations.” They applauded Mr. Bessent for assuring Congress in writing that the Treasury will safeguard the “integrity and security of the system, given the implications of any compromise or disruption to the U.S. economy.”

But they decried the need for any Treasury secretary to have to make such promises in his first weeks in office.

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Other potential flash points for Treasury yields loom. The Fed has in the past manipulated the market bond supply by buying and selling securities. It’s reducing its holding now, which could put upward pressure on interest rates — and make the Fed an irresistible Trump target. At the same time, Secretary Bessent is financing the government debt mainly with shorter-term bills but may not be able to avoid increasing the supply of longer-term Treasuries indefinitely, as the federal deficit swells. Yet Congress is reluctant to raise the debt ceiling, which will bite later this year.

These are difficult times. So far, the 10-year yield hasn’t shifted all that much. The markets, at least, have been holding steady.

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130,000 Igloo Coolers Recalled After Fingertip Amputations From Handle

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130,000 Igloo Coolers Recalled After Fingertip Amputations From Handle

About 130,000 Igloo coolers were recalled on Thursday after consumers reported 78 fingertip injuries from the cooler’s tow handle, 26 of which led to fingertip amputations, bone fractures or cuts, according to the U.S. Consumer Product Safety Commission.

This warning expands an initial recall issued in February of more than one million 90-quart Igloo Flip & Tow Rolling Coolers because the tow handle was crushing and seriously injuring people’s fingertips.

“The tow handle can pinch consumers’ fingertips against the cooler, posing fingertip amputation and crushing hazard,” the recall said.

In the February recall, the safety commission said that Igloo had received 12 reports of fingertip injuries from the coolers. Since then there have been an additional 78 reports, according to the commission.

The recalled coolers, all of which have the word “IGLOO” on the side of them, were manufactured before January 2024 and come in different colors. The manufacture date can be found on the bottom of the cooler.

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The commission said the latest recall also affected about 20,000 coolers in Canada and 5,900 in Mexico, which is in addition to the tens of thousands recalled from each country in February.

Igloo said that owners who bought the coolers between January 2019 and January 2025 should stop using them and contact the company for a free replacement handle.

The company said in a statement that it stood behind the quality of its products and that consumer “safety and satisfaction” were its top priorities.

The coolers were sold at Academy, Costco, Dick’s, Target and other retailers and online stores and were usually priced between $80 and $140.

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Insurance commissioner signals possible probe into State Farm's handling of L.A. wildfire claims

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Insurance commissioner signals possible probe into State Farm's handling of L.A. wildfire claims

After fielding a storm of complaints at a community meeting about how State Farm General is handling Los Angeles wildfire claims, California Insurance Commissioner Ricardo Lara said Saturday that regulators might launch a formal inquiry into the company’s practices.

Lara made his comments during a Zoom session attended by more 200 survivors of the Palisades and Eaton fires, who complained about delays in handling their claims, difficulty in getting testing for toxic substances and low cash offers to fix damaged homes and replace those destroyed.

“It’s not off the table,” said Lara, referring to the department’s authority to conduct what is called a “market conduct” exam into the company’s response to the fires. “We are not necessarily opposed to that.”

The department has previously conducted such investigations following other large fires.

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The Zoom session was organized by the Pali Strong community group, which was formed by Pacific Palisades residents after the Jan. 7 fires.

State Farm, on Sunday, said in response that it has the largest claims force in the industry and it is “focused on our customers and helping them recover from the largest fire event we have ever experienced in the state.”

“We actively work with each of our customers to resolve their claim by understanding the facts of their loss, identifying the damages and applicable coverage,” the statement said.

The company said that as of May 5 it had received more than 12,600 claims and paid more than $3.4 billion to customers.

Separately, Tony Cignarale, deputy commissioner of consumer services and market conduct, told the fire victims that the department sent the California FAIR Plan Assn. a letter last week seeking information into how the insurer of last resort is handling smoke damage claims.

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The FAIR Plan was sued last month by policyholders in both fire zones, who allege the state’s insurer is refusing to properly investigate and pay for smoke damage as required by state law. Also named as defendants are State Farm and other California licensed home insurers, who run the plan.

The threat to conduct a market conduct exam into State Farm General’s claims handling practices comes as California’s largest home insurer awaits a decision on its request for an emergency rate hike in response to its losses from the Jan. 7 fires.

The company originally filed for a 22% rate hike for its homeowner policies, but trimmed that down to 17% during a hearing last month before an administrative law judge.

The judge is expected to make a recommendation as early as this week to Lara, who can then accept, reject or revise the ruling. It also could be sent back for reconsideration.

Joy Chen, whose Altadena home was damaged by soot and ash, asked Lara to defer granting the company any rate hike until he “fully” investigates the complaints.

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“We’d be happy to submit them to you,” said Chen, a leader of the Eaton Fire Survivors Network.

Lara said that he could not tie any investigation into the complaints to consideration of the rate hike, which he said was a “separate judicial process that is currently underway.” However, he asked the fire survivors to submit all their complaints to the department so it could examine them.

“What I commit to doing is collecting all the data that I’m going to receive … and sending it to our law enforcement team, because I really want to look at … all the allegations that were talked about today,” he said.

Chen, who said her home was effectively remediated by her insurer, USAA, later told The Times, “Lara’s most important job is to protect California families but he is saying the department does not consider claims management when approving rate hikes — but this is one of the few legal powers he actually has to regulate the industry.”

Last week, the Los Angeles County Department of Public Health announced it found high levels of lead and other toxic metals at homes destroyed by the wildfires whose topsoil had been scraped by the U.S. Army Corps of Engineers, particularly in the Altadena area with its older housing stock.

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In regards to the FAIR Plan, Cignarale said the department’s letter to the insurer asked them “for very specific information as to the very steps that are being taken to resolve these smoke claims.”

Lara told the fire victims that he had issued a bulletin to state insurers in March stating that the department expected them to “fully investigate and pay legitimate smoke claims.” He said if that was not happening, fire victims should submit their complaints to the state so the department’s investigative unit could look into them.

He also said the department planned to convene health experts to develop state standards for smoke damage remediation. “Absent any set standards, then the insurance companies will do anything to get you back in your home as quickly as possible,” he said.

The FAIR Plan did not immediately respond to a request for comment.

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Why America’s ‘Beautiful Beef’ Is a Trade War Sore Point for Europe

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Why America’s ‘Beautiful Beef’ Is a Trade War Sore Point for Europe

Hendrik Dierendonck, a second-generation butcher who has become, as he describes it, “world famous in Belgium” for his curated local beef, thinks Europe’s way of raising cattle results in varied and delicious cuts that European consumers prize.

“They want hormone-free, grass-fed,” Mr. Dierendonck explained recently as he cut steaks at a bloody chopping block in his Michelin-starred restaurant, which backs onto the butchery his father started in the 1970s. “They want to know where it came from.”

Strict European Union food regulations, including a ban on hormones, govern Mr. Dierendonck’s work. And those rules could turn into a trade-war sticking point. The Trump administration argues that American meat, produced without similar regulations, is better — and wants Europe to buy more of it, and other American farm products.

“They hate our beef because our beef is beautiful,” Howard Lutnick, the commerce secretary, said in a televised interview last month. “And theirs is weak.”

Questions of beauty and strength aside, the administration is right about one thing: European policymakers are not keen on allowing more hormone-raised American steaks and burgers into the European Union.

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Further opening the European market to American farmers is just one ask on a laundry list of requests from the Trump team. American negotiators also want Europe to buy more American gas and trucks, to change their consumption taxes and to weaken their digital regulations.

Trade officials within the European Union are willing to make many concessions to avert a painful and protracted trade war and to avert higher tariffs. They have offered to drop car tariffs to zero, to buy more gas and to increase military purchases. Negotiators have even suggested they could buy more of certain agricultural products, like soy beans.

But Europeans have their limits, and those include America’s treated T-bones and acid-washed chicken breasts.

“E.U. standards, particularly as they relate to food, health and safety, are sacrosanct — that’s not part of the negotiation, and never will be,” Olof Gill, a spokesman for the European Commission, the E.U. administrative arm, said at a recent news conference. “That’s a red line.”

It is not clear how serious the Americans are about pushing for farm products like beef and chicken. But the topic has surfaced repeatedly. When U.S. officials unveiled a trade deal with Britain on Thursday, for instance, beef was part of the agreement.

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But according to Britain, the deal would simply make it cheaper for Americans to export more hormone-free beef to the country and would not weaken British health and safety rules, which are similar to those in the E.U.

When it comes to the European Union, the United States can already export a large amount of hormone-free beef without facing tariffs, so an equivalent deal would do little to help American farmers.

But diplomats and European officials have repeatedly insisted that there is no wiggle room to lower those health and safety standards. And when it comes to meat-related trade restrictions more broadly, there is very little. Chicken, for instance, faces relatively high tariffs, and there is limited appetite to lower those rates.

That’s because Europe is protective of both its food culture and its farms.

Where America tends to have massive agricultural businesses, Europeans have maintained a more robust network of smaller family operations. The 27-nation bloc has about nine million farms, compared with about two million in the United States.

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Subsidies and trade restrictions help to keep Europe’s agricultural system intact. The European Union allocates a big chunk of its budget to supporting farmers, and a mix of tariffs and quotas limit competition in sensitive areas. E.U. tariffs on agricultural products are around 11 percent overall, based on World Trade Organization estimates, though they vary hugely by product.

And the bloc could place higher tariffs on U.S. farm goods if trade negotiations fall through. Their list of products that could face retaliatory levies, published Thursday, includes beef and pork, along with many soy products and bourbon.

But it’s not just tariffs limiting European imports of American food. Strict health and safety standards also keep many foreign products off European grocery shelves.

Take beef. Mr. Dierendonck and other European farmers are banned from using growth stimulants, unlike in the United States, where cattle are often raised on large feedlots with the use of hormones. European safety officials have concluded that they cannot rule out health risks for humans from hormone-raised beef.

To Mr. Dierendonck, the rules also fit European preferences. The lack of hormones results in a less homogenous product. “Every terroir has its taste,” he explains, describing the unique “mouth feel” of the West Flemish Red cow he raises on his farm on the Belgian coast.

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But farming beef without hormones is more expensive. And American exporters have to adhere to hormone limitations when they send steaks, hamburgers or dairy products to E.U. countries, which European farmers argue is only fair. Otherwise, imports produced using cheaper methods could put European farmers out of business.

“We cannot accept import products that do not meet our production standards,” said Dominique Chargé, a cattle farmer from the west of France who is also president of La Coopération Agricole, a national federation representing French agricultural cooperatives.

The result is that the United States does not sell much beef to Europe. It makes more economic sense for U.S. farmers to sell into markets that allow hormone-raised cattle.

One frequent American complaint is that European health standards are more about preference than actual health.

American scientists have called the risks of hormone use in cows minimal. And though E.U. officials and consumers frequently sneer at America’s “chlorinated chickens,” that rallying cry is a bit dated. American farmers have for years been using a vinegar-like acid, and not chlorine, to rinse poultry and kill potential pathogens.

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Some studies in Europe have suggested that such treatments are not a replacement for raising a chicken in a way that makes it pathogen-free from the start. American scientists have concluded that the rinses do their job and are not harmful to humans.

“I don’t know that it’s really about the science,” said Dianna Bourassa, a microbiologist specializing in poultry at Auburn University. “In my microbiological opinion, there are no health implications.”

From the perspective of European farmers, though, whether the health risks are genuine is besides the point. So long as European voters oppose chemical-treated chicken and hormone-treated beef, Europe’s farmers cannot use those farming techniques.

“When you speak to our farmers, it’s about fairness,” explained Pieter Verhelst, a member of the executive board of a Belgian farmers’ union, Boerenbond. “The policy framework we start with is totally different, and those issues are mostly totally out of the hands of farmers.”

And European consumers do seem to support E.U. food and farming rules.

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Farmer protests last year loudly opposed more beef imports from South American countries, in part over concerns that the cows might be raised with a growth hormone. An Obama-era trade deal died in part thanks to popular anger over “chlorine chicken” (“Chlorhünchen,” to derisive Germans.)

E.U. public opinion polling has suggested that policies that promote farming and farmers are very popular. In a 2020 poll fielded in-person across the bloc, nearly 90 percent of Europeans agreed with the idea that agricultural imports “should only enter the E.U. if their production has complied with the E.U.’s environmental and animal welfare standards.”

In Europe, including at Mr. Dierendonck’s butchery and farm, there’s a value placed on the old-fashioned, small-scale way of doing things, policymakers and farmers agreed. Mr. Dierendonck does buy some American beef for customers who ask for it — it’s easy to cook, he said — but it’s a small part of the business.

“I like American beef very much, but I don’t like it too much,” said Mr. Dierendonck, explaining that to him, the beef his European suppliers provide is varied, like a fine wine. “For me, it’s about keeping traditions alive.”

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