Member Briefing September 20, 2022
10-Year Yields Highest Since 2011 Before Expected Fed Rate Hike
Benchmark 10-year U.S. Treasury yields jumped to their highest level since 2011 on Monday as investors adjusted for the likelihood that the Federal Reserve will hike rates higher and for longer than previously expected as inflation remains near multi-decade highs.
Data last week showed higher-than-expected consumer prices in August, dashing hopes that the worst of rising price pressures may be in the past. It also made it more likely that the Fed will hike rates by another 75 basis points when it concludes its two-day meeting on Wednesday. Traders are now pricing in a 77% chance of a 75 basis points hike and a 23% likelihood of a 100 basis points increase.
War in Ukraine Headlines
- Ukraine and Russia: the Latest News – The Guardian
- Germany to Deliver Four More Howitzers to Ukraine - German Defence Ministry - US News
- Zelenskiy Vows No Let-Up as Ukraine Says Troops cross Key River in Northeast - Reuters
- The Russians Spent Months Forming A New Army Corps. It Lasted Days in Ukraine - Forbes
- Deadly Donetsk Blasts Hit Separatist-Run City in Ukraine - BBC
- Ukraine Has Shot Down 55 Russian Warplanes, U.S. General Says – Politico
- General Warns of Putin’s Reaction as Russia ‘Increasingly Divorced’ from Battlefield Realities - Fortune
- Donbas Separatist Leader Urges Referendum on Joining Russia - Reuters
- Ukraine Warns of 'Nuclear Terrorism' After Strike Near Plant - ABC New
- Europe Races to Prepare for Energy Crunch this Winter - Reuters
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Electric Bills Soar Across the Country as Winter Looms
Natural-gas prices have more than doubled this year because of a global supply shortage made worse by the war in Ukraine, and they are expected to remain elevated for months as fuel is needed to light and heat homes during the winter. The supply crunch has made it substantially more expensive for utilities to purchase or produce power, and those costs are being passed on to customers.
The strain is particularly acute in New England. The region is investing heavily in renewable-energy sources, but many of those projects aren’t yet operational, and it still relies heavily on natural gas for electricity production. The region has limited pipeline capacity and imports large volumes of liquefied natural gas, which are in shorter supply as a result of European demand.
Dollar’s Rise Spells Trouble for Global Economies
The U.S. dollar is experiencing a once-in-a-generation rally, a surge that threatens to exacerbate a slowdown in growth and amplify inflation headaches for global central banks. The dollar’s role as the primary currency used in global trade and finance means its fluctuations have widespread impacts. The currency’s strength is being felt in the fuel and food shortages in Sri Lanka, in Europe’s record inflation and in Japan’s exploding trade deficit.
The ICE U.S. Dollar Index, which measures the currency against a basket of its biggest trading partners, has risen more than 14% in 2022, on track for its best year since the index’s launch in 1985. The euro, Japanese yen and British pound have fallen to multidecade lows against the greenback. Emerging-market currencies have been battered: The Egyptian pound has fallen 18%, the Hungarian forint is down 20% and the South African rand has lost 9.4%.
US COVID - Biden: ‘The Pandemic is Over’'
The pandemic is over,” Biden told “60 Minutes” from the Detroit auto show last Wednesday, the first time the even has been held since the onset of the pandemic in 2020. “We still have a problem with COVID. We’re still doing a lotta work on it. It’s — but the pandemic is over. if you notice, no one’s wearing masks. Everybody seems to be in pretty good shape. And so I think it’s changing. And I think this is a perfect example of it.”
The U.S. and much of the world has returned to hosting large events over the past year, like the auto show, and done away with requirements that attendees wear masks or provide proof of vaccination. The U.S. still requires foreign visitors to be fully vaccinated to come to the country by plane. The World Health Organization (WHO) still categorizes COVID-19 as a pandemic.
NY Schools No Longer Required to Report COVID-19 Cases; Statewide Data Tracker Shut Down
The state is no longer releasing COVID-19 case numbers by school district, closing down the COVID-19 School Report Card, which had been a source of local statistics for two years. Now, school districts are supposed to keep tracking cases, but report them to their local health department. Health experts worry the closure of the COVID-19 Report Card is coming at an inopportune time. Another surge is expected this autumn and winter, and the data trackers can help people make better informed decisions about their public health.
“We have increasingly been asked as citizens to make decisions on our own,” said Dr. Denis Nash, an epidemiology professor at CUNY’s Graduate School of Public Health. “In order for our elected leaders to enable us to do that, we need access to high-quality information that gives us a sense of what's happening in the population.”
The Cost of Long COVID to Employers is Skyrocketing
Nomi Health, a technology driven direct health care system Reviewed the medical claims from some 4-plus million plan members filed in 2022. First, two types of claims were sorted out: those labeled long COVID, and those attributed to diabetes. When the numbers were crunched, here’s what came up: Per-member employer spend on long COVID was on average $2,654.67, more than 26% higher than the average diabetic spend.
The study also finds that long COVID patients reported a 3.6 times greater likelihood of missing work for medical reasons than plan members without the symptoms. Nomi says the average predicted cost of long COVID to patients is nearly $9,500 within the first six months following a diagnosis.
We’re Entering the Next Stage of the Housing Market Downturn—3 Things to Expect Heading Forward
Whenever a central bank moves from monetary easing to monetary tightening, there’s going to be an impact on a rate-sensitive sector like real estate. That impact, of course, is going to be even greater when monetary tightening comes after the asset class—residential real estate—spiked 43% in just over two years. Powell admitted that much in June. However, Powell was noncommittal as to whether the rate shock would push home prices lower.
Let’s take a deeper look at the three elements that’ll shift as we move into the second stage of the housing market downturn.
U.S. Home Builder Sentiment Falls for Ninth Straight Month in September
The National Association of Home Builders/Wells Fargo Housing Market index dropped three points to 46 this month. Discounting the plunge during the spring of 2020 when the economy was reeling from the first wave of COVID-19, this was the lowest reading since May 2014. A reading below 50 indicates that more builders view conditions as poor rather than good.
The survey's measure of current sales conditions slipped three points to 54. Its gauge of sales expectations over the next six months dipped one point to 46. The component measuring traffic of prospective buyers fell one point to 31. Mortgage rates have surged even higher. The 30-year fixed mortgage rate averaged 6.02% last week from 5.89% in the prior week, breaking above 6% for the first time since November 2008, according to data from mortgage finance agency Freddie Mac.
IRS Faces Tight Job Market and Competition for Talent as It Recruits Thousands
The Internal Revenue Service now has plenty of money. Its next challenge: finding people. The tax agency received $80 billion from Congress this summer to overhaul aging computer systems and strengthen enforcement so the U.S. collects more unpaid taxes. The Biden administration wants the IRS to provide better, more-modern service and take a tougher approach to high-income households and large corporations.
Meeting the objectives will require a top-to-bottom transformation and expansion of the agency, a shift to be accomplished with a yearslong hiring binge for tens of thousands of workers after a long period of agency attrition. The bulk of the hiring will be specialized accountants and technical professionals, though the agency is adding lower-paid customer-service workers in the short term. The IRS will need to sustain hiring over several years while offsetting expected retirements of its aging workforce.
U.S. Return-to-Office Rates Hit Pandemic High as More Employers Get Tougher
Workers are returning to U.S. offices at the highest rate since the pandemic forced most workplaces to temporarily close in 2020, as infection rates continue to fall and more companies intensify efforts to bring employees back.
Office use on average was 47.5% of early 2020 levels for workers in the office over the five business days from Sept. 8 to Sept. 14 in the 10 major metro areas monitored by Kastle Systems. The company, which tracks security swipes into buildings, said that was the highest percentage since late-March 2020. Midweek days were especially strong, with office use for Tuesday and Wednesday last week at about 55% of the pre-pandemic workforce, also a high during the pandemic for those days, Kastle said. The data through last Wednesday were the most recent weekly figures available.
Albany Looks to Crack down on ‘Forever Chemicals’ Contamination
Sen. Rachel May (D-Syracuse) and Assemblymember Carrie Woerner (D-Saratoga County) unveiled their “PFAS Surface Water Discharge Disclosure Act,” at a late-morning news conference. The legislation (NY S9525)/(NY A10689), which was formally introduced last month, would create an annual PFAS surface water discharge disclosure requirement for all publicly owned treatment works and new state pollutant discharge elimination system permit applications.
The legislation stems from May's recent work as part of an Environmental Protection Agency local government advisory council on federal PFAS rulemaking. “What we realized in New York state, as well as [in] lots of parts of the country, is no one has any data about where these chemicals are, where they’re coming from, how big a problem it is in local areas. This bill is designed to make sure that local governments have data that they can use when they are trying to figure out if there’s a problem, And, if so, how to address it.”
Tensions Rise Amid Frustration Over Manchin Energy Permitting Side Deal
Lawmakers are frustrated about being kept in the dark as Democratic leaders strategize how to jimmy an energy deal struck with Sen. Joe Manchin (D-W.Va.) behind closed doors through Congress — while also averting a government shutdown. Only a broad outline of Manchin’s plan has been released.
It includes setting maximum timelines for the environmental review process for energy projects, which advocates say could undercut the analysis required for a project’s approval and weaken community involvement. Other components would make it harder for states to block projects that run through their waters and require the president to pick a “balanced” list of energy projects that should be prioritized.
Boeing Remarketing Undelivered 737 MAX Jets
Boeing will make dozens of 737 MAX aircraft built for Chinese buyers available to other customers because of the prolonged delay in gaining China’s clearance to deliver the jets. The OEM lists 290 of its top-selling passenger jet in inventory and waiting for delivery, an estimated120 of which have been ordered by Chinese carriers. Boeing has not indicated how many of the complete aircraft may be available to other buyers.
CFO Brian West recently addressed the decision to reallocate completed 737 MAX jets, telling an investors’ conference, “We have deferred decisions on those planes for a long time. We can't defer that decision forever. So, we will begin to remarket some of those airplanes.” Although the 737 MAX program was grounded for 20 months during 2019-2020, during the investigation into and repairs to address the causes of two fatal crashes, Boeing continued to build new aircraft to address a significant volume of orders.
Nearly 1 In 10 Americans Suffered From Depression In 2020, Study Finds
Almost one in 10 Americans reported suffering from depression in 2020, according to a new study published in the American Journal of Preventive Medicine, which found rates of the mental health disorder are on the rise for all Americans, especially among adolescents and young adults.
About 9.2% of Americans 12 and older reported experiencing a major depressive episode over the past year in 2020, up from 7.3% in 2015, according to the study, led by researchers at Columbia University Mailman School of Public Health and City University of New York. More than 17% of young adults ages 18 to 25 reported having depression, the highest rate out of all age groups and an increase from 10.3% in 2015, followed by 16.9% of adolescents ages 12 to 17, up from 12.7% in 2015, according to the study, which used data from the 2015−2020 National Survey on Drug Use and Health.