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Employment gains for black Americans are at risk as the Federal Reserve tightens interest rates

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Black workers have led the US’s return to work after the Covid crisis, but economists warn their gains will reverse as the Federal Reserve aggressively tries to cool the economy. Interest rate He increases.

Earlier this year, rising wages and a shortage of workers pushed black workers into the job market at record levels. Black Americans worked and looked for jobs at higher rates than white Americans in May for the first time since 1972, according to Labor Department data. Employers have lowered job requirements, expanded skills improvement programs and diversified their hiring plans to fill their ranks amid staffing shortages, offering new opportunities to historically disadvantaged workers in the process.

While unemployment and labor force participation rates for workers of color have remained relatively stable in recent months, rising interest rates and a deteriorating job market could reverse those gains. In recent months, employment has already fallen in several industries that disproportionately employ workers of color, including retail, transportation, and warehousing.

Between September and November, general merchandise stores, including department stores, lost 71,500 jobs, and the warehouse and warehousing industry lost 41,000 jobs. Many of these industries rely on low-wage workers, with average annual wages often in the $30,000 to $50,000 range in retail and warehousing.

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William Spriggs, professor of economics at Howard University and chief economist for the AFL-CIO, said, “The moment companies stop hiring . . . the unemployment rate goes up because unemployed people can’t escape unemployment. And that hurts black workers first.”

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Spriggs added that the “significant uptick in black labor force participation, which has really helped black workers in the last six months…that goes a long way.”

Concerns about the US economy tipping into recession faded as the Federal Reserve continued its most aggressive series of interest rate hikes since the early 1980s. In an effort to tackle decades-high inflation, the central bank in less than a year raised its benchmark policy rate from nearly zero as of March to roughly 4.5 percent currently. Interest rates are expected to rise next year, with senior officials forecasting the federal funds rate to peak at 5.1 percent.

Policymakers believe there is a way for inflation to return to the Fed’s 2 percent target without massive job losses and a recession – the claim of many economists across Wall Street and academia. Modern survey Conducted by the Financial Times in partnership with the University of Chicago Booth School of Business, it found that the vast majority of leading economists expect a recession next year, which they warn could push the unemployment rate beyond 5.5 percent from the current 3.7 percent.

Most Fed officials currently expect the unemployment rate to rise by about one percentage point to 4.6 percent next year and to remain at that level through the end of 2024.

Economists and policymakers acknowledge this people of color They are disproportionately affected when the unemployment rate is high, especially when there is a recession, even if it is mild.

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“Black Americans don’t have low unemployment rates,” says Algernon Austin, director of race and economic justice at the Center for Economics and Policy Research, a Washington-based think tank. “The unemployment rate ranges from high to very high to very high.”

“It is important to realize that a mild recession means a transition from a high unemployment rate to a very high unemployment rate for blacks.”

Before the pandemic — when the US labor market was healthy — the unemployment rate for black Americans was twice the unemployment rate for white and Asian adults. In 2019, it was 6.1 percent, compared to just 3.3 percent and 2.7 percent for white and Asian adults, respectively. For Hispanic adults, the rate was 4.3 percent.

At the worst of the Covid economic crisis, the black unemployment rate jumped to nearly 17 percent. For white workers, it was slightly lower, at 14 percent.

Federal Reserve officials emphasized that inflation is also affecting those communities the most, and that in order to return to a healthy economy, they must restore control of prices. They argue that failure to do so in the near term will mean more pain later, as the central bank will have to squeeze the economy even harder.

“Without price stability, the economy doesn’t work for anyone,” Jay Powell, chairman of the Federal Reserve, said in mid-December at his last press conference of the year. “We will not achieve a sustainable period of strong labor market conditions that benefit everyone.”

Austin expressed concerns about other factors, such as the war in Ukraine and China’s Covid policy, which are outside the Fed’s control but have a significant impact on the path of inflation. He warned that the central bank was not only “unnecessarily” imposing costs on the most economically vulnerable, it was also undermining their ability to deal with price pressures they were already struggling to overcome.

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“[Put] If people are unemployed, they won’t be able to handle inflation.”

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Standard Chartered becomes first foreign bank to trade bond futures in China (Reuters).

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© Reuters. FILE PHOTO: The Standard Chartered logo is displayed at its main branch in Hong Kong, China August 1, 2017. REUTERS/Bobby Yip/File Photo

SHANGHAI (Reuters) – Standard Chartered’s China unit said it has become the first foreign bank to trade in Treasury bond futures in the country that works to liberalize capital markets.

The move comes as China ramps up efforts to attract global investors amid months of inflows of foreign money from the $20 trillion bond market.

In a statement on Wednesday, Standard Chartered Bank (China) Limited said it had completed its first Treasury futures transaction in China, with the permission of regulators.

The bank said that treasury bond futures are a key tool for managing interest rate risk, and that China’s opening up of the market will allow foreign investors to better participate in the domestic bond market and promote the internationalization of the yuan.

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“We believe that the depth and breadth of global investor participation in China’s capital market will continue to increase” as more comprehensive risk management tools become available, said Asia Chief Executive Officer Benjamin Hong.

Foreign institutional investors have dumped a net 740 billion yuan ($107.48 billion) worth of Chinese bonds in 10 straight months of outflows, amid geopolitical tensions, concerns about China’s economy and US interest rate premiums on China.

Foreign holdings of yuan-denominated bonds traded on China’s interbank market reached 3.33 trillion yuan at the end of November, less than 3% of the total market volume.

The trading of Standard Chartered bond futures comes nearly three years after China in early 2020 freed up banks and insurance companies to participate in the market for the first time, selecting its five largest banks for an initial pilot scheme.

“China’s relentless efforts to expand its opening up, especially the continued opening up of financial markets at a high level, provides huge opportunities for Standard Chartered,” said Jerry Zhang, Vice President of the China Unit.

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In February 2022, Standard Chartered said it would invest $300 million in China-related companies over the next three years and double the related dividend contribution by the end of 2024.

($1 = 6.8847 renminbi)

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Pharmacists in the United Kingdom and the United States are reporting shortages of cold and flu medicines

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Pharmacists in the UK and US are warning of shortages of cold and flu medicines, with an increase in respiratory infections in early winter leaving manufacturers struggling to keep up with demand.

Some pharmacies are finding it difficult to order over-the-counter medicines such as cough syrups and pain relievers, restricting what customers can buy, while some wholesalers are rationing available medicines.

Leila Hanbeck, chief executive of the UK’s Independent Multiplex Pharmacy Association, said shortages – along with other frustrations such as not being able to use their family doctor – mean frontline pharmacists are dealing with a rise in abuse and violence from patients.

She called on the UK government to bring stakeholders together and tackle problems in the supply chain. “We’re running out of essential medicines for colds and flu. Once the demand for something goes up, we fall flat on our faces. Supply can’t meet demand,” she said.

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Those infected are buying medicines to treat symptoms of Covid-19, the flu and other conditions, including Strep-A and RSV, which have seen a resurgence after winters of lockdown. Supply problems come on top of global shortages Antibiotics This led the UK to issue a protocol for a serious shortage of infant formula last month.

Adrian van den Hoeven, general manager of Medicines Europe, which represents generic drug companies, said they expected an increase in demand compared to two years ago, but did not expect it to come before the normal cold and flu season.

He said governments must share more data on infection rates – beyond what’s already been collected on Covid-19 and influenza – so manufacturers can adjust supply chains, which takes several months.

We are not epidemiologists. We don’t know exactly what it will look like: will 2022-2023 be a year away, or will the next five years look like this? ” He said.

In the UK, pharmaceutical industry associations have reported shortages of treatments including Lemsip, Haleon Beechams and Day and Night Nurse.

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Superdrug, one of the UK’s largest pharmacy chains, confirmed that the shortage was a “national problem”, saying there had been a “huge peak in demand for branded and proprietary cold and flu products”. The company said demand for Superdrug-branded remedies was above its highest levels in the acute phase of the pandemic.

Pharmacists reported price increases of antibiotics amid shortages last month. But Paras Shah, chief executive of UK wholesale retailer Sigma, said prices for over-the-counter treatments do not react to market conditions as quickly as prices for prescription medicines.

In the United States, CVS Pharmacies have limited purchases of children’s pain relief products to two per customer since last month. Walgreens has limited the number of online customers to six per transaction to “prevent excessive purchasing behaviour”.

Johnson & Johnson, which makes the pain relievers Tylenol and Motrin, said its production sites are working around the clock to handle “high consumer demand due to a very difficult cold and flu season.”

Consumer health groups said the shortages were caused by a jump in demand, rather than problems securing essential ingredients. Rickitt reported a “significant increase in demand” but said she was doing everything she could to minimize disruption. Haleon said it is increasing its supply capacity but that customers in some areas may face shortages.

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Fed’s hawkish rhetoric fails to lift the dollar; Aussie jumps via Reuters

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© Reuters. FILE PHOTO: One hundred US dollar banknotes are seen in this illustration taken in Seoul on February 7, 2011. REUTERS/Lee Jae-won

Written by Ray Wei

SINGAPORE (Reuters) – The dollar struggled higher on Thursday even though federal policymakers reiterated their commitment last month to fighting inflation, while the dollar rebounded after China eased restrictions on Australian coal imports.

Minutes of the Fed’s December monetary policy meeting released last night showed that while officials agreed the central bank should slow the pace of aggressive rate hikes, they remained focused on curbing inflation, and were concerned about any “misperception” in financial markets. that their commitment was declining.

Minneapolis Federal Reserve Chairman Neel Kashkari also said on Wednesday that he sees the Fed’s target interest rate peaking at 5.4%, higher than current market expectations of just under 5%.

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However, that failed to give a boost to the greenback, which was down 1.4% against the Canadian dollar overnight.

The pound sterling last settled at $1.2062, after rising 0.76% against the dollar in the previous session, while the euro rose 0.19% to $1.0624, after gains of more than 0.5% overnight.

said Ray Attrell, head of foreign exchange strategy at National Australia Bank (OTC: (NAB) ).

Economic data released on Wednesday also revealed that US employment declined less-than-expected in November, although a survey from the Institute for Supply Management (ISM) showed US manufacturing activity contracted again in December.

“With the payroll coming up on Friday, the message is still that the job market is still in very good shape,” Atrell said.

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Against a basket of currencies, it fell 0.14% to 104.06, after falling 0.5% on Wednesday.

The Australian dollar rose 1.7% overnight after news that China’s state plan allowed three central government-backed utilities and its largest steelmaker to resume coal imports from Australia, in the first such move since Beijing imposed an informal ban on coal trade with Canberra in 2020. .

The Australian dollar finally settled at $0.6835, while it rose 0.11% to $0.6298, after rising 0.7% in the previous session.

“The Australian dollar has clearly benefited from the coal story,” said NAB’s Atrell, adding that most other commodity currencies were supported.

The Japanese yen rose 0.5% to 131.97 per dollar on Thursday, reversing a 1.2% decline overnight, as traders bet the Bank of Japan may give up its controversial yield curve grip.

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