Tag Archives: U.S. Treasury

U.S. housing starts drop; permits rise to one-year high

house under construction

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. homebuilding fell in January as the construction of multi-family housing projects dropped, but upward revisions to the prior month’s data and a jump in permits to a one-year high suggested the housing recovery remained on track.

Other data on Thursday showed only a modest increase in the number of Americans filing new applications for unemployment benefits last week, a sign that the labor market was continuing to tighten.

Housing starts fell 2.6 percent to a seasonally adjusted annual rate of 1.25 million units last month, the Commerce Department said. December’s starts were revised up to a rate of 1.28 million units from the previously reported 1.23 million pace.

Homebuilding was up 10.5 percent compared to January 2016. Permits for future construction jumped 4.6 percent in January to a rate of 1.29 million units, the highest level since November 2015. Building permits in the South, where most homebuilding occurs, hit their highest level since July 2007.

With overall permits now outpacing starts, homebuilding is likely to rebound in the coming months. Economists polled by Reuters had forecast groundbreaking activity slipping to a rate of 1.22 million units last month and building permits rising to a 1.23 million pace.

Prices of U.S. Treasuries slid and U.S. stock index futures trimmed losses after the data. The dollar <.DXY> pared losses against a basket of currencies.

LABOR MARKET TIGHTENING

The housing recovery is being driven by a strong labor market, which is boosting employment opportunities for young people and supporting household formation.

In a separate report, the Labor Department said initial claims for state unemployment benefits rose 5,000 to a seasonally adjusted 239,000 for the week ended Feb. 11.

Claims have been below 300,000, a threshold associated with a strong job market, for 102 consecutive weeks. That is the longest stretch since 1970, when the labor market was much smaller. The labor market is at or close to full employment, with the unemployment rate at 4.8 percent.

Economists had forecast first-time applications for jobless benefits rising to 245,000 in the latest week. While the labor market is expected to continue to underpin the housing market, higher mortgage rates could slow demand for housing.

A survey on Wednesday showed homebuilders’ confidence slipped in February but remained at levels consistent with a growing housing market. Builders anticipated a slowdown in buyer traffic and continued to grapple with shortages of developed lots and skilled labor.

January’s starts were above the fourth-quarter average, suggesting housing will again contribute to gross domestic product in the first three months of this year.

Homebuilding last month surged 55.4 percent in the Northeast region of the country. It jumped 20.0 percent in the South to the highest level since August 2007. Starts fell 41.3 percent in the West, likely due to the impact of unusually wet weather.

Last month, single-family homebuilding, which accounts for the largest share of the residential housing market, climbed 1.9 percent to a pace of 823,000 units.

Starts for the volatile multi-family housing segment tumbled 10.2 percent to a rate of 423,000 units.

Single-family permits slipped 2.7 percent last month after increasing for five consecutive months. Single-family starts in the South rose to their highest level since August 2007.

Building permits for multi-family units soared 19.8 percent.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. makes limited exceptions to sanctions on Russian spy agency

cars drive past headquarters

By Joel Schectman and Dustin Volz

WASHINGTON (Reuters) – The U.S. Treasury Department on Thursday adjusted sanctions on Russian intelligence agency FSB, making limited exceptions to the measures put in place by former President Barack Obama over accusations Moscow tried to influence the 2016 U.S. presidential election with cyber attacks on political organizations.

The department said in a statement it would allow U.S. companies to make limited transactions with FSB that are needed to gain approval to import information technology products into Russia.

At the White House, President Donald Trump responded to a reporter’s question about whether he was easing sanctions on Russia, saying, “I’m not easing anything.”

Sanctions experts and former Obama administration officials stressed the exceptions to the sanctions imposed in December do not signal a broader shift in Russia policy.

In a conference call with reporters, a senior Treasury Department official said the exceptions were “a very technical fix” made in response to “direct complaints” from companies that were unable to import many consumer technology products without a permit from the FSB. The action had been in the making for weeks before Trump took office on Jan. 20, the official said.

Beyond its intelligence function, the FSB also regulates the importation of software and hardware that contains cryptography. Companies need FSB approval even to import broadly available commercial products such as cell phones and printers if they contain encryption.

Peter Harrell, a sanctions expert and former senior U.S. State Department official, said Treasury officials likely had not considered the issue in December.

“I don’t think when they sanctioned FSB they were intending to complicate the sale of cell phones and tablets,” Harrell said.

David Mortlock, a former National Security Council advisor for Obama said that before granting such exceptions, the administration would ask who a sanction was hurting and who it was benefiting.

Mortlock, now an attorney, said “here it’s a pretty easy calculus” because it was clear tech companies were the ones harmed by not being able to import software into Russia, not the spy agencies.

U.S. intelligence agencies accused the FSB of involvement in hacking of Democratic Party organizations during the election to discredit Democrat Hillary Clinton and help Republican Trump.

The agencies and private cyber security experts concluded the FSB first broke into the Democratic National Committee’s computer system in the summer of 2015 and began monitoring email and chat conversations.

They said FSB was one of two Russian spy agencies involved in a broad operation approved by top-ranking people in the Russian government. In December, Obama expelled 35 suspected Russian spies and sanctioned two spy agencies. He also sanctioned four Russian intelligence officers and three companies that he said provided support to the cyber operations.

(Reporting by Joel Schectman and Dustin Volz; additional reporting by Yeganeh Torbati and Jason Lange; Editing by Alistair Bell and Grant McCool)

U.S. Treasury holds debt auctions steady, plans cyber test

dollar note

By Jason Lange

WASHINGTON (Reuters) – The U.S. Treasury announced on Wednesday it will hold the size of coupon auctions steady in the upcoming quarter when it conducts a small “contingency auction” that an official said would test its ability to borrow following a cyber attack.

It was unclear how much of a role, if any, the White House had in crafting the Treasury’s quarterly debt policy statement, which was the first since President Donald Trump took office last month.

The U.S. Senate has yet to confirm Trump’s Treasury secretary nominee, Steven Mnuchin. Several Treasury officials from the Obama administration have left, with their positions filled on a temporary basis by career bureaucrats or political appointees from the last administration.

The latest policy statement was made by Monique Rollins, Treasury’s acting assistant secretary for financial markets and a holdover from the Obama administration. A Treasury official told reporters separately that the new political leadership was aware of the debt policies announced on Wednesday.

Rollins said in the policy statement that Treasury plans to offer $62 billion in notes and bonds next week, raising approximately $17 billion in new cash.

The contingency test was part of regular auction infrastructure testing, Rollins said.

The Treasury official who briefed reporters separately said the test would gauge the government’s ability to borrow money if a cyber attack disrupted normal auctions.

On future coupon sizes, Rollins said the department “will continue to monitor projected financing needs and make appropriate adjustments as necessary.”

(Reporting by Jason Lange; Editing by Paul Simao)

U.S. blacklists North Korean officials over rights abuses

Kim Jong Un leader of North Korea leading a meeting

WASHINGTON (Reuters) – The U.S. Treasury Department has added seven senior North Korean officials, including leader Kim Jong Un’s sister, to its sanctions list because of human rights abuses and censorship by the communist nation.

The department said in a statement on Wednesday that its Office of Foreign Assets Control added six men and one woman, all officials of the government of the Democratic People’s Republic of Korea or the ruling Workers’ Party of Korea, along with the Ministry of Labor and the State Planning Commission, to the Specially Designated Nationals List.

“The North Korean regime not only engages in severe human rights abuses, but it also implements rigid censorship policies and conceals its inhumane and oppressive behavior,” acting OFAC Director John Smith said in the statement, adding that the move aimed to expose the individuals responsible for the abuses.

The U.S. State Department said in a separate statement that the action coincided with the release of its second report on North Korean human rights abuses and censorship, which it called among the worst in the world.

Pyongyang “continues to commit extrajudicial killings, enforced disappearances, arbitrary arrest and detention, forced labor, and torture. Many of these abuses are committed in the political prison camps, where an estimated 80,000 to 120,000 individuals are detained, including children and family members of those subject to persecution and censorship,” the State Department statement said.

Among seven individuals on the Treasury Department blacklist is Kim Yo Jong, 27, who it said is the younger sister of leader Kim Jong Un, as well as the vice director of the Workers’ Party of Korea Propaganda and Agitation Department.

Also on the list is Minister of State Security Kim Won Hong, whose agency the department said “engages in torture and inhumane treatment of detainees during interrogation and in the country’s network of political prison camps.”

(Reporting by Tim Ahmann; Writing by Eric Walsh; Editing by Tom Brown and Steve Orlofsky)

U.S. housing starts tumble from nine-year high

A carpenter works on a new home at a residential construction site in the west side of the Las Vegas Valley in Las Vegas

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. homebuilding fell more than expected in November, tumbling from a nine-year high as construction activity declined broadly, which could prompt further downward revisions to fourth-quarter economic growth estimates.

Groundbreaking on new housing projects dropped 18.7 percent to a seasonally adjusted annual rate of 1.09 million units, the Commerce Department said on Friday. Last month’s percentage decline was the largest in nearly two years.

Housing starts data is very volatile month-to-month.

There were, however, some silver linings in the report. October’s starts were revised up to a 1.34 million-unit rate, the highest since July 2007. In addition, building permits for single-family homes, the largest segment of the market, rose to a nine-year high in November.

Economists had forecast housing starts slipping to a 1.23 million-unit rate last month from October’s previously reported 1.32 million pace. Coming on the heels of data this week showing weak retail sales and industrial production in November, the plunge in groundbreaking activity could result in fourth-quarter gross domestic product forecasts being trimmed again.

The Atlanta Federal Reserve is forecasting GDP rising at a 2.4 percent annualized rate in the fourth quarter after increasing at a brisk 3.2 percent rate in the third quarter.

U.S. Treasury debt prices rose on the data, while the dollar was little changed against a basket of currencies.

Starts fell in all four regions last month. October’s surge in homebuilding had widened the gap between permits and starts. As such, a drop in housing starts was widely anticipated to bring them more in line with permits.

The housing market remains on solid ground even as mortgage rates have jumped to more than two-year highs following the election of Donald Trump as the next president.

A survey on Thursday showed homebuilders’ confidence in December hitting its highest level since July 2005, with builders anticipating strong sales.

Trump’s surprise victory last month led to a surge in U.S. government bond yields amid investor concerns that the business mogul’s proposed expansionary fiscal policy agenda could fan inflation. Mortgage rates closely track movements in U.S. Treasury yields.

Since the Nov. 8 presidential election, the fixed 30-year mortgage rate has increased about 60 basis points to average 4.16 percent in the week ending Dec. 15, the highest since October 2014, according to data from mortgage finance firm Freddie Mac.

Last month, single-family home building, which accounts for the largest share of the residential housing market, fell 4.1 percent to an 828,000-unit pace. Single-family starts rose to a nine-year high in October.

The housing market is being supported by a tightening labor market, which is starting to drive up wages.

Housing starts for the volatile multi-family segment tumbled 45.1 percent to a 262,000-unit pace.

Permits for future construction fell 4.7 percent in November. Single-family permits rose 0.5 percent last month to their highest level since November 2007. Building permits for multi-family units dropped 13.0 percent.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)