By Lucia Mutikani

WASHINGTON -Contracts to buy U.S. previously owned homes dropped to the lowest level in nearly two years in February, weighed down by a persistent shortage of properties, and activity could remain sluggish amid increasing mortgage rates and high house prices.

The National Association of Realtors (NAR) said on Friday its Pending Home Sales Index, based on signed contracts, fell 4.1% last month to 104.9, the lowest level since May 2020. It was the fourth straight monthly decline in the index, which leads sales by a month or two.

Pending home sales declined in the South, Midwest and West, but rose in the Northeast. Economists polled by Reuters had forecast contracts rebounding 1.0%. Pending home sales decreased 5.4% in February on a year-on-year basis.

“A lack of supply that is showing few signs of easing is boosting prices and impacting affordability,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “Further increases in mortgage rates as the Fed hikes and starts balance sheet reduction will be an additional constraint for sales going forward.”

Sales of previously owned homes tumbled in February, but remained above their pre-pandemic level. The inventory of used houses is at record lows. Shortages and expensive building materials have made it harder for builders to ramp up construction, leading to double-digit growth in houses prices.

Mortgage rates surged in February and have continued to push higher after the Federal Reserve last week raised its policy interest rate by 25 basis points, the first hike in more than three years. They are likely to continue accelerating as Fed Chair Jerome Powell on Monday said the U.S. central bank must move “expeditiously” to raise rates and possibly “more aggressively” to keep high inflation from becoming entrenched.

The 30-year fixed rate averaged 4.42% this week, the highest since January 2019, from 4.16% in the prior week, data from mortgage finance agency Freddie Mac showed on Thursday.

According to the NAR, higher mortgage rates and sustained house price inflation had resulted in a 28% year-over-year jump in mortgage payments as of February.

U.S. stocks were mostly higher. The dollar slipped against a basket of currencies. U.S. Treasury prices fell.

GASOLINE PRICES STABILIZING

Other data on Friday confirmed that consumer sentiment wobbled in March as gasoline prices surged to a record high in the wake of Russia’s war against Ukraine, lifting one-year inflation expectations to the highest level since 1981.

The University of Michigan’s final consumer sentiment index dropped to 59.4 in March, the lowest reading since August 2011. It was slightly revised down from the preliminary reading of 59.7 earlier in the month. The index was at 62.8 in February and it has now declined for three straight months.

Some economists viewed the modest revision from early this month as a sign that the worst was over and than ebb in sentiment could be coming to an end.

The survey places more emphasis on gasoline prices and the stock market. The Conference Board’s consumer confidence index, which puts more weight on the labor market, remains well above its COVID-19 pandemic lows.

Gasoline prices appear to be stabilizing after setting a record high of $4.331 per gallon on March 11. Prices averaged $4.243 per gallon on Friday, according to AAA.

Economists maintained that the continued slump in the University of Michigan’s sentiment index was overdone relative to fundamentals and they expected the economy to continue growing. First-time applications for unemployment benefits are at a 52-1/2-year low and wages are rising at a strong clip.

There were 11.3 million job openings at the end of January. Consumers have accumulated more than $2 trillion in excess savings, which should help to cushion the blow from high inflation. The share of consumers planning to buy motor vehicles increased compared to February, while intentions to purchase major household items rose modestly. Home buying plans fell.

“The continuing weakness in confidence does not warrant any immediate change to our near-term forecast for consumer spending as the relationship between spending and sentiment is loose,” said Scott Hoyt, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

Consumers’ inflation expectations were unchanged from earlier this month. The survey’s one-year inflation expectations jumped to 5.4%, the highest since November 1981, from 4.9% in February. Its five-year inflation expectations held steady at 3.0% for a second straight month.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

– U.S. tech giant Apple has suspended its Apple Pay service for Russia’s Mir card payment system, Russia’s largest lender and payments system said on Friday, closing a loophole that had allowed Russians to keep using the service.

Apple Inc restricted the use of Apple Pay, which began operating in Russia in 2016, on March 1 in the wake of Russia’s decision to send tens of thousands of troops into Ukraine on Feb. 24, preventing Russian Mastercard and Visa cardholders using the service.

But Russia’s home-grown system, Mir, remained connected to Apple Pay until that access was removed on Thursday, according to Russia’s National Card Payment System (NSPK).

“Apple has informed NSPK it is suspending support for Mir cards in the Apple Pay payment service. Starting from March 24, users cannot add new Mir cards to the service. Apple will stop all operations of previously added cards over the next few days,” NSPK said on Friday.

Russia’s dominant lender, Sberbank, said that Apple, which did not respond to Reuters requests for comment, had informed the bank of its decision to further restrict access to its Apple Pay service.

“Further use of Mir cards in Apple Pay will not be available,” the bank said.

(Reporting by Reuters; Editing by Kevin Liffey and Jonathan Oatis)

By Brijesh Patel

– Gold was on course to gain for the week as concerns over the war in Ukraine and rising prices boosted its appeal as a safe-haven and an inflation hedge, but prices eased on Friday as U.S. Treasury yields reached new highs.

Spot gold XAU= fell 0.1% to $1,956.19 per ounce by 12:44 p.m. ET (1644 GMT).

U.S. gold futures GCv1 fell 0.3% to $1,955.70.

Helped by expectations of monetary tightening by the U.S. Federal Reserve, yields on the U.S. 10-year Treasury note US10YT=RR firmed near multi-year highs, increasing the opportunity cost of holding zero-yield bullion. US/

“If interest rates do continue to rise at a quick pace that could limit the upside in precious metals,” said Chris Gaffney, president of world markets at TIAA Bank. .N MKTS/GLOB

“However, overall tone of the market is still supportive of precious metals. There is safe-haven buying and also as an inflation hedge on the retail side. We’re seeing clients coming in wanting to add the diversification of gold to their portfolios,” Gaffney said. GOL/ETF

The Fed raised borrowing costs for the first time in three years last week, and traders are pricing in a probability of a 50 basis points rate hike during the Fed policy meeting in May. FEDWATCH

Gold, seen as a safe investment during times of political and financial uncertainty, has risen about 1.8% this week as investors try to shield against the impact of the war in Ukraine and higher oil prices that threaten global growth.

“Don’t be surprised to see some safe-haven and bargain buying surface,” said Jim Wyckoff, senior analyst at Kitco Metals in a note.

Spot silver XAG= fell 0.3% to $25.44 per ounce, but was on track for a weekly rise of about 2%.

Platinum XPT= dipped 1.7% to $1,002.80 per ounce, and palladium XPD= was down 5.7% at $2,380.20, both set for their third weekly dip.

(Reporting by Brijesh Patel in Bengaluru; Editing by Vinay Dwivedi)

By Jamie Freed

-As the clock runs down to Monday’s sanctions deadline for Russian airlines to hand back more than 400 leased planes worth almost $10 billion, foreign lessors are fast losing hope that they will get their aircraft back.

Most of the planes are still flying Russian domestic routes, IBA consultancy says, although Bermuda and Ireland – where most are registered – have suspended airworthiness certificates which usually means they should be grounded.

Aviation was an early business casualty of Moscow’s invasion of Ukraine, as the West and Russia imposed tit-for-tat airspace bans. Now, lessors face big writedowns or a long insurance battle as the March 28 deadline looms for terminating plane leases under European Union sanctions.

“I’m afraid that we are going to witness the largest sort of theft of aircraft in the history of commercial civil aviation,” said Volodymyr Bilotkach, an associate professor of air transport management at Singapore Institute of Technology.

Dual registration is not allowed under international rules, but Russia has already moved more than half of the foreign-owned aircraft to its own registry after passing a law permitting this, Russia’s government said on Wednesday.

The government also said 78 planes leased to Russian carriers had been seized while abroad and would not fly back to Russia, Interfax news agency said on Tuesday.

Major aircraft lessor Avolon has terminated all its Russian airline leases and repossessed four of the 14 owned aircraft on lease with Russian airlines outside the country, a source familiar with the matter said on Friday.

It wasn’t clear if the four planes were part of the 78 reported by Moscow.

Although the planes are insured, the unprecedented nature and scale of the potential losses will likely mean years of litigation between lessors and insurers before any decisions on payouts are taken, analysts say.

And even if the planes are repossessed, the recoverable value would be in question because the aircraft must have accurate maintenance records to ensure they have been fitted with genuine, traceable components – another area targeted by Western sanctions on Russia.

Although the total value of the planes is huge, the impact on individual leasing firms may still be manageable even if writedowns are required as aircraft leased to Russian airlines account for less than 10% of most leasing firm portfolios.

“It’s not going to cripple these businesses,” said Brad Dailey, a director at Alton Aviation Consultancy who previously worked at Ireland-based leasing giant AerCap Holdings.

“What it does do in my view is it changes the future market potential of Russia,” he said.

COVERING LOSSES

Some private airlines have indicated their willingness to hand back planes to the lessors, although it is unclear whether the Russian government will approve the transactions.

Russia’s UTair Airlines said on March 14 it would withdraw from service all nine of its leased Boeing 737 NGs, citing owner requirements, a move that could preserve longer-term relations after sanctions end.

Those planes have not flown since that announcement but remain in Russia, data from flight tracking website FlightRadar24 show.

In some cases, lessors have security deposits that could be forfeit and could help cover a portion of any losses – but still only a fraction of a plane’s value.

For example, a security deposit on narrowbody plane worth $20 million could be about $450,000, the equivalent of three months rent, Alton’s Dailey said.

Ratings agency KBRA said security deposits generally range from one to four months of rent, depending on the credit assessment of the airline leasing the plane.

Russian national carrier Aeroflot had been viewed as the best credit risk before the invasion, industry sources said, although that assessment no longer applies after Moscow’s move to register its planes in Russia.

A person at a Chinese lessor with exposure to Aeroflot said no security deposits had been taken from the airline and said insurance payouts appeared to be the only route to cover losses.

The lessor plans to begin insurance claims after the March 28 deadline has passed, said the person, who was not authorised to speak publicly about the matter.

A source at another Chinese lessor with exposure to Aeroflot said that, instead of taking a security deposit, it held U.S. dollar letters of credit from Russian banks – but the source said they had no effective value now because of Russian currency controls imposed in response to financial sanctions.

At lower-tier airlines, lessors are more likely to have stronger security deposits in place, Dailey said.

(Reporting by Jamie Freed in Sydney; Additional reporting by Engen Tham in Shanghai and Padraic Halpin in Dublin; Editing by Edmund Blair and Jan Harvey)

By Danielle Kaye and Doyinsola Oladipo

NEW YORK – Amazon.com Inc workers at the company’s JFK8 Staten Island warehouse started casting ballots on Friday on whether to form a union as labor organizers look to New York for the first-ever union victory in the retail giant’s 28-year history.

As the second-largest U.S. private employer, Amazon has long been a focus for labor advocates who hope that a single union victory will spark organizing efforts across the country.

Geebah Sando, a package sorter who has worked at JFK8 for more than two years, said he is voting in favor of the union.

He hopes a unionized workplace would mean higher wages and more benefits, including longer breaks and more paid time off.

The push to organize is spearheaded by a group of workers known as the Amazon Labor Union (ALU). In-person voting at JFK8 will last until March 30, with votes set to be counted on March 31.

“We look forward to having our employees’ voices heard. Our focus remains on working directly with our team to continue making Amazon a great place to work,” said Amazon spokesperson Kelly Nantel.

Keisha Renaud, 50, an associate from East Orange, New Jersey, said she would leave the facility if it unionizes.

“The energy they are taking to start a union, why didn’t they take that energy to start a team to talk to the managers. I think Amazon would listen,” she said, wearing a pink shirt that says “Vote No.”

Distrust of unions is common among workers, fanned by Amazon itself, which has warned in meetings staff were obliged to attend that labor groups could mandate strikes or shrink pay, something organizers have disputed.

‘NO EXPERIENCE’

Some workers said they are open to a unionized workplace but have concerns about ALU’s ability to advocate on their behalf.

“The union has no experience at all,” said Claudia Rodriguez, 58, who has worked at JFK8 for four years. Rodriguez, while walking up to the voting tent, said she was still on the fence about whether to back the union.

There was a long line to cast a vote, but Chris Smalls, president of ALU and a former employee at the Staten Island warehouse, said he was encouraged by the turnout.

“Whichever way they vote, I’m happy to see it happen,” Smalls said.

Workers at the company’s other warehouse in Staten Island, LDJ5, will also vote in person on whether to unionize starting on April 25, according to a National Labor Relations Board election notice.

A rerun of last year’s failed union organizing campaign at Amazon’s warehouse in Bessemer, Alabama, is also scheduled to conclude on Friday. Votes will be counted starting on Monday for this second closely watched election.

The NLRB found that Amazon improperly interfered in the original contest, when the company won by a two-to-one margin.

The American labor movement has gained momentum over the past year, motivated by the high-profile Alabama campaign, ongoing pandemic concerns and strikes.

(Reporting by Danielle Kaye and Doyinsola Oladipo in New York; Editing by Anna Driver, Nick Zieminski and Matthew Lewis)

By Sumeet Chatterjee and Lawrence White

HONG KONG/LONDON – HSBC is shunning prospective Russian clients and declining credit to some existing ones, two sources with knowledge of the matter told Reuters, as the bank seeks to shield itself from Western sanctions against Moscow.

The measures affect HSBC’s individual and business customers globally and go further than the bank’s previously stated intentions to wind down its relations with lenders such as VTB, which were placed under Western restrictions after Russia invaded Ukraine on Feb. 24.

The moves by Europe’s second biggest bank show how sanctions aimed at Russia’s financial system and its political and business elite are also ensnaring Russian nationals outside the country as lenders seek to avoid falling foul of the restrictions and potentially hefty fines.

HSBC had said on March 14 it is “not accepting any new business in Russia,” without spelling out what that means for existing or prospective Russian customers in other markets.

The sources said the bank’s risk and compliance staff have told business managers to apply extra scrutiny to all prospective clients bearing Russian passports or furnishing Russian addresses, with the result that many more are turned away than would have been in the past.

The checks also extend to dual passport-holders as well as those with links to Belarus, seen as an ally of Moscow, as the bank’s staff scramble to ensure they do not inadvertently offer services to sanctioned individuals or businesses.

HSBC declined to comment.

Customers with business ties to Russia and receiving income in roubles, such as those deriving income from Russian employment, pensions, or investments, are also being impacted as those rouble cashflows are discounted to zero for credit purposes, one of the sources, who works at HSBC, told Reuters.

Business customers with Russian links, even those with no ties to sanctioned entities or individuals, face increased scrutiny on large deposits or withdrawals and are seeing new loan applications declined, the two sources said.

The invasion has triggered an exodus of foreign companies from Russia as Western authorities deploy sanctions at an unprecedented scale and pace to squeeze Moscow and prevent the global financial system from being a conduit for Russian money.

Reuters reported earlier this month that European Union regulators had told some banks to tighten control of all Russian and Belarusian clients, including EU residents, to ensure they are not used to circumvent sanctions.

Russia characterises its actions in Ukraine as a “special operation” to demilitarise and “denazify” the country.

BUSINESS FREEZE

Leading European banks such as Italy’s UniCredit and France’s Societe Generale said they could face a multi-billion dollar write-off of their businesses in Russia, but banks also face a wider chill on business as they grapple with sanctions.

HSBC does not operate a retail bank inside Russia but as of Feb. 22 it had around 200 staff there serving multinational corporations, its Chief Financial Officer Ewen Stevenson told Reuters at the time. The bank said on March 14 its business there “will continue to reduce.”

The latest HSBC measures go beyond the usual background checks, and show how banks’ policies are still evolving since the invasion as they try to implement multiple waves of sanctions without discriminating against legitimate customers.

They also show the tension between banks’ sanctions and compliance teams, who urge the strictest possible interpretation of new rules to satisfy regulators, and frontline staff tasked with growing the business and serving clients.

HSBC is under particular pressure to show regulators that it can identify illegal transactions. It had to tighten up its money laundering controls globally after a string of past scandals and, in 2012, agreed to pay $1.9 billion to U.S. authorities for allowing itself to be used to launder drug money flowing out of Mexico.

HSBC is reviewing all existing private and retail banking customers with Russian connections globally to see if they have ties to sanctioned entities or individuals, the sources said.

(Additional reporting by Vidya Ranganathan in Singapore. Editing by Jane Merriman and Carmel Crimmins)

WASHINGTON – China is likely to offer some support to Russia’s economy amid Moscow’s invasion of Ukraine, but will engage in a “dance” to maintain economic ties with Europe and the United States, a senior White House official said on Friday.

The United States has warned of significant consequences if Beijing offers material support to Russia for its war in Ukraine, or provides an economic lifeline to Moscow in the face of large-scale Western sanctions.

Mira Rapp-Hooper, director for the Indo-Pacific at the White House National Security Council, told an online panel discussion that driving a wedge between Russia and China would be easier said than done, but that Beijing would remain uncomfortable with Russian President Vladimir Putin’s war.

“We’re unlikely, I think, to see a fully and publicly unified Moscow and Beijing in which China is totally comfortable being saddled with the burden of Vladimir Putin’s brutal and ill-begotten war,” Rapp-Hooper said.

“That is to say that we are likely to continue to see some amount of Chinese support for the Russian economy, but a dance that Beijing tries to do to keep up its economic ties to the European Union in particular, but also to the United States,” she said.

In February, China and Russia declared a “no limits” partnership, with a promise to collaborate more against the West.

But Western governments are shutting off Russia’s economy from the global financial system, pushing international companies to halt sales, cut ties and dump tens of billions of dollars’ worth of investments.

China has repeatedly voiced opposition to the sanctions, calling them ineffective and insisting it will maintain normal economic and trade exchanges with Russia.

U.S. President Joe Biden, who spoke with China’s leader Xi Jinping last week, said on Thursday that China understands its economic future is more closely tied to the West than to Russia

Moscow calls its actions in Ukraine a “special military operation” to demilitarise and “denazify” Ukraine. Ukraine and the West say Putin launched an unprovoked war of aggression.

(Reporting by Michael Martina and David Brunnstrom; editing by Jonathan Oatis)

By Pete Schroeder

WASHINGTON – A group of U.S. Senate Democrats is pressing large U.S. banks to scrap or significantly reduce overdraft and other fees they charge customers with insufficient funds.

In a letter sent to seven large firms Thursday, the group of five lawmakers — including Senate Banking Chairman Sherrod Brown — called for a “fairer and more transparent” fee structure.

Democratic lawmakers and regulators are placing heightened scrutiny on bank fees. The group cited recent research from the Consumer Financial Protection Bureau, which found nearly 80% of such fees are charged to only 9% of accounts. The CFPB is currently soliciting public feedback on ways to potentially curtail overdraft and other “junk fees,” and a House Financial Services subcommittee will hold a hearing Thursday on the fees.

Under political and regulatory pressure, several large banks, including some that received letters, have taken steps to curtail such fees.

In February, Citigroup announced it would eliminate overdraft fees by this summer. JPMorgan Chase, Wells Fargo & Co and US Bancorp have moved to give customers extra time to bring their account balances above zero. Bank of America said it would reduce overdraft fees to $10 from $35 beginning in May and eliminate its “nonsufficient fund” fees.

JPMorgan had already taken other steps requested in the letter, such as eliminating nonsufficient fund fees, according to a spokeswoman.

But banking groups are resisting government efforts to eliminate overdraft fees, arguing they serve a useful purpose.

“A majority of consumers who use the product do so knowingly and count on it when unexpected expenses arise. As a result, contrary to what is stated in the letter, the Consumer Bankers Association believes taking action that would dramatically restrict overdraft could force many families out of the well-regulated, well-supervised banking and toward predatory payday lenders,” said CBA spokesperson Lauren Bair Bianchi.

Copies of the letter were sent to chief executives at JPMorgan, Wells Fargo, Truist Financial Corp, PNC Financial Services Group, US Bancorp and Charles Schwab Corp.

Spokespeople for the other banks either declined to comment or did not respond to a request for comment.

(Reporting by Pete Schroeder; Editing by David Gregorio)