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The ECB: So Much Flexibility and So Little to Do

The ECB meeting is the most important calendar event in the week ahead.  It is true that the US reports February CPI figures, but the base effect surge begins with the March reading.  Still, headline inflation will likely be lifted by rising food and…

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The ECB meeting is the most important calendar event in the week ahead.  It is true that the US reports February CPI figures, but the base effect surge begins with the March reading.  Still, headline inflation will likely be lifted by rising food and energy prices.  The core rate has been flat for the past two months, and a small rise should not be surprising.  

Last March, headline CPI fell by 0.3%.  In April, it tumbled 0.7% and another 0.1% in May.  These will drop out of the year-over-year rate and most likely be replaced with positive numbers, probably around 0.2% or 0.3%.  This will make the year-over-year rate appear to surge. 

This is not the kind of inflation that is of much concern to policymakers or businesses.  The February PMI and manufacturing surveys are signaling rising prices.   Fed officials seem to recognize this, but on the whole, the price pressures are not unexpected, undesirable, or dangerous.  They are partly a reflection of the economy re-opening, some bottlenecks, and low inventories.  Officials have argued that they do not expect these price pressures to be very strong or persistent. Businesses can be expected to respond relatively quickly to supply issues and low inventories.  This type of price pressure is seen as short-lived. 

The pressures coming from the demand side are also not expected to be sustained.  Fiscal stimulus will run its course.  The stimulus checks will have been absorbed in household finances, and in late Q3, some income support measures, like the extension of emergency jobless benefits, will end.  More broadly, the herd immunity, achieved through the virus and vaccine, will likely mean that fiscal stimulus will be dramatically reduced. The next debate after the infrastructure initiative may be about the "fiscal cliffs."   We had argued in favor of linking some stimulus efforts to economic conditions, like maintaining emergency jobless benefits until the unemployment rate is below a certain threshold to minimize the disruption. Still, it did not make it into the legislation.  

There does seem to be a rising chorus of people, for whom the highly-respected journalist John Authers may have channeled for when he wrote recently wrote about the "epochal shifts [in inflation] can be difficult to spot in real-time, but the signs are there."  While journalists and some market participants may see this shift as clear as the nose on my face, central bankers mostly disagree. The BOE's Haldane may be a lone exception, warning that central banks may be complacent about inflation.  

Fed officials are not buying it is primarily due to the slack in the labor market.  Nearly a year after the pandemic first stuck, the number of people filing for jobless claims for the first time is above what had been the record peak during the Great Financial Crisis. The March jobs report was nearly twice as strong as expected, and the vast majority of the 465k private sector jobs were in leisure and hospitality. It leaves the US with about 9.5 mln jobs less than a year ago.  The number of long-term unemployed rose by 125k last month to 4.1mln, an increase of 3 mln over last February.  And let's not forget that on the eve of the pandemic, when unemployment, including minority unemployment and underemployment, was at its lowest in a generation, inflation was still undershooting the Fed's self-selected target.  It was not just in the US either.  Inflation was typically undershooting at the peak of the last cycle.  

There seems to be a tendency for market observers to prematurely claim structural factors for what ultimately is a cyclical phenomenon.  That tendency also seems to encourage the removal of stimulus early after the Great Financial Crisis, which is recognized now by both the US Treasury Secretary and Federal Reserve Chairman as a mistake.   Ironically, some who argued against longer and more stimulus after the GFC and plea mea culpa now,  like Summers, is worried that he might be right this time.  

Perhaps, there is also a disagreement about the direction it would be preferable to wrong.  One type of mistake is if it is a structural shift, a new regime after a 40-year decline, and policymakers do not recognize it as such. Inflation can be elevated for some time, undermining the domestic purchasing power of the dollar.  Central banks know how to fight inflation, and they would tighten financial conditions. On the other hand, what if the rise in price pressures is mainly due to economies opening back-up in an unsynchronized and uneven way and is part of the recovery from the unprecedented shutdown? If officials are led to believe it is a structural and epoch-making inflection point, they would once again take away the punchbowl too early. Given the stress still evident in the labor market, such an error could have grave social and political consequences, especially given the erosion of social trust.  

The eurozone lags behind the US on three important metrics. The US policy response has been far more aggressive. Partly, as a consequence, the recovery is weaker. While US economic growth appears to be surging, the eurozone is likely contracting. The vaccine rollout in the eurozone is proceeding at a slower rate than in the US. The rise in eurozone yields appears to be a knock-on effect of US developments. Though, when in word and deed, ECB plays down the significance of the increase in yields, it seems to egg on the market further and may have, in turn, weighed on US Treasuries.  

Fed officials, including Chairman Powell, take the rise in US yields in stride, even if the pace and volatility were a bit unsettling.  The rise in European yields, should they continue, may slow the recovery.  The ECB's staff is likely to trim its growth forecast and raise its inflation forecasts at the meeting on March 11.  In December, the forecast for this year's growth was cut to 3.9% from 5.0%.  The March forecast will likely be trimmed further below the median estimates in Bloomberg's survey for a 4.2% growth.  

The ECB forecasts CPI to rise by 1.0% in 2021.  This was unchanged from its September forecast.  It seems less reasonable now.  The preliminary estimate for February put the year-over-year pace at 0.9%.  While the US base effect will be pronounced in the March-May period, the eurozone's happens in July and August.   Since the end of October, the price of Brent has risen almost 90%, and there appears more to come.  Energy accounts for more than 50% of the ECB's harmonized CPI measure.  

The exchange rate is another important component of the eurozone's measured inflation.  ECB officials are inclined to talk about it when the euro is appreciating.  The euro has fallen by almost 2% so far this year against the dollar and by nearly 3% against the currency of its biggest trading partner, China.  With the euro around $1.20, it is about 16.6% undervalued according to the OECD's model of Purchasing Power Parity.  

ECB promised a more robust discussion of financial conditions and how they are measured. The central bank's chief economist has cited the exchange rate, equities, and the slope of the overnight index swaps and the 10-year yield curve.  Europe's equity benchmarks are less heavily weighted toward tech and have a greater weight of the energy.  However, the performance of Europe's Dow Jones Stoxx 600 and the S&P 500 is now so different (2.4% vs. 2.3%, respectively). Europe's sovereign curve has steepened by roughly 20-30 bp year-to-date.  The US 2-10 curve has steepened by closer to 65 bp.    

The real question is, what is the ECB prepared to do about it.  The first thing that seems to occur to observers is to increase the amount of bonds being purchased.  The most obvious answer may not be the right one. However, it is true that unlike the Fed, which seems unwaveringly committed to buying $120 bln of long-term assets a month, the ECB has a fund ("envelope") that is really more of an agreed-upon but sell-imposed buying cap (1.85 trillion euros).  It has the ultimate flexibility and is not limited to the capital key (weighted by GDP and population).  

The ECB does not want to defend a pre-determined bond yield.  There is no yield-curve control policy implicit or explicit.  Even if the ECB wanted, it is not clear that it can dictate the price of long-term capital for long.  A global market is developed even if with varying levels of volatility. The general direction appears global in nature. The Fed is buying $80 a month of US Treasuries, and still, the yield has doubled since early November.  

ECB President Lagarde will emphasize the flexibility in all of its tools and dimensions.  It could step up its bond purchases, but it might not be evident in the price action. The only way the market will know is in hindsight after the ECB issues its report.  Some suggest the ECB will extend its PEPP beyond March 2022, but the time for such a decision is not now.  The ECB could announce it will extend the favorable terms of the Targeted Long-Term Refinancing Operation--in effect, three-year loans at 50 bp below the deposit rate (currently at minus 50 bp) if certain loan targets are achieved.  Extending them another year, through June 2022, provides cheap credit and blunts the impact of the negative deposit rate.

There is some speculation that the ECB may cut the deposit rate, and some officials have suggested this is possible. With the certitude of the zero-bound being pulled from under our feet, it is not clear how deep into negative territory interest rates can fall.  Many suspect it could be around minus 100 bp. That gives the ECB some scope to cut the deposit rate.  However, the missing element here is will.  There does not seem to be much confidence that lowering the negative deposit rate would greatly impact the long-end of the curve.  

Officials are likely to conclude that there is little new to do now.  The market is adjusting to the greater confidence of an earlier and stronger US recovery and the anticipation that Europe will not be that far behind.  The bond market did not wait for the eurozone recovery to take hold, but neither did oil or commodities more generally. That is not the way things work.  

The EC has given strong hints that it is prepared to extend the fiscal waiver for 2022.  Several eurozone countries either announced an increase in spending this year or are drafting programs now.  The EU Recovery Fund is expected to begin making disbursements toward midyear.   Fiscal policy is expansionary, and it is not clear that the US is a fair metric.  

Monetary policy is still ultra-accommodative by nearly any metric, and European yields should not be exaggerated.  Italy can borrow 10-year for less than 75 bp, half of what it was on the eve of the pandemic, for example.  Germany is still paid to borrow for 10-years (~-0.35%).  Portugal's 10-year bond yield trades inside Spain's. 

Look for good old-fashion jawboning and some strategic ambiguity from the ECB, while fiscal policy and the vaccine do some heavy lifting now.  An extension of the favorable terms for the TLTRO coupled with dovish rhetoric would appear to be negative for the euro.  Lagarde may very well echo Powell's sentiments to wit the ECB is focused on financial conditions broadly, not on specific bond yields.  The only problem with that is the sell-off in US bonds sparked by Powell's apparent lack of much concern about the level of rates even if the pace was jarring.  



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Red Candle In The Wind

Red Candle In The Wind

By Benjamin PIcton of Rabobank

February non-farm payrolls superficially exceeded market expectations on Friday by…

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4 hours ago

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March 11, 2024

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Red Candle In The Wind

By Benjamin PIcton of Rabobank

February non-farm payrolls superficially exceeded market expectations on Friday by printing at 275,000 against a consensus call of 200,000. We say superficially, because the downward revisions to prior months totalled 167,000 for December and January, taking the total change in employed persons well below the implied forecast, and helping the unemployment rate to pop two-ticks to 3.9%. The U6 underemployment rate also rose from 7.2% to 7.3%, while average hourly earnings growth fell to 0.2% m-o-m and average weekly hours worked languished at 34.3, equalling pre-pandemic lows.

Undeterred by the devil in the detail, the algos sprang into action once exchanges opened. Market darling NVIDIA hit a new intraday high of $974 before (presumably) the humans took over and sold the stock down more than 10% to close at $875.28. If our suspicions are correct that it was the AIs buying before the humans started selling (no doubt triggering trailing stops on the way down), the irony is not lost on us.

The 1-day chart for NVIDIA now makes for interesting viewing, because the red candle posted on Friday presents quite a strong bearish engulfing signal. Volume traded on the day was almost double the 15-day simple moving average, and similar price action is observable on the 1-day charts for both Intel and AMD. Regular readers will be aware that we have expressed incredulity in the past about the durability the AI thematic melt-up, so it will be interesting to see whether Friday’s sell off is just a profit-taking blip, or a genuine trend reversal.

AI equities aside, this week ought to be important for markets because the BTFP program expires today. That means that the Fed will no longer be loaning cash to the banking system in exchange for collateral pledged at-par. The KBW Regional Banking index has so far taken this in its stride and is trading 30% above the lows established during the mini banking crisis of this time last year, but the Fed’s liquidity facility was effectively an exercise in can-kicking that makes regional banks a sector of the market worth paying attention to in the weeks ahead. Even here in Sydney, regulators are warning of external risks posed to the banking sector from scheduled refinancing of commercial real estate loans following sharp falls in valuations.

Markets are sending signals in other sectors, too. Gold closed at a new record-high of $2178/oz on Friday after trading above $2200/oz briefly. Gold has been going ballistic since the Friday before last, posting gains even on days where 2-year Treasury yields have risen. Gold bugs are buying as real yields fall from the October highs and inflation breakevens creep higher. This is particularly interesting as gold ETFs have been recording net outflows; suggesting that price gains aren’t being driven by a retail pile-in. Are gold buyers now betting on a stagflationary outcome where the Fed cuts without inflation being anchored at the 2% target? The price action around the US CPI release tomorrow ought to be illuminating.

Leaving the day-to-day movements to one side, we are also seeing further signs of structural change at the macro level. The UK budget last week included a provision for the creation of a British ISA. That is, an Individual Savings Account that provides tax breaks to savers who invest their money in the stock of British companies. This follows moves last year to encourage pension funds to head up the risk curve by allocating 5% of their capital to unlisted investments.

As a Hail Mary option for a government cruising toward an electoral drubbing it’s a curious choice, but it’s worth highlighting as cash-strapped governments increasingly see private savings pools as a funding solution for their spending priorities.

Of course, the UK is not alone in making creeping moves towards financial repression. In contrast to announcements today of increased trade liberalisation, Australian Treasurer Jim Chalmers has in the recent past flagged his interest in tapping private pension savings to fund state spending priorities, including defence, public housing and renewable energy projects. Both the UK and Australia appear intent on finding ways to open up the lungs of their economies, but government wants more say in directing private capital flows for state goals.

So, how far is the blurring of the lines between free markets and state planning likely to go? Given the immense and varied budgetary (and security) pressures that governments are facing, could we see a re-up of WWII-era Victory bonds, where private investors are encouraged to do their patriotic duty by directly financing government at negative real rates?

That would really light a fire under the gold market.

Tyler Durden Mon, 03/11/2024 - 19:00

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Trump “Clearly Hasn’t Learned From His COVID-Era Mistakes”, RFK Jr. Says

Trump "Clearly Hasn’t Learned From His COVID-Era Mistakes", RFK Jr. Says

Authored by Jeff Louderback via The Epoch Times (emphasis ours),

President…

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March 11, 2024

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Trump "Clearly Hasn't Learned From His COVID-Era Mistakes", RFK Jr. Says

Authored by Jeff Louderback via The Epoch Times (emphasis ours),

President Joe Biden claimed that COVID vaccines are now helping cancer patients during his State of the Union address on March 7, but it was a response on Truth Social from former President Donald Trump that drew the ire of independent presidential candidate Robert F. Kennedy Jr.

Robert F. Kennedy Jr. holds a voter rally in Grand Rapids, Mich., on Feb. 10, 2024. (Mitch Ranger for The Epoch Times)

During the address, President Biden said: “The pandemic no longer controls our lives. The vaccines that saved us from COVID are now being used to help beat cancer, turning setback into comeback. That’s what America does.”

President Trump wrote: “The Pandemic no longer controls our lives. The VACCINES that saved us from COVID are now being used to help beat cancer—turning setback into comeback. YOU’RE WELCOME JOE. NINE-MONTH APPROVAL TIME VS. 12 YEARS THAT IT WOULD HAVE TAKEN YOU.”

An outspoken critic of President Trump’s COVID response, and the Operation Warp Speed program that escalated the availability of COVID vaccines, Mr. Kennedy said on X, formerly known as Twitter, that “Donald Trump clearly hasn’t learned from his COVID-era mistakes.”

“He fails to recognize how ineffective his warp speed vaccine is as the ninth shot is being recommended to seniors. Even more troubling is the documented harm being caused by the shot to so many innocent children and adults who are suffering myocarditis, pericarditis, and brain inflammation,” Mr. Kennedy remarked.

“This has been confirmed by a CDC-funded study of 99 million people. Instead of bragging about its speedy approval, we should be honestly and transparently debating the abundant evidence that this vaccine may have caused more harm than good.

“I look forward to debating both Trump and Biden on Sept. 16 in San Marcos, Texas.”

Mr. Kennedy announced in April 2023 that he would challenge President Biden for the 2024 Democratic Party presidential nomination before declaring his run as an independent last October, claiming that the Democrat National Committee was “rigging the primary.”

Since the early stages of his campaign, Mr. Kennedy has generated more support than pundits expected from conservatives, moderates, and independents resulting in speculation that he could take votes away from President Trump.

Many Republicans continue to seek a reckoning over the government-imposed pandemic lockdowns and vaccine mandates.

President Trump’s defense of Operation Warp Speed, the program he rolled out in May 2020 to spur the development and distribution of COVID-19 vaccines amid the pandemic, remains a sticking point for some of his supporters.

Vice President Mike Pence (L) and President Donald Trump deliver an update on Operation Warp Speed in the Rose Garden of the White House in Washington on Nov. 13, 2020. (Mandel Ngan/AFP via Getty Images)

Operation Warp Speed featured a partnership between the government, the military, and the private sector, with the government paying for millions of vaccine doses to be produced.

President Trump released a statement in March 2021 saying: “I hope everyone remembers when they’re getting the COVID-19 Vaccine, that if I wasn’t President, you wouldn’t be getting that beautiful ‘shot’ for 5 years, at best, and probably wouldn’t be getting it at all. I hope everyone remembers!”

President Trump said about the COVID-19 vaccine in an interview on Fox News in March 2021: “It works incredibly well. Ninety-five percent, maybe even more than that. I would recommend it, and I would recommend it to a lot of people that don’t want to get it and a lot of those people voted for me, frankly.

“But again, we have our freedoms and we have to live by that and I agree with that also. But it’s a great vaccine, it’s a safe vaccine, and it’s something that works.”

On many occasions, President Trump has said that he is not in favor of vaccine mandates.

An environmental attorney, Mr. Kennedy founded Children’s Health Defense, a nonprofit that aims to end childhood health epidemics by promoting vaccine safeguards, among other initiatives.

Last year, Mr. Kennedy told podcaster Joe Rogan that ivermectin was suppressed by the FDA so that the COVID-19 vaccines could be granted emergency use authorization.

He has criticized Big Pharma, vaccine safety, and government mandates for years.

Since launching his presidential campaign, Mr. Kennedy has made his stances on the COVID-19 vaccines, and vaccines in general, a frequent talking point.

“I would argue that the science is very clear right now that they [vaccines] caused a lot more problems than they averted,” Mr. Kennedy said on Piers Morgan Uncensored last April.

“And if you look at the countries that did not vaccinate, they had the lowest death rates, they had the lowest COVID and infection rates.”

Additional data show a “direct correlation” between excess deaths and high vaccination rates in developed countries, he said.

President Trump and Mr. Kennedy have similar views on topics like protecting the U.S.-Mexico border and ending the Russia-Ukraine war.

COVID-19 is the topic where Mr. Kennedy and President Trump seem to differ the most.

Former President Donald Trump intended to “drain the swamp” when he took office in 2017, but he was “intimidated by bureaucrats” at federal agencies and did not accomplish that objective, Mr. Kennedy said on Feb. 5.

Speaking at a voter rally in Tucson, where he collected signatures to get on the Arizona ballot, the independent presidential candidate said President Trump was “earnest” when he vowed to “drain the swamp,” but it was “business as usual” during his term.

John Bolton, who President Trump appointed as a national security adviser, is “the template for a swamp creature,” Mr. Kennedy said.

Scott Gottlieb, who President Trump named to run the FDA, “was Pfizer’s business partner” and eventually returned to Pfizer, Mr. Kennedy said.

Mr. Kennedy said that President Trump had more lobbyists running federal agencies than any president in U.S. history.

“You can’t reform them when you’ve got the swamp creatures running them, and I’m not going to do that. I’m going to do something different,” Mr. Kennedy said.

During the COVID-19 pandemic, President Trump “did not ask the questions that he should have,” he believes.

President Trump “knew that lockdowns were wrong” and then “agreed to lockdowns,” Mr. Kennedy said.

He also “knew that hydroxychloroquine worked, he said it,” Mr. Kennedy explained, adding that he was eventually “rolled over” by Dr. Anthony Fauci and his advisers.

President Donald Trump greets the crowd before he leaves at the Operation Warp Speed Vaccine Summit in Washington on Dec. 8, 2020. (Tasos Katopodis/Getty Images)

MaryJo Perry, a longtime advocate for vaccine choice and a Trump supporter, thinks votes will be at a premium come Election Day, particularly because the independent and third-party field is becoming more competitive.

Ms. Perry, president of Mississippi Parents for Vaccine Rights, believes advocates for medical freedom could determine who is ultimately president.

She believes that Mr. Kennedy is “pulling votes from Trump” because of the former president’s stance on the vaccines.

“People care about medical freedom. It’s an important issue here in Mississippi, and across the country,” Ms. Perry told The Epoch Times.

“Trump should admit he was wrong about Operation Warp Speed and that COVID vaccines have been dangerous. That would make a difference among people he has offended.”

President Trump won’t lose enough votes to Mr. Kennedy about Operation Warp Speed and COVID vaccines to have a significant impact on the election, Ohio Republican strategist Wes Farno told The Epoch Times.

President Trump won in Ohio by eight percentage points in both 2016 and 2020. The Ohio Republican Party endorsed President Trump for the nomination in 2024.

“The positives of a Trump presidency far outweigh the negatives,” Mr. Farno said. “People are more concerned about their wallet and the economy.

“They are asking themselves if they were better off during President Trump’s term compared to since President Biden took office. The answer to that question is obvious because many Americans are struggling to afford groceries, gas, mortgages, and rent payments.

“America needs President Trump.”

Multiple national polls back Mr. Farno’s view.

As of March 6, the RealClearPolitics average of polls indicates that President Trump has 41.8 percent support in a five-way race that includes President Biden (38.4 percent), Mr. Kennedy (12.7 percent), independent Cornel West (2.6 percent), and Green Party nominee Jill Stein (1.7 percent).

A Pew Research Center study conducted among 10,133 U.S. adults from Feb. 7 to Feb. 11 showed that Democrats and Democrat-leaning independents (42 percent) are more likely than Republicans and GOP-leaning independents (15 percent) to say they have received an updated COVID vaccine.

The poll also reported that just 28 percent of adults say they have received the updated COVID inoculation.

The peer-reviewed multinational study of more than 99 million vaccinated people that Mr. Kennedy referenced in his X post on March 7 was published in the Vaccine journal on Feb. 12.

It aimed to evaluate the risk of 13 adverse events of special interest (AESI) following COVID-19 vaccination. The AESIs spanned three categories—neurological, hematologic (blood), and cardiovascular.

The study reviewed data collected from more than 99 million vaccinated people from eight nations—Argentina, Australia, Canada, Denmark, Finland, France, New Zealand, and Scotland—looking at risks up to 42 days after getting the shots.

Three vaccines—Pfizer and Moderna’s mRNA vaccines as well as AstraZeneca’s viral vector jab—were examined in the study.

Researchers found higher-than-expected cases that they deemed met the threshold to be potential safety signals for multiple AESIs, including for Guillain-Barre syndrome (GBS), cerebral venous sinus thrombosis (CVST), myocarditis, and pericarditis.

A safety signal refers to information that could suggest a potential risk or harm that may be associated with a medical product.

The study identified higher incidences of neurological, cardiovascular, and blood disorder complications than what the researchers expected.

President Trump’s role in Operation Warp Speed, and his continued praise of the COVID vaccine, remains a concern for some voters, including those who still support him.

Krista Cobb is a 40-year-old mother in western Ohio. She voted for President Trump in 2020 and said she would cast her vote for him this November, but she was stunned when she saw his response to President Biden about the COVID-19 vaccine during the State of the Union address.

“I love President Trump and support his policies, but at this point, he has to know they [advisers and health officials] lied about the shot,” Ms. Cobb told The Epoch Times.

“If he continues to promote it, especially after all of the hearings they’ve had about it in Congress, the side effects, and cover-ups on Capitol Hill, at what point does he become the same as the people who have lied?” Ms. Cobb added.

“I think he should distance himself from talk about Operation Warp Speed and even admit that he was wrong—that the vaccines have not had the impact he was told they would have. If he did that, people would respect him even more.”

Tyler Durden Mon, 03/11/2024 - 17:00

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There will soon be one million seats on this popular Amtrak route

“More people are taking the train than ever before,” says Amtrak’s Executive Vice President.

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9 hours ago

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March 11, 2024

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While the size of the United States makes it hard for it to compete with the inter-city train access available in places like Japan and many European countries, Amtrak trains are a very popular transportation option in certain pockets of the country — so much so that the country’s national railway company is expanding its Northeast Corridor by more than one million seats.

Related: This is what it's like to take a 19-hour train from New York to Chicago

Running from Boston all the way south to Washington, D.C., the route is one of the most popular as it passes through the most densely populated part of the country and serves as a commuter train for those who need to go between East Coast cities such as New York and Philadelphia for business.

Veronika Bondarenko captured this photo of New York’s Moynihan Train Hall. 

Veronika Bondarenko

Amtrak launches new routes, promises travelers ‘additional travel options’

Earlier this month, Amtrak announced that it was adding four additional Northeastern routes to its schedule — two more routes between New York’s Penn Station and Union Station in Washington, D.C. on the weekend, a new early-morning weekday route between New York and Philadelphia’s William H. Gray III 30th Street Station and a weekend route between Philadelphia and Boston’s South Station.

More Travel:

According to Amtrak, these additions will increase Northeast Corridor’s service by 20% on the weekdays and 10% on the weekends for a total of one million additional seats when counted by how many will ride the corridor over the year.

“More people are taking the train than ever before and we’re proud to offer our customers additional travel options when they ride with us on the Northeast Regional,” Amtrak Executive Vice President and Chief Commercial Officer Eliot Hamlisch said in a statement on the new routes. “The Northeast Regional gets you where you want to go comfortably, conveniently and sustainably as you breeze past traffic on I-95 for a more enjoyable travel experience.”

Here are some of the other Amtrak changes you can expect to see

Amtrak also said that, in the 2023 financial year, the Northeast Corridor had nearly 9.2 million riders — 8% more than it had pre-pandemic and a 29% increase from 2022. The higher demand, particularly during both off-peak hours and the time when many business travelers use to get to work, is pushing Amtrak to invest into this corridor in particular.

To reach more customers, Amtrak has also made several changes to both its routes and pricing system. In the fall of 2023, it introduced a type of new “Night Owl Fare” — if traveling during very late or very early hours, one can go between cities like New York and Philadelphia or Philadelphia and Washington. D.C. for $5 to $15.

As travel on the same routes during peak hours can reach as much as $300, this was a deliberate move to reach those who have the flexibility of time and might have otherwise preferred more affordable methods of transportation such as the bus. After seeing strong uptake, Amtrak added this type of fare to more Boston routes.

The largest distances, such as the ones between Boston and New York or New York and Washington, are available at the lowest rate for $20.

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