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☆ Morning Bid: Back to data watching, with US debt bill on track
▼ + stars: | 2023-05-31 | by ( ) www.reuters.com time to read: +2 min

Unfortunately, there's little respite on that front given disappointing economic activity and persistently elevated inflation data out of Asia. China's official PMIs indicated a faster-than-expected contraction in manufacturing activity and slower growth in services in May. That followed consistently weak economic releases for April, suggesting the post-COVID reopening bounce has run out of steam. China economyAsian stock markets fell and even U.S. equity futures turned negative despite the debt ceiling reprieve, while China's yuan promptly skidded to fresh six-month lows, giving the U.S. dollar a broad boost. But much of the focus will, of course, be on the House debate over the debt ceiling bill.

Persons: Sonali Desai, Philip Lowe's, Italy's, Ignazio Visco's, Catherine Mann, Muralikumar Organizations: Sonali, Reserve Bank of Australia, U.S, CPI, Central Bank's, Bank of Italy, Bank of England MPC, Nordstrom, Thomson Locations: Asia, China, Korean, Ukraine, France, Germany, Italy, U.S, Italian

☆ Australia's central bank warns of inflation risks, pain ahead for households
▼ + stars: | 2023-05-31 | by ( ) www.cnbc.com time to read: +1 min

The head of Australia's central bank on Wednesday pledged to do whatever is necessary to bring inflation back to target, warning that risks to inflation are on the upside and households should brace for the pain ahead. Appearing before lawmakers, Reserve Bank of Australia Governor Philip Lowe said inflation expectations were well anchored for now, but that cannot be taken for granted and entrenched inflation would lead to higher interest rates and unemployment. "Mid-2025 is pressing the length of time we can reasonably take, because if we take longer than that, people may reasonably say: 'Are you serious about the inflation target?' I want to reassure you we're serious," said Lowe. "The risk to inflation is to the upside and we need to be attentive to that."

Persons: Philip Lowe, Lowe Organizations: Reserve Bank of Australia

☆ ECB’s crisis tool works best if it’s never used
▼ + stars: | 2023-05-30 | by ( Rebecca Christie | ) www.reuters.com time to read: +8 min

BRUSSELS, May 30 (Reuters Breakingviews) - In the euro zone bond market, unlimited backstops are the cheapest. The European Central Bank has been trumpeting its ability to buy member states’ debt if it comes under attack from investors. The danger here is that too much divergence would lead the euro zone to fracture, creating a powder keg for crisis. The central bank has been deliberately quiet about exactly when and how it might activate the crisis tool, except to say it will be ready if necessary. They have noted that the euro zone central bank has a new instrument to combat any sharp increase in the differential between yields of euro zone government bonds.

Persons: Christine Lagarde, –, Lagarde, Fabio Panetta, hasn’t, there’s, Nils Redeker, Berlin’s Jacques Delors, Philip Lane, Francesco Guerrera, Oliver Taslic Organizations: Reuters, European Central Bank, ECB, Italy, Reuters Graphics Reuters, ECB won’t, Reuters Graphics, U.S . Federal, Silicon Valley Bank, Signature Bank, ”, European Union, Twitter, Thomson Locations: BRUSSELS, Frankfurt, Italy, Spain, Greece, Lithuania, Silicon, EU, Ukraine

☆ Morning Bid: Not so fast, debt ceiling bulls!
▼ + stars: | 2023-05-22 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Kevin BucklandYou didn't think it would be that easy, did you? Investors are on edge after equities and the dollar got knocked back Friday, when Republican negotiators unexpectedly walked out of debt ceiling talks. Discussions now seem to be back on track, with President Joe Biden due to meet House Republican Speaker Kevin McCarthy later today. Another potential boost comes from the PBOC's assessment that the fundamentals of China's economic stability and long-term improvement have not changed. Luis de Guindos and Philip Lane are among Lagarde's ECB colleagues on speaking duty today.

☆ Opinion: A cerebral rock star is dead
▼ + stars: | 2023-05-21 | by ( Opinion John Avlon | ) edition.cnn.com time to read: +5 min

He is the author of “Lincoln and the Fight for Peace.” The views expressed in this essay are his own. These celebrated writers were the subject of long-form profiles and occasional tabloid scandals, treated as cerebral rock stars and voices of their generation. They were a post-punk crew that migrated from the UK to the US, including Hitchens, Tina Brown and Salman Rushdie. In his final book, “Inside Story,” part memoir and part novel, Amis returned to his friendship with Hitchens in the 1970s, prior to their becoming famous. It chronicles a doomed affair, flashing forward at times to the decline of their friend Saul Bellows from dementia, as well as Hitchens’ death.

☆ Australia employment unexpectedly drops, reinforcing rate pause bets
▼ + stars: | 2023-05-18 | by ( Stella Qiu | ) www.reuters.com time to read: +3 min

SYDNEY, May 18 (Reuters) - Australia employment unexpectedly dipped in April after two months of outsized gains, and the jobless rate also ticked up in a sign the red-hot labour market might be cooling, bolstering the case for a pause in interest rate hikes next month. The jobless rate ticked up to a three-month high of 3.7% from a near 50-year low of 3.5%, when analysts had expected no change. Markets reinforced bets of a rate pause next month but were pricing in some risk of a move in August or September. "We expect to see a gradual softening in labour market conditions over 2023 as the impact of interest rate increases to date start to bite," said Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia. "NAB's view is that there will likely be at least one further rate increase, but we remain close to the peak of this interest rate cycle."

On top of the GOP gubernatorial primary in Kentucky, there are other contests taking place on Tuesday that could provide some clues about 2024 — even though it’s hard to draw too many lessons from individual races. Voters are also heading to the polls in Pennsylvania, which is hosting a crowded Democratic primary for Philadelphia mayor. Two races will also provide some insight into voter attitudes in two key counties in two crucial battlegrounds. In other Pence news, he will attend Iowa GOP Sen. Joni Ernst’s “Roast and Ride” event next month, per Fox News (former United Nations Ambassador Nikki Haley is also attending). Jumping in: Former state Rep. Leslie Love jumped into the Democratic Senate primary in Michigan on Monday.

☆ Australia's c.bank hiked in May due to inflation risks, more raises may be required
▼ + stars: | 2023-05-16 | by ( ) www.reuters.com time to read: +2 min

SYDNEY, May 16(Reuters) - Australia's central bank decided to hike at its May meeting due to inflation risks from weak productivity growth, persistently high services inflation and faster-than-forecast rental increases, saying more rate rises may be required. Minutes of the Reserve Bank of Australia's May 2 policy meeting released on Tuesday said board members also considered a pause, but that the inflation risks warranted a 25 basis point increase, after holding rates steady in April. "Members also agreed that further increases in interest rates may still be required, but that this would depend on how the economy and inflation evolve." Inflation is not expected to decline to the top of the Bank's 2-3% target range until mid-2025, leaving little room for upside risks, the May minutes said. Governor Philip Lowe has warned that the central bank cannot take too long to being inflation to heel.

☆ Morning Bid: US uncertainty feeds caution in Asia
▼ + stars: | 2023-05-09 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Asia markets correspondent Kevin Buckland. European investors hoping to find some clues on market direction from Asia may be disappointed today. Overall, the market mood was cautious ahead of the week's trading highlight, Wednesday's U.S. CPI report, which will put to the test the market's view that the Fed is done hiking. Reuters GraphicsAnd there are several other reasons that investor attention is squarely on the U.S., with the debt ceiling tussle deadlocked and banking sector troubles simmering. The Fed's quarterly Senior Loan Officer Opinion Survey ('SLOOS') also buoyed the mood, showing tighter lending conditions but no impending credit crunch.

☆ Morning Bid: Markets await US banks' take on credit squeeze
▼ + stars: | 2023-05-08 | by ( ) www.reuters.com time to read: +3 min

A look at the day ahead in European and global markets from Wayne Cole. In the meantime, everyone is waiting for the Federal Reserve's Senior Loan Officer Opinion Survey, or 'SLOOS', to see just how much lending has tightened given the strife in U.S. regional banks. The last survey out in January showed a combined 44.8% of respondents saw a tightening of standards for large and middle-market firms. It would also be consistent with levels reached before or during the last four recessions - 1990-91, 2001, 2007-09 and early 2020. This week also sees Chinese data on inflation and trade, while G7 finance ministers meet in Niigata, Japan, from Thursday through Saturday.

☆ POLL RBA to hike rates further this year, say economists in snap poll
▼ + stars: | 2023-05-04 | by ( Devayani Sathyan | ) www.reuters.com time to read: +3 min

On May 2, the RBA startled economists and financial markets with a hike. Our expectation is that the final rate hike occurs in August. Over 85% of respondents, 25 of 29, expected no hike from the central bank at its June 6 meeting, while four predicted a 25 basis point hike. Among major local banks, only ANZ forecast a 25 basis point hike in Q3 while Westpac and CBA predicted an extended pause. Median forecasts showed the cash rate remaining at 4.10% until year-end, 25 basis points higher than the peak expected in an April poll.

Unlike much of the past 15 years, euro strength is on the ECB's side as it meets on Thursday. Indeed, ECB President Christine Lagarde and chief economist Philip Lane littered speeches with warning shots about an excessive euro strength when the euro last snarled up to this extent in October 2020. Lagarde's predecessors Mario Draghi and Jean-Claude Trichet similarly weighed in with verbal intervention to cool periodic 10% surges in the trade-weighted euro over its history. Euro strength has built on belated ECB interest rate hikes since July - up some 350 basis points to 3.0% so far and expected to go up at least another 25 bps this week. So should euro strength be finally embraced by ECB as way of slaying the inflation beast?

☆ Sen. Sherrod Brown received an extra property tax credit and racked up penalties for late payments
▼ + stars: | 2023-05-03 | by ( Henry J. Gomez | ) www.cnbc.com time to read: +6 min

Sen. Sherrod Brown, D-Ohio, for years claimed an owner-occupancy tax credit at two properties, public records show — a potential violation of the state's rules governing such incentives. Responding to questions from NBC News, Brown and Schultz this week paid a $390 penalty stemming from their most recent late payment. Brown will no longer accept the owner-occupancy credit on the Columbus property, according to his campaign. Franklin County tax records available online show no late payments or penalties for Brown's Columbus condo — purchased in 2014 — over the last four years. Ohio schools are heavily reliant on property tax revenue, and late payments affect their accounting.

☆ Australia central bank stuns market with 25-bps hike, says more might be needed
▼ + stars: | 2023-05-02 | by ( ) www.reuters.com time to read: +2 min

Wrapping up its May policy meeting, the Reserve Bank of Australia (RBA) lifted rates to 3.85% and said "some further" tightening may be required to ensure that inflation returns to target in a reasonable timeframe. Investors reacted by pushing the Australian dollar 0.9% higher to $0.6687, while three-year bond futures slumped 16 ticks to 96.85. "Given the importance of returning inflation to target within a reasonable timeframe, the Board judged that a further increase in interest rates was warranted today." Home prices are also showing signs of bottoming out, having risen for the second straight month in April, supported by rising migration levels and a chronic shortage in housing supply. Reporting by Wayne Cole; Editing by Shri NavaratnamOur Standards: The Thomson Reuters Trust Principles.

☆ Take Five: Rate hike vs bank stress
▼ + stars: | 2023-04-28 | by ( ) www.reuters.com time to read: +5 min

The Fed is expected to deliver another 25-basis point interest rate increase on Wednesday and signal a pause in its most aggressive rate-hiking cycle since the 1980s. Futures markets show investors pricing an nearly 90% chance of a rate increase. But confidence in a 25 bps rate hike has wavered in recent days after problems at lender First Republic reignited concerns over the U.S. banking sector. Yet, key inflation and bank lending data releases in the days ahead could sway that outcome. Tuesday's flash April inflation data is likely to confirm underlying price pressures - running above 5% - remains uncomfortably high.

☆ Australia central bank to get new rate-setting board under review recommendations
▼ + stars: | 2023-04-20 | by ( Wayne Cole | ) www.reuters.com time to read: +3 min

The central bank should keep its flexible inflation target of 2-3% but aim to return inflation to the mid-point rather than average it over time. Importantly for market confidence, the RBA's Monetary Policy Board (MPB) would retain its independence from government control. Chalmers is also due to announce two new external board members for the RBA later on Thursday, to replace members whose terms are expiring this year. MPB members should be more accountable for their role in setting monetary policy, the review said. Current RBA Governor Philip Lowe has come in for much criticism after telling borrowers in 2021 that interest rates were unlikely to rise until 2024.

☆ Australia's central bank to get new rate-setting board under review shake up
▼ + stars: | 2023-04-20 | by ( ) www.cnbc.com time to read: +2 min

Philip Lowe, governor of the Reserve Bank of Australia, speaks during a news conference in Sydney on April 20, 2023. Australia's central bank is expected to get a new specialist board to manage monetary policy that will give independent expert members more responsibility for setting interest rates, a dilution of the bank's traditional power over policy. Importantly for market confidence, the RBA's new Monetary Policy Board (MPB) would retain its independence from government and its flexible inflation target of 2% to 3%. The current mandate is unusual among central banks in having a broad remit for the economic prosperity and welfare of the Australian people. Similar criticisms have been levelled against many central banks over the effectiveness of policy communication to markets and the wider public.

☆ Some ECB governors doubted 'immaculate disinflation' in March
▼ + stars: | 2023-04-20 | by ( ) www.reuters.com time to read: +3 min

But some of its 26 policymakers expressed doubts about what they called an "immaculate disinflation", the ECB's account of the March 15-16 meeting showed. a return of inflation to target with very low cost in terms of lost output)," the ECB said in the account. "There were doubts about whether the projected lower wage growth towards the end of the horizon in the March projections was justified," the ECB said. Others argued that it was consistent to revise down nominal wage growth while cutting inflation forecasts. "Members widely reiterated that developments in profits and mark-ups warranted constant monitoring and further analysis on an equal footing with developments in wages," the ECB said.

☆ Morning Bid: Crowded bonds unnerved
▼ + stars: | 2023-04-19 | by ( ) www.reuters.com time to read: +5 min

This has some wondering if the recent dash for cash and top-rated bonds has become a bit crowded and how much more tightening central banks have to do. As we move into the weeds of the first-quarter U.S. earnings season, it's been a mixed bag so far. That clearly unnerved UK government bonds - where 10 year yields jumped 10bps - but it also jarred sovereign bonds around the world. Elsewhere, further signs of healing were evident in the global bank funding market. Japan's Sumitomo Mitsui Financial Group (8316.T) sold $1 billion of additional tier-1 debt, the first major global bank to sell the risky securities since similar bonds issued by Credit Suisse were wiped out last month.

chartEither way, extremely low U.S. volatility generally bodes well for other stock markets. And worrying UK inflation figures may extend a dark shadow over Asia. Figures on Wednesday showed that Britain was the only country in western Europe with double-digit inflation in March, prompting several banks to raise their UK rate outlook. UK money markets are pricing in a further 75 basis points of tightening this year, taking the base rate up to 5%. Meanwhile, Australia's central bank governor Philip Lowe addresses the media on Thursday and India's central bank releases the minutes of its last policy meeting.

☆ Australia nears wide-ranging shake up of its central bank
▼ + stars: | 2023-04-17 | by ( ) www.reuters.com time to read: +2 min

SYDNEY, April 17 (Reuters) - Australia's Treasurer on Monday said he was close to announcing details of a wide-ranging review into the country's central bank which would require legal changes for some steps, underlining the scope of the shake-up. Treasurer Jim Chalmers said the independent review had provided 51 recommendations for changing how the Reserve Bank of Australia (RBA) operates and formulates policy. "There are some recommendations which would require legislative change," Chalmers told a media conference. "There are some that would require the governor and the board to change the way that they go about things at the bank." The review is expected to have recommended changes to the RBA's policy making board, which currently consists of two RBA staff, the Treasury secretary and six business people.

☆ Australia's robust March employment suggests RBA may hike again
▼ + stars: | 2023-04-13 | by ( Stella Qiu | ) www.reuters.com time to read: +3 min

REUTERS/Steven Saphore/File PhotoSummary Strong employment, jobless near 50-year lows keep RBA on alertFull-time employment surges, positive for household incomeData suggests strong Q1 inflation, see RBA hike again -analystSYDNEY, April 13 (Reuters) - Australia employment blew past expectations for a second month in March while the jobless rate held near 50-year lows, an unambiguously strong report that suggests the central bank's tightening campaign may not be over yet. Figures from the Australian Bureau of Statistics showed on Thursday net employment rose 53,000 in March from February, when they rebounded by a steep but slightly downwardly revised 63,600. The jobless rate stayed at 3.5%, when analysts had looked for a nudge up to 3.6%. Full-time employment surged by 72,200, after a hefty increase of 74,900 the previous month, an encouraging sign for household income. Reporting by Stella Qiu and Wayne Cole; Editing by Muralikumar Anantharaman and Shri NavaratnamOur Standards: The Thomson Reuters Trust Principles.

Reuters GraphicsNOTHING 'BROKEN' YETInternational economic officials gathering in Washington this week for the IMF and World Bank spring meetings can take some comfort that pandemic-era risks are continuing to diminish. An aggressive year of central bank rate hikes hasn't yet "broken" any of the economies involved, with the U.S. unemployment rate at 3.5%, near its lowest level since the late 1960s. Still, that terminal rate remains unclear, and the end of synchronized tightening by the Fed, BoE and European Central Bank doesn't mean tight monetary policy is going away. Wages, services and food are driving price growth to the point that the ECB's attention has shifted almost entirely to underlying inflation on fears that rapid price growth is at risk of getting stuck above target. The U.S. central bank is expected to increase its benchmark overnight interest rate by another quarter of a percentage point next month, and signal whether more hikes may be warranted.

☆ ECB may need to hike rates again in May - Lane
▼ + stars: | 2023-04-06 | by ( ) www.reuters.com time to read: +1 min

FRANKFURT, April 6 (Reuters) - The European Central Bank will need to raise interest rates again in May if inflation develops along the path seen in the bank's March economic projections, ECB chief economist Philip Lane told the Cyprus News Agency. The ECB has raised rates by a combined 350 basis points since July but did not provide specific guidance for its May 4 meeting, arguing that turbulence in the financial sector required extra caution. "However, we need to be data-dependent about the assessment of whether that baseline still holds true at the time of our May meeting." Largely repeating his stance, Lane argued that the May decision will depend on the inflation outlook, the bank's assessment of underlying price dynamics and on how quickly past rate hikes are impacting the economy. Although bank shares are down by about a tenth over the past month, volatility has receded and underlying inflation, a key worry for policymakers, continues to accelerate, strengthening the case for rate hikes.

April 6 (Reuters) - There will be no Asia Morning Bid on Friday, April 7. Chinese services PMI and Australian trade figures are also on the docket Thursday, while remarks from Reserve Bank of Australia governor Philip Lowe on could shed further light on the RBA's outlook following Tuesday's policy decision. chartIt's a difficult one to call, and after the Reserve Bank of New Zealand's hawkish surprise on Wednesday, investors would do well to be humble in their predictions. Wall Street is finally buckling, rates markets are now gunning for almost 100 basis points of Fed rate cuts this year and the dollar is sagging. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

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