Aurelia Butler

LONDON (Reuters) -British retail sales edged up in July, boosted in part by extra spending due to the men’s Euros soccer championship, official figures showed on Friday, after an unusually cool and wet June had kept shoppers away and weighed on broader economic growth.Retail sales volumes rose 0.5% in July after falling 0.9% in June and were 1.4% greater than a year earlier, the Office for National Statistics said. Both rises were in line with forecasts from economists polled by Reuters and there was little market reaction.”We expect further increases in disposable income to feed through to overall spending,” said Rob Wood, chief UK economist at Pantheon Macroeconomics, pointing to a gradual upward trend in annual sales growth.The squeeze on British consumers from high inflation in 2022 and 2023 is beginning to ease, though not enough to keep the Conservatives from a historic loss to the opposition Labour Party in last month’s election. Inflation was back at its 2% target in May and June, and only slightly above that in July, while wage growth exceeded inflation by the highest margin since mid-2021 in the second quarter of the year.The Bank of England cut interest rates from a 16-year high this month and Britain’s longest-running consumer confidence measure rose to its highest in nearly three years as shoppers became more willing to make big purchases.Even so, sales volumes in July were still 0.8% lower than in February 2020, the last month before COVID-19 lockdowns started, and recent reports from UK retailers have been mixed. Clothing retailer Next reported better-than-expected second-quarter sales and raised its full-year profit outlook. By contrast, luxury brand Burberry warned on profit and other UK retailers have highlighted continuing low consumer confidence around more discretionary purchases.Sales volumes at clothing stores fell 0.6% in July and were 4.0% lower than a year earlier, the ONS said.Department stores and sports equipment shops did better, boosted by the Euros and discounting, Liz McKeown, the ONS’ director of economic statistics, said.Prices in shops were 0.9% higher than a year earlier, the smallest increase since March 2021.Hot weather in the second half of July also helped offset cool and wet weather earlier in the British summer, which had led to weak July data from the British Retail Consortium and the Confederation of British Industry. “Although retail sales haven’t come roaring back as the industry hoped, retailers should be confident of a strong end to summer trading now that warmer weather has finally arrived,” said Deann Evans, a managing director at online retail platform Shopify (NYSE:SHOP). More

(Reuters) -Wall Street’s main indexes were set for a lower open on Friday following the S&P 500 and the Nasdaq logging six-session winning streaks after a spate of encouraging economic data fueled a broad rebound led by heavyweight tech and growth stocks.The benchmark index has recovered from a pullback earlier this month caused by a dour U.S. jobs report and the yen carry trade as better-than-expected data calmed nerves over a sharp slowdown in the world’s largest economy.U.S. consumer and producer prices data this week indicated inflation was moderating at a pace that would keep the U.S. Federal Reserve on track to start its monetary easing cycle with a 25-basis point rate cut next month as opposed to a more aggressive move.”The signal from this week’s batch of data is that the sky is not falling out as some investors had started to fear,” said Mike Reynolds, vice president of investment strategy at Glenmede.”The totality of the data we’ve gotten so far leading into (the next Fed meeting) makes a really strong case for rate cuts.”The U.S. central bank is now expected to track labor market trends more closely.Market participants will look to minutes from the Fed’s last policy meeting and Fed Chair Jerome Powell’s outlook of the U.S. economy at the Jackson Hole symposium, an annual gathering of global central bankers, next week for more clues on the rate cut trajectory.The S&P 500 and the Nasdaq were headed for their best weeks since October, while the Dow was on pace for its best weekly showing since December.Later in the day, University of Michigan will issue its consumer sentiment survey for August around 10 a.m. ET (1400 GMT).In an interview with National Public Radio, Chicago Fed chief Autan Goolsbee said the U.S. economy is not showing signs of overheating, so central bank officials should be wary of keeping restrictive policy in place longer than necessary.St. Louis Fed chief Alberto Musalem and Atlanta Fed boss Raphael Bostic on Thursday had gravitated toward an interest rate cut in September.At 8:15 a.m. ET, Dow E-minis were down 28 points, or 0.07%, S&P 500 E-minis were down 13 points, or 0.23% and Nasdaq 100 E-minis were down 50.25 points, or 0.26%.Applied Materials (NASDAQ:AMAT) dropped almost 3% in premarket trading following a strong jump ahead of its results. The chip-making equipment firm forecast fourth-quarter revenue slightly above Wall Street estimates.U.S.-listed shares of Amcor (NYSE:AMCR) slipped 6.1% after the packaging company reported a more-than-expected decline in fourth-quarter sales, hurt by weaker demand for its containers and cartons.Crypto- and blockchain-related firms gained as bitcoin rose 2.8%. Miners Riot Platforms (NASDAQ:RIOT) and Marathon Digital (NASDAQ:MARA) gained almost 1% each, while iShares Bitcoin Trust ETF added 2.2%.U.S. equities saw inflows for the seventh straight week last week, with large caps seeing the bulk of inflows while growth stocks saw slight outflows, according to BofA data. Overall, U.S. stock trading volume has been below its 20-day moving average in the past six sessions as many investors are away for summer break. More

The IBC-Br index, a key predictor of gross domestic product (GDP), increased by a seasonally adjusted 1.4% from the previous month, beating the 0.5% growth expected by economists in a Reuters poll.The monthly performance led to a 1.1% expansion in the second quarter compared to the previous three months.Finance Minister Fernando Haddad said this week that the government would likely revise this year’s expected economic growth forecast upwards to more than 2.5%, after maintaining the estimate at that level in July. Latin America’s largest economy has been supported by a strong labor market and booming services sector, which hit an all-time high in June. The second quarter’s performance showed resilience despite the severe floods that hit the southernmost state of Rio Grande do Sul in May, devastating cities and displacing more than a half million people. These events led many economists to predict potential economic losses for the country.The official gross domestic product (GDP) figures will be released by the statistics agency IBGE on September 3. More

British-born Taylor is currently a professor at Columbia University in New York and alongside his academic career has worked as a senior advisor at Morgan Stanley, PIMCO and McKinsey.Taylor will start at the BoE on Sept. 2 and succeeds Jonathan Haskel, a professor of economics at London’s Imperial College Business School, who will soon complete his second three-year term, the maximum for an external MPC member.One of the most hawkish members of the MPC, Haskel was in the minority of four out of nine members who voted to keep rates on hold for its Aug. 1 interest rate announcement, rather than cutting it from a 16-year high of 5.25%.”Professor Alan Taylor’s substantial experience in both the financial sector and academia will bring valuable expertise to the Monetary Policy Committee,” said finance minister Rachel Reeves, who made the appointment. British inflation returned to its 2% target in May after reaching a 41-year high of 11.1% in October 2022, but rose to 2.2% in July and the BoE expects it to reach 2.75% toward the end of this year.Taylor was born in the northern English city of Wakefield and studied at the University of Cambridge before receiving a doctorate in economics from Harvard University.In his academic work, Taylor researched the economic history of Argentina, credit booms, foreign exchange markets and what economists term a “trilemma” that makes it hard for a country simultaneously to have fixed exchange rates, open capital markets and independent monetary policy.In research published by the Federal Reserve Bank of San Francisco in September 2023, Taylor and his co-authors concluded that tight monetary policy could weigh on a country’s economic potential for at least 12 years.”These long-run effects develop primarily through investment decisions that ultimately result in lower productivity and lower capital stock,” the paper said. More

According to LSEG data, investors purchased a net $14.24 billion in global money market funds during the week, adding to the $97 billion bought over the previous seven days. Government bond funds attracted $2.6 billion for a 15th consecutive weekly net inflow.A disappointing U.S. jobs report and manufacturing data had sparked concerns about the possibility of a U.S. recession and triggered last week’s global stock market rout.But since then, benign U.S. inflation figures and surprisingly strong retail sales have seen equities pick up again.Riskier equity funds reversed a downward trend, gaining about $857 million in net inflows in the week to Aug. 14, after losing a substantial net $4.56 billion the previous week.European funds attracted $6.57 billion in net purchases after two weeks of outflows, while Asian funds drew a net $2.09 billion. However, U.S. funds saw a net outflow of $8.92 billion.Investors allocated a net $938 million and $850 million into the tech and utilities sectors, respectively, but withdrew $426 million from consumer discretionary funds.Global bond funds secured a net $4.04 billion inflow, marking a 34th consecutive week of net purchases, sterling-denominated global bond funds attracted $2.34 billion, the highest since at least November 2020. Corporate and loan participation funds saw net outflows of $3.85 billion and $653 million, respectively.In commodities, energy funds saw net outflows of $193 million following five weeks of inflows, while precious metal funds flipped to a net purchase of $645 million from net selling of $713 million the previous week.Data covering 29,578 emerging market funds showed a net outflow of $1.21 billion from equity funds, continuing a 10-week trend, while bond funds drew net purchases of $92 million. More

“You don’t want to tighten any longer than you have to,” Goolsbee told National Public Radio in an interview. “And the reason you’d want to tighten is if you’re afraid the economy is overheating, and this is not what an overheating economy looks like to me.”Goolsbee declined to say whether he would press for an interest rate cut at the Fed’s coming meeting on Sept. 17-18. But his remarks were consistent with his recent comments that officials need to be increasingly attuned to signs like the rising unemployment rate and increases in credit card delinquencies that suggest the economy is slowing to a point where policy should not be as restrictive as it is now.The Fed has held its policy rate in the current range of 5.25% to 5.50% since July 2023 after raising to that level at a breakneck pace over the prior 16 months to combat the worst outbreak of inflation since the 1980s.Financial markets are now 100% priced for a rate cut next month, with the main debate being over what size – a quarter percentage point or a half point. Odds now favor the smaller cut, but a big signal on the Fed’s next move is likely to come next Friday when Fed Chair Jerome Powell delivers a keynote address at the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyoming. More

WHY IT’S IMPORTANTA potential ratings downgrade would increase the costs for wealth managers at a time when worries about the economy are growing, with some forecasting a downturn due to the tight monetary policy.CONTEXTCash sweep programs allow wealth managers to move un-invested cash in brokerage accounts to partner banks, enabling clients to earn returns on idle funds.However, these arrangements have led to disputes, as the interest paid by partner banks is typically lower than what customers could earn through other options, such as money market funds.To prevent these conflicts, wealth managers have started giving clients more choices. Customers can opt to park their un-invested money in tax-exempt funds or other vehicles instead of moving it to their brokers’ partner banks.Morgan Stanley, Wells Fargo and Bank of America have also raised the interest rates they pay on some brokerage accounts.Despite these efforts, regulatory investigations remain a concern. Wells Fargo and Morgan Stanley have disclosed their cash sweep programs are under review from the SEC, while Bank of America highlighted it as a potential risk factor in its quarterly filing. Moody’s said that having multiple revenue streams will help mitigate the risk for larger firms. However, private-equity owned wealth managers with high debt burdens and less diversified business models are likely to be more severely affected.The investigations could squeeze margins across the industry by prompting firms to increase the interest on brokerage accounts, the ratings agency added. More