Aurelia Butler

TOKYO (Reuters) -Core inflation in Japan’s capital accelerated in June on rising fuel bills and the boost to import costs from a weak yen, data showed on Friday, keeping alive expectations for a near-term interest rate hike by the central bank.Separate data showed factory output rebounded nationally in May as automakers recovered from shipment disruptions, offering policymakers hope the economy was on track for a moderate recovery.The data may help the Bank of Japan (BOJ) make the case to raise interest rates as early as this month, as cost pressures from the weak yen heighten the chance of inflation staying well above its 2% target in coming months, analysts say.The core consumer price index (CPI) in Tokyo, considered a leading indicator of nationwide figures, rose 2.1% in June from a year earlier, accelerating from the previous month’s 1.9% gain and exceeding market forecasts for a 2.0% gain.A separate index that excludes the effects of fresh food and fuel costs, closely watched by the BOJ as a broader price trend indicator, also rose 1.8% in June after a 1.7% gain in May.Marcel Thieliant, head of Asia-Pacific at Capital Economics, said a jump in industrial products prices in the CPI appears to vindicate the BOJ’s concerns that rising import costs are being passed through faster than in the past.”The latest inflation data are consistent with our view that the Bank will lift its policy rate further at its July meeting,” he said.Factory output rose 2.8% in May from the previous month, exceeding market forecasts for a 2.0% gain, due largely to a sharp rebound in auto production, data showed on Friday.Japan’s economy shrank an annualised 1.8% in the first quarter as companies and households reduced spending, casting doubt on the central bank’s view of a moderate recovery.While analysts expect growth to rebound in the current quarter, a weak yen is weighing on household sentiment by pushing up the cost of imports for fuel and food.The BOJ ended eight years of negative interest rates and other remnants of its radical monetary stimulus in March as it judged that sustained achievement of its 2% inflation target has come into sight.BOJ Governor Kazuo Ueda has said the central bank will raise interest rates from current near-zero levels if underlying inflation, which takes into account CPI and broader price gauges, accelerates toward 2% as it currently projects.The central bank expects rising wages to push up service inflation and keep inflation durably around 2%, a condition it set as a prerequisite to further phase out monetary stimulus. More

SEATTLE (Reuters) -Boeing’s financial and production challenges following a January mid-air panel blowout will not change its workers’ readiness to strike to make gains in bargaining, a union local president said on Thursday.The International Association of Machinists and Aerospace Workers (IAM), which represents more than 30,000 Washington state workers building Boeing (NYSE:BA) jets, wants better retirement benefits and wage increases exceeding 40% over three to four years after what it termed years of stagnant earnings.”We are going to maximize this opportunity no matter what,” Jon Holden, president of the IAM’s District 751 representing the Seattle-area workers, said in an interview with Reuters.”Our members want an agreement, they want a good agreement but they are willing to strike if they have to.”IAM workers are scheduled to vote for a strike authorization mandate on July 17, but they cannot strike before the contract expires on Sept. 12.Boeing did not respond to a request for comment on the union’s potential strike plans.The planemaker is trying to manage a sprawling crisis that erupted after a door plug blew off an Alaska Airlines 737 MAX jet on Jan. 5.Boeing’s chief financial officer said last month the company would burn rather than generate cash in 2024 and deliveries would not increase in the second quarter. Workers held a noisy rally on Tuesday at Boeing’s Renton plant outside Seattle, coinciding with a media visit to showcase quality improvements at the factory. Holden said the IAM’s talks with Boeing have not resolved any significant points yet and the planemaker has pushed back on union demands for higher wages and to gain a seat on the company’s board of directors.”They’re not open to it at this point,” he said of the board seat. “But it’s important for us to continue to push because it is about ensuring that those at the highest level of this company understand that they are missing the voice of workers.”U.S. investigators on Thursday sanctioned the planemaker for revealing details of a probe into the panel blowout incident at the media event, prompting Boeing to apologize.Holden said he was not aware of changes at the Renton factory described by Boeing to reporters and had not yet seen the planemaker’s 90-day plan to improve quality that has been submitted to the Federal Aviation Administration. He said he expected to get a copy of the plan and had held earlier discussions with Boeing as it was being developed.”I don’t see a difference,” Holden said of factory changes. “I haven’t seen the 90-day plan yet. We’re still trying to get a copy of it.” Boeing said in a statement that it had hosted Holden in its factory multiple times to walk him through its safety and quality plan and to listen to his concerns and feedback. More

WASHINGTON (Reuters) – The International Monetary Fund on Thursday called on the U.S. to raise taxes to curb rising debt levels while applauding “robust, dynamic” growth in the world’s largest economy and progress toward bringing inflation under control.The IMF said in a closing statement for its “Article IV” review of U.S. economic policies that high deficits and debt “create a growing risk to the U.S. and global economy, potentially feeding into higher fiscal financing costs and a growing risk to the smooth rollover of maturing obligations.”The IMF’s statement slightly revised down its 2024 U.S. GDP growth forecast to 2.6% from the 2.7% forecast in the global lender’s World Economic Outlook in April.The IMF forecasts U.S. growth in 2025 to dip to 1.9% — unchanged from the April outlook — and remaining above 2% through the end of the decade.”The U.S. economy has proven itself to be robust, dynamic and adaptable to changing global conditions,” the IMF said. “Activity and employment continue to expectations… and the disinflation process has been considerably less costly than many had feared.”The IMF said it expects U.S. inflation as measured by the Personal Consumption Expenditures Price Index to return to the Federal Reserve’s 2% target by mid-2025, considerably sooner than the Fed’s own forecast of returning to target in 2026.IMF Managing Director Kristalina Georgieva told reporters that the IMF’s forecast is more optimistic because of the current trajectory of inflation indicates a quicker return to target, partly because strong U.S. consumer spending driven by wealth built up during the COVID-19 pandemic is subsiding and the labor market is cooling.DEBT, TRADE PRESCRIPTIONSBut the IMF chided Washington for rising deficits that if continued would bring the U.S. debt-to-GDP ratio to a concerning level of 140% by the end of the decade. The IMF measure includes Social Security pension and Medicare healthcare obligations.”Such high deficits and debt create a growing risk to the U.S. and global economy, potentially feeding into higher fiscal financing costs and a growing risk to the smooth rollover of maturing obligations,” the Fund said.For the second year in a row, the Fund prescribed that the U.S. increase income tax rates progressively, not only on the wealthiest Americans but also for households earning less than $400,000 a year — a threshold that U.S. President Joe Biden has vowed not to cross in his re-election campaign pledges.The Fund said the U.S. also should reform entitlement programs — cuts that Biden and Republican rival Donald Trump have both vowed not to pursue — and raise the threshold for eligibility for the Earned Income Tax Credit for workers without children.Georgieva said the Fund was trying to provide to present a policy path for the U.S. “that in our view would serve the economy and its people well” as it would for any IMF member country.With the U.S. economy strong, it was a “good time” for the U.S. to consolidate its fiscal position, she said adding: “It is in good times where you can do more to prepare yourself for risks in the future.”The IMF also said that intensifying U.S. tariffs and other trade barriers along with the increased use of industrial policy to favor domestic firms represented a downside risk for the U.S. and global economies, with the potential to distort investment flows and undermine the global trading system.Instead, the Fund called for Washington to work out differences with trading partners through negotiations and strengthen the World Trade Organization.The U.S. Treasury sidestepped the advice over deficits and trade in a statement issued after the IMF’s assessment.In her discussion with Georgieva, U.S. Treasury Secretary Janet Yellen reiterated the importance of “frank and thorough assessments” of IMF member economies and discussed the “remarkable performance of the U.S. economy over the past few years,” the Treasury said. More

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(Reuters) – A look at the day ahead in Asian markets.A mood of caution hangs over Asian markets on Friday, the last trading day of the quarter and half-way point in the year, with investors likely to keep risk exposure to a minimum ahead of U.S. inflation data later in the day and ahead of the weekend.That wariness may be enforced by headlines from the U.S. presidential debate between Joe Biden and Donald Trump late on Thursday, particularly on trade protectionism and tariffs on imports from China.Friday’s Asian economic calendar is packed with top-tier releases, including: Tokyo inflation, Japanese unemployment and industrial production, South Korean industrial output and retail sales, and trade and current account figures from Thailand.Top among them is probably Tokyo inflation, which will give an insight into wider price pressures in Japan and what the Bank of Japan might do at its July 30 to 31 policy meeting.Pressure is mounting on the BOJ to raise rates again or taper its bond purchases, if for no other reason than to cool some of the selling pressure on the yen and lift the currency from the 38-year low it hit against the dollar this week.Policymakers have warned that tightening policy too much could harm consumer spending and economic growth. But they also continue to express their displeasure with the yen’s relentless depreciation. They can’t have it both ways.Japanese authorities have not yet intervened to support the yen this time around, but traders will be on high alert for action, especially in the least liquid parts of the global trading day. Economists polled by Reuters reckon core Tokyo inflation edged up to 2.0% in June from 1.9% in May. Officials would probably be comfortable with that, but so might yen bears, and renewed selling is bound to sound the intervention alarm. China’s currency, meanwhile, also reaches the mid-year point on the defensive, and on Thursday slipped to a new low for the year. Chinese stocks are in a similar boat, hugely underperforming their regional and global peers.The wider mid-year report card in Asia is mixed. Japan’s Nikkei massively outperformed, in large part thanks to the weak yen, Japanese bond yields have hit multi-year highs, but the specter of deflation has pushed Chinese bond yields to historic lows.Most currencies are down against the U.S. dollar although nowhere near as much as the yen. The Indonesian rupiah is at multi-year lows, while India’s rupee is at a record low but spared further weakness by official intervention. A snapshot of M&A activity in the January-June period on Thursday may be more revealing about investor sentiment across the continent. LSEG data shows that the value of announced transactions dropped 25% year-on-year to $317.5 billion, and M&A fees fell to $1.5 billion. Both are the lowest in 11 years.Here are key developments that could provide more direction to markets on Friday:- Tokyo inflation (June)- Japan unemployment (May)- U.S. presidential debate More

Lula signed the bill into law during a meeting of his Council for Sustainable Economic and Social Development in Brasilia.The tax on online international low cost purchases was a request from Brazilian retailers who argue that they are being victims of unfair competition, mainly against Chinese e-commerce giants.In May, Lula had said he was willing to negotiate with lawmakers about taxing cross-border low cost purchases of up to 50 dollars, but he did not rule out the possibility of vetoing the measure. At the time, the president pointed out that the measure could impact people with lower income.The highly controversial tax was attached to a bill that creates the so-called Green Mobility and Innovation program (Mover). More

NEW YORK (Reuters) – Ten large banks including Bank of America, Goldman Sachs and JPMorgan Chase (NYSE:JPM) will pay $46 million to settle a long-running antitrust lawsuit accusing them of conspiring to rig the now $465.9 trillion market for interest rate swaps.Lawyers for investors filed a preliminary settlement to end the eight-year-old nationwide case on Thursday in Manhattan federal court.The settlement requires approval by U.S. District Judge Paul Oetken, and boosts the value of all settlements in the case to $71 million.Other settling banks include Barclays, BNP Paribas (OTC:BNPQY), Citigroup, Deutsche Bank, Morgan Stanley, NatWest and UBS.Investors led by the city of Baltimore and pension funds in Chicago, Los Angeles and Michigan accused the banks of trying from 2013 to 2016 to corner swaps trading, in part by boycotting three upstart platforms that offered better prices and let buy-side investors trade with each other.This allegedly led to “tremendous profits” for the banks because of their role as dealers, primarily in the form of bid/ask spreads, the investors said.Credit Suisse, now part of UBS, agreed in 2022 to pay $25 million to settle investors’ claims. A different judge dismissed a 12th bank, HSBC, as a defendant in 2017.All of the banks have denied wrongdoing.Oetken’s refusal in December to certify a class action made the investors’ case more difficult, because it’s often more costly and not worth the trouble for individual investors to sue on their own.Lawyers for the investors did not immediately respond to requests for comment. They called the settlement an “excellent recovery” given the challenges of further litigation, oourt papers show.Interest rate swaps let parties exchange future interest payments, typically by exchanging a fixed rate for a floating rate, to manage risk or bet on whether rates will rise or fall.The case is part of more than a decade of litigation in Manhattan accusing big banks of colluding in various markets including interest rate benchmarks, U.S. Treasuries, currencies and commodities.The case is In re: Interest Rate Swaps Antitrust Litigation, U.S. District Court, Southern District of New York, No. 16-md-02704. More

The agreement to take a 10% stake in the Horse Powertrain business, first reported by Bloomberg, is lower than the stake of around 20% which was cited by sources at the beginning of discussions.The transaction would value Horse Powertrain at around 7.4 billion euros ($7.92 billion), said one of the sources.The sources declined to be identified because discussions were confidential and still ongoing.Both Horse and Aramco declined to comment, while Geely did not immediately respond to a request for comment after business hours.The Saudi oil group signed a letter of intent in March 2023 with a view to possibly becoming a minority shareholder in the JV, which was formally established on May 31.Horse Powertrain supplies gasoline engines, hybrid systems and gear boxes for thermal vehicles.($1 = 0.9342 euro) More