Aurelia Butler

The unchanged reading in the consumer price index reported by the Labor Department’s Bureau of Labor Statistics on Wednesday followed a 0.3% increase in April. The CPI has been trending lower since posting solid readings in February and March. Price pressures could continue moderating as major retailers, including Target, slash prices on goods ranging from food to diapers as they seek to lure inflation-weary consumers.In the 12 months through May, the CPI advanced 3.3% after increasing 3.4% in April. Economists polled by Reuters had forecast the CPI edging up 0.1% and gaining 3.4% year-on-year. Though the annual increase in consumer prices has slowed from a peak of 9.1% in June 2022, inflation continues to run above the U.S. central bank’s 2% target.Job growth accelerated in May and wages picked up, but the unemployment rate increased to 4%, the government reported last week. Fed officials are later on Wednesday expected to leave the central bank’s benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since July.The Fed has raised its policy rate by 525 basis points since March 2022.Financial markets expect the Fed to start its easing cycle in September, though that conviction is waning. Some economists are leaning towards a rate cut in December, but others are not so sure that borrowing costs will be lowered this year.Excluding the volatile food and energy components, the CPI climbed 0.2% in May after rising 0.3% in April. In the 12 months through May, the core CPI increased 3.4%. That was the smallest year-on-year gain since April 2021 and followed a 3.6% advance in April. More

A Labor Department report showed the Consumer Price Index was unchanged on a monthly basis, where it was expected to rise 0.1%. On an annual basis, inflation rose 3.3%, lower than economists’ expectation of a 3.4% increase. CPI, excluding volatile food and energy prices, rose 0.2% compared with expectations of a 0.3% rise, while core inflation rose 3.4% on an annual basis versus a forecast of 3.5%. At 8:34 a.m. ET, Dow e-minis were up 234 points, or 0.6%, S&P 500 e-minis were up 40.25 points, or 0.75%, and Nasdaq 100 e-minis were up 187.75 points, or 0.98%. More

LONDON (Reuters) -Global shares rallied, while the dollar sank and gold surged on Wednesday, after data showed U.S. consumer inflation was a lot milder than expected in May, increasing the chances of a markets-friendly interest rate cut as soon as September. The Bureau of Labor Statistics said U.S. consumer prices were unchanged in May, thanks to a drop in the cost of gasoline. This followed a 0.3% increase in April.Economists polled by Reuters had expected a rise of 0.1%.The dollar index, which measures the performance of the U.S. currency against six others, fell 0.7%, heading for its largest one-day drop in around a month.U.S. stock futures rose between 0.8-1% after the numbers, from having shown a gain of just 0.1% earlier in the day. European shares bounced, pushing the STOXX 600 up by more than 1%.Even though prices did not change on a monthly basis, inflation likely remains too high for the Federal Reserve to start cutting interest rates before September against the backdrop of a persistently strong jobs market.The Fed wraps up a policy meeting later in the day. Wednesday’s inflation figures may have offered investors some encouragement that rates are about to drop.But in light of last week’s forecast-beating employment numbers, analysts said Fed Chair Jerome Powell may need more evidence to be convinced inflation is evaporating.”While September may be on the table, today would have had to be the first of a handful of inflation data prints that went right, which it did,” Lindsay (NYSE:LNN) Rosner, head of multi-sector investing at Goldman Sachs Asset Management, said.”It does remain challenging, however, for inflation to cool with the backdrop of the summer’s heat. Let’s see what the Fed forecasts this afternoon. This is good news, but we will need more of it,” Rosner said.U.S. Treasury prices leapt, pushing yields down, as investors piled into fixed income. The yield on the two-year note, the most sensitive to shifts in expectations for monetary policy, fell by as much as 15 basis points to a low of 4.687%. Ten-year notes were last yielding 4.291%, showing a drop of 11 bps on the day. Next up is the Fed rate decision. The central bank is not expected to make any change to interest rates at its policy meeting. Instead, the focus will be on whether it keeps three rate cuts in its “dot plot” projections for this year.After the consumer inflation figures, rate futures implied a 70% chance of a quarter-point rate cut at the Fed’s September meeting, compared with around 60% earlier on..”The (inflation) data does lessen the chances of a hawkish shift in Chair Powell’s rhetoric at the post meeting press conference, even if the dot plot is likely to show a median expectation of 50bp, from 75bp, of cuts this year,” Pepperstone market analyst Michael Brown said.With the dollar under pressure and yields falling, gold, which had been trading in negative territory before the CPI data, was up 0.6% at $2,328 an ounce, while crude oil extended gains, rising 1.2% on the day to $82.80 a barrel. More

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The central bank last month set up a 300 billion yuan ($41.4 billion) relending loan facility for affordable housing, and Wednesday’s virtual meeting hosted from the city of Jinan in eastern Shandong province is the latest effort to promote the facility among local governments and banks.Beijing has given the nod to local state-owned enterprises, or SOEs, to buy up unsold completed homes, and the relending facility is aimed at helping them make these purchases at “reasonable prices”. The People’s Bank of China (PBOC) said in a statement on Wednesday that the facility is aimed at speeding up sales of existing commercial housing stock in a market-oriented way.It said the facility adds to its “whitelist” mechanism launched in January for approving housing development projects, under which local governments nominate projects and state-owned as well as commercial banks are encouraged to provide lending to the developers.The PBOC said SOEs’ purchases of unsold homes should adhere to “voluntary participation, demand-based ordering and reasonable pricing” to ensure business sustainability, while any new local hidden debt should be strictly prohibited.Officials from the cities of Jinan, Tianjin, Chongqing and Zhengzhou shared their local trial experiences at Wednesday’s meeting, which PBOC Governor Pan Gongsheng and Deputy Governor Tao Ling also attended in person.Analysts and developers say the $41 billion relending facility, which could result in 500 billion yuan worth of bank financing for local SOEs, however, is unlikely to help cash-strapped developers due to the programme’s limited size and potentially low prices. ($1 = 7.2534 Chinese yuan renminbi) More

BRUSSELS (Reuters) -The European Commission told automakers on Wednesday it would impose extra duties of up to 38.1% on imported Chinese electric cars from July, in a move that China called protectionist but its car industry dismissed as one without a major impact.Less than a month after Washington quadrupled duties quadrupled duties for Chinese EVs to 100%, Brussels said it would set additional tariffs of 17.4% for BYD (SZ:002594), 20% for Geely and 38.1% for SAIC, on top of the existing 10%, over what it said were excessive subsidies.That equates to billions of euros of extra costs for the carmakers at a time they are struggling with slowing demand and falling prices at home, according to Reuters calculations based on 2023 EU trade data.The move comes as European automakers are being challenged by an influx of lower-cost EVs from Chinese rivals.Shares in some of Europe’s biggest carmakers which make a big portion of their sales in China, fell on fears of Chinese retaliation. Some like BMW (ETR:BMWG) will also now incur duties on their EVs made in China and sold in Europe.”This anti-subsidy investigation is a typical case of protectionism,” said Chinese foreign ministry spokesperson Lin Jian, adding the tariffs would damage China-EU economic and trade cooperation and the stability of the global automobile production and supply chain.Lin said China urged the EU to support free trade, adding Beijing would take all necessary measures to “firmly safeguard” its legitimate rights and interests.The Chinese Passenger Car Association seemed less concerned.”The EU’s provisional tariffs come basically within our expectations, averaging around 20%, which won’t have much of an impact on the majority of Chinese firms,” CPCA Secretary General Cui Dongshu said.  “Those exporting China-made EVs that include Tesla (NASDAQ:TSLA), Geely and BYD still have huge potential for development in Europe in the future,” Cui said.China’s commerce ministry said it would closely monitor the development and take all necessary measures to safeguard the legitimate rights of Chinese companies. Beijing has already launched an anti-dumping investigation into mostly French-made imports of brandy. It also passed a law in April to strengthen its ability to hit back should the United States or EU impose tariffs on exports of the world’s No. 2 economy.The EU provisional duties are set to apply by July 4, with the anti-subsidy investigation set to continue until Nov. 2, when definitive duties, typically for five years, could apply.The Commission said it would apply rates of 21% for companies deemed to have cooperated with the investigation and of 38.1% for those it said had not. Western producers such as Tesla and BMW that export cars from China to Europe were considered cooperating companies. Margaritis Schinas, a Commission vice president, told a news conference that Chinese-built cars were benefiting from unfair levels of subsidies, threatening EU producers. “On this basis the Commission has reached out to Chinese authorities to discuss these findings and explore possible ways for resolving the issues identified,” he told a news conference.The indicative tariffs are above expectations of analysts of between 10% and 25% on Chinese EVs.BYD, Geely, SAIC and Tesla did not immediately respond to Reuters’ queries on the report.CHALLENGEDSome economists said the immediate effect of the additional duties would be very small in economic terms because the EU imported around 440,000 EVs from China in the 12 months ending in April worth 9 billion euros ($9.7 billion) or around 4% of household expenditure on vehicles.”But the anti-subsidy duties are intended to limit the future growth in EV imports which would otherwise take place rather than to block existing trade,” said Andrew Kenningham, chief Europe economist at Capital Economics.”The decision marks a big change in EU trade policy because, although the EU has used trade defence measures regularly in recent years, including against China, it has not previously done so for such an important industry. And Europe has been reluctant to engage in the kind of protectionism that the US has deployed since Donald Trump’s presidency,” he said.    ($1 = 0.9296 euros) More