Aurelia Butler

(Reuters) – The U.S. Consumer Financial Protection Bureau (CFPB) on Tuesday scored a jurisdictional victory when a federal judge in Texas transferred to another court in Washington, D.C., an industry-backed lawsuit challenging the agency’s rule capping credit card late fees at $8.U.S. District Judge Mark Pittman in Fort Worth moved swiftly to transfer the lawsuit out of his courthouse for a second time after a federal appeals court that had previously prevented him from doing so relinquished jurisdiction on Friday.That could give the CFPB a home-turf advantage as it defends a key part of President Joe Biden administration’s crackdown on “junk fees” against a lawsuit filed by groups including the U.S. Chamber of Commerce and the American Bankers Association.The CFPB had fought for months to move the case out of the federal court in Fort Worth, a venue that has become a favorite of litigants challenging the Biden administration’s agenda and whose two active judges are Republican appointees.The CFPB declined to comment. The Chamber of Commerce did not respond to a request for comment.At issue is a rule that would block card issuers with more than 1 million open accounts from charging more than $8 for late fees, unless they could prove higher fees are necessary to cover their costs.According to the CFPB, issuers collected more than $14 billion worth of credit card late fees in 2022, with an average fee of $32.Pittman, an appointee of Republican former President Donald Trump, on May 10 halted the rule from taking effect.But he did so only after a panel of the New Orleans-based 5th U.S. Circuit Court of Appeals dominated by Trump appointees reversed an earlier decision he issued transferring the case to the nation’s capital.Pittman’s sole rationale for blocking the rule was because the 5th Circuit had in a different case in 2022 concluded the CFPB’s funding structure was unconstitutional, which would mean any regulations it adopted were likewise unconstitutional.That 2022 ruling was overturned by the U.S. Supreme Court on May 16. The CFPB has said it plans to seek to have Pittman’s injunction vacated as a result, though the industry groups have raised other, yet-to-be-addressed arguments to block the rule.After the 5th Circuit then returned the credit card fee case to Pittman, the CFPB on Tuesday asked Pittman to send it to Washington once again.He did so within three hours, saying the case chiefly involves out-of-state plaintiffs challenging actions of government officials in Washington. The only connection to Fort Worth was a local plaintiff, the Fort Worth Chamber of Commerce. (This story has been refiled to correct the day to Tuesday, instead of Monday, in paragraph 12) More

BENGALURU (Reuters) – A European Central Bank interest rate cut on June 6 appears certain, according to all 82 economists polled by Reuters, a majority of whom predicted two further reductions in September and December. But financial markets are pricing only two ECB rate cuts in total in 2024, a sharp pullback from six expected at the start of the year, presenting an uncommon situation where economic forecasters expect more rate reductions than traders.Despite encouraging signs on inflation, a recent pickup in wage growth has raised questions over how fast the ECB may be able to lower rates. It has all but pre-announced a June cut through multiple hints from policymakers over recent months.All 82 economists in a May 21-28 Reuters poll predicted the ECB would reduce its deposit rate by 25 basis points to 3.75% on June 6. But debate over how much room the ECB has to cut has become more heated with the U.S. Federal Reserve remaining non-committal on the timing of its first cut, now set to come in September at the earliest and priced for November by markets.Still, an over two-thirds majority of those polled, 55 of 82, expected the ECB’s Governing Council (GC) to cut twice more this year, in September and December. That was up from just over half in an April survey. The majority view for three cuts in 2024 comes as some economists have scaled back their rate cut calls from 100 basis points or more this year. Only 22% now see the deposit rate at 3.00% or lower by end-2024, compared with nearly 40% last month.”Faced with elevated uncertainty and activity accelerating faster than anticipated, we now think the GC will move more gradually this year,” said Mariano Cena, senior European economist at Barclays.”This would take place even if risks to the inflation outlook beyond this year are more symmetric and even potentially to the downside,” said Cena, who recently shifted a follow-up cut in July to September. Asked what was more likely for ECB rate cuts this year, nearly three-quarters of economists, 25 of 34, said fewer than they expected rather than more.Of 77 common contributors in this and last month’s surveys, over one-quarter, 20, now see fewer rate cuts.The median of 35 responses to an additional question also showed the ECB, which hiked rates by 450 basis points between July 2022 and September 2023, would reduce the deposit rate by a modest 150 basis points in the upcoming cutting cycle to 2.50%.But with wage growth expected to remain above 3% – the level the ECB sees as consistent with its 2% inflation target – until at least 2026, inflation could remain elevated for longer.Inflation is expected to rise to 2.5% this month from 2.4% in April, a separate Reuters poll showed. It was not expected to fall to target until Q3 2025.”The ECB has recently put a lot of emphasis on wage growth coming down as a condition for rate cuts and the question is how much this unexpected increase will startle it ahead of the June meeting,” said Bert Colijn, senior euro zone economist at ING.”While the euro zone economy has been performing sluggishly for some time and inflation has fallen back towards target faster than expected, enough uncertainty remains to not expect a traditional rate cutting cycle to emerge.”The euro zone economy, which grew a better-than-expected 0.3% last quarter, will also expand 0.3% this quarter and next, the poll showed. Economic growth was seen averaging 0.7% this year, an upgrade from the last poll.(For other stories from the Reuters global economic poll:) More

1. Futures lowerU.S. stock futures edged down on Wednesday, as investors looked ahead to key inflation data later this week that could influence how the Federal Reserve approaches potential interest rate cuts in 2024.By 03:38 ET (07:38 GMT), the S&P 500 futures contract had shed 21 points or 0.4%, Nasdaq 100 futures had dipped by 70 points or 0.4%, and Dow futures had dropped by 168 points or 0.4%.The tech-heavy Nasdaq Composite closed higher in the prior session thanks in part to a jump in shares in artificial intelligence chipmaker Nvidia (NASDAQ:NVDA). A closely-watched monitor of semiconductors added 1.9%, boosting the benchmark S&P 500. The blue-chip Dow Jones Industrial Average dipped, weighed down by an uptick in U.S. Treasury yields.Traders are awaiting the release of the monthly personal consumption expenditures price index on Friday. The figure is widely considered to be the Fed’s preferred gauge of inflation, meaning it could factor into how policymakers regard the trajectory of price gains. Signs of sticky inflation have led several officials to suggest in recent days that they would like to see more evidence of cooling prices before starting to bring rates down from more than two-decade highs.2. Salesforce to reportSalesforce is due to report its fiscal first quarter earnings after the bell on Wednesday, with Wall Street likely on the lookout for updates on the business software group’s Data Cloud division.The unit stands to be a beneficiary of a boom in interest in artificial intelligence. Analysts at Goldman Sachs said in a note to clients that they expect demand for the segment to “remain strong” partly due to Salesforce’s ability to “enhance its products via AI.”Data Cloud’s fourth-quarter annual recurring revenue neared $400 million, growing by almost 90% versus the year-ago period. Salesforce President Brian Millham told investors in February that the result “should be an indicator of the demand that we’re seeing for people to get ready for the AI transformation they want to put their company through.”However, market observers have flagged that California-based Salesforce still faces headwinds from uncertainty hovering over the broader economic backdrop and a recovery in spending by inflation-squeezed small- and medium-sized companies.3. American Airlines slashes second-quarter earnings outlookShares in American Airlines slumped in extended hours trading after the carrier warned that it expects to earn less per share in the current quarter.The company lowered its forecast for second-quarter earnings per share to between $1.00 to $1.15, down from $1.15 to $1.45 previously. Total revenue per available seat mile, or TRASM, is also now expected to fall by 5% to 6%, versus a prior estimate for a decline of 1% to 3%.Quarterly flying capacity is now forecast to match the corresponding three-month period in 2023. American had said that the number would increase by 7% to 9%.Meanwhile, the firm announced the departure of Chief Commercial Officer Vasu Raja in June.4. BHP asks for extension in Anglo American takeover talksBHP Group (NYSE:BHP) said it would need more time to hold negotiations with Anglo American, as a deadline for the Australian miner to submit a formal takeover offer for its rival loomed large.Last week, London-listed Anglo rejected a bid from BHP that was reportedly worth 38.6 billion pounds. The firms now have until 5 p.m. London time on Wednesday to reach an agreement, following a week-long extension of a prior deadline.In a statement to Australia’s securities exchange, BHP said that the extension would allow for “further engagement on its proposal.”BHP, the world’s largest listed mining group, has put forward a range of measures to alleviate Anglo’s concerns regarding the deal structure, which includes Anglo unbundling its platinum and iron ore assets in South Africa.”BHP is confident that the measures it has proposed to the Board of Anglo American provide a viable pathway to resolve the matters raised by Anglo American,” it said.CNBC has reported that Anglo American said it would respond to BHP’s request in “due time.”5. Crude gains prior to U.S. inventory dataCrude prices rose Wednesday, adding to recent gains on hopes that demand will pick up with the onset of the travel-heavy U.S. summer season ahead of a meeting by major producers to decide future output levels.By 03:34 ET, the U.S. crude futures (WTI) traded 0.5% higher at $80.20 per barrel, while the Brent contract climbed 0.4% to $84.25 a barrel.Both benchmarks gained over 1% on Tuesday.The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, is set to take place online over the weekend, and the group is expected to extend its current voluntary output cuts of 2.2 million barrels per day into the second half of the year.Meanwhile, the Memorial Day holiday on Monday signaled the start of the peak demand season in the U.S., the world’s biggest oil consumer, supporting sentiment in the market. Upcoming inventory data is expected to further the notion of growing demand, with analysts predicting a 2 million barrel draw in overall inventories. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is chief economic strategist at NetwealthAre financial markets pricing sufficiently for future risks? Measures of financial market volatility suggest not. There are different measures of market volatility. Occasionally, they move the same way. This is often countercyclical, when the economic environment is stable and the political and policy outlook is clear and predictable.Shocks, likewise, can have a similar effect, usually triggering rising volatility. Then the policy response may lead asset classes to behave differently, both in direction and volatility.What about now? Volatility across equity and currency markets is low. The most widely followed gauge of equity market volatility expectations is the Vix. Its value of 12.46 compares with an average over five years of 21.5 and over the longer-term of 19.9.Increased issuance of yield-enhancing structured investment products and their greater use by option dealers has reinforced the low value of the Vix. Notwithstanding this, other measures such as standard deviations in market moves confirm low volatility. The fall in inflation since 2022 has been the main driver. Equity markets, it seems, are discounting good news and a disinflationary environment.More remarkable, perhaps, is low volatility across currency markets. The DB index of foreign exchange volatility captures the picture. It is at 6.3 versus an average of 7.6 over five years and 9.3 over the longer term. This is despite bouts of volatility associated with a competitive weakening of the yen, renminbi and won. However, low currency volatility may discourage hedging, undermine market depth and resilience. Low volatility and tight spreads in credit interest rates over benchmarks have also been evident in corporate bond markets, despite higher refinancing costs and defaults. In contrast, volatility in bond markets has risen this year. The ICE BofA Move index of volatility in US Treasuries is at 83.6, just below both its five-year and longer-term averages. This is explained by the market’s shift away from expectations of a large number of rate cuts in the US. As policy rates fall, bond market volatility should ease, perhaps temporarily. But the challenge is that many of the assumptions underpinning low volatility across markets may be subject to challenge. Not least is how the juncture of political, geopolitical, policy and economic risks are likely to align.Take inflation. Inappropriate monetary policy and supply-side shocks led inflation to persist. A key driver of low global inflation over the past quarter of a century has been the combination of globalisation, technology, financialisation and a squeeze on how much of the national incomes goes to labour, or wage shares. Now globalisation is being replaced by fragmentation and in turn, wage shares have risen. The net result is monetary policy will have to work harder to achieve inflation targets. While policy rates can fall, they will settle at higher levels than pre-pandemic. Plus, there is uncertainty about where neutral rates, where monetary policy is not too tight or too easy, lie.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Fragmentation still has some way to go. One area to watch is digital currencies. If the imminent low-scale rollout of mBridge, a project involving China, Hong Kong, Thailand and the UAE, with more likely to join, is successful then it will not only reduce the costs of cross-border flows, but reinforce a shift in currency holdings. Passive dollar diversification will be a norm, as more central banks put less of their future reserves into the west. This will be disruptive. Markets are evolving from a focus on inflation to growth. A focus on debt will follow. While higher nominal GDP growth provides some temporary respite, debt levels, globally, are close to all-time highs. It is not only the level, but the future relationship between growth and rates that poses problems.The plethora of elections this year has not destabilised markets as some feared. That’s largely because across emerging economies, incumbents have been re-elected or are likely to be. In Europe, the UK and US incumbents will suffer, as they did during the inflationary 1970s. That will trigger policy uncertainty and market volatility. Moreover, the geopolitical landscape is shifting to a less predictable G3 world, comprising the US, China plus the third group of middle ground powers, like India, Nigeria and Brazil.It is hard to quantify fully political and geopolitical risks, but it suggests greater risk premia in many areas. It’s not just tail risks, but policy mistakes and economic vulnerability to possible shocks that could disrupt markets. It suggests the present calm may be replaced by increasing financial market volatility. More

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