Aurelia Butler

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The Australian dollar is down 1.3% to $0.6605 through the week so far and the New Zealand dollar is about 0.6% weaker at $0.6098. The euro traded at $1.0814 in the Asia morning, down 0.5% for the week.Overnight May figures showed U.S. business activity accelerated to the highest level in just over two years and manufacturers reported a surge in prices for a range of inputs, prompting a pullback in U.S. interest rate cut expectations.”Traders pushed out the timing of the first Fed rate cut to December,” said Westpac economist Jameson Coombs.Minutes from the Federal Reserve’s April 30-May 1 meeting published this week also showed a live debate among policymakers as to whether current rates are sufficiently restrictive to cool inflation, again surprising investors expecting rate cuts.The dollar’s gains have kept heavy pressure on the yen, which has weakened about 0.8% through the week so far to 157.10 per dollar. The yen has also fallen on crosses and at 169.65 to the euro is not far from last months’ 22-year trough at 171.44.Japan’s core inflation slowed for a second straight month in April, meeting market expectations at 2.2%.The euro received a small boost on Thursday when key European wage indicator picked up, showing the pace of negotiated wages rose by 4.7% last quarter. That ruffled market bets on a June rate cut for Europe and helped lift the euro away from a nine-month low on the pound.However the moves were modest and the European Central Bank published a blog post highlighting one-off factors contributing to the wage rise. Rates markets still price a near 90% chance the ECB cuts rates next month.Currency moves were modest in the early part of the Asia session and stock markets fell. China started a second day of war games around Taiwan. China’s yuan was steady in offshore trade and eyeing a weekly drop at 7.2858 per dollar.The U.S. dollar index, which measures the dollar against a basket of six major peers, was last up nearly 0.6% on the week to 105.07, on course for its largest one-week rise since mid-April.Later in the day traders will have an eye on final German GDP figures, British and Canadian retail sales, U.S. durable goods orders and speeches from ECB and Federal Reserve policymakers – notably Fed Governor Christopher Waller on longer-term rates. More

Standard DigitalWeekend Print + Standard Digitalwasnow $85 per monthBilled Quarterly at $199. Complete digital access plus the FT newspaper delivered Monday-Saturday.What’s included Global news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts10 monthly gift articles to shareGlobal news & analysisExpert opinionFT App on Android & iOSFT Edit appFirstFT: the day’s biggest stories20+ curated newslettersFollow topics & set alerts with myFTFT Videos & Podcasts20 monthly gift articles to shareLex: FT’s flagship investment column15+ Premium newsletters by leading expertsFT Digital Edition: our digitised print editionEverything in PrintWeekday Print EditionFT WeekendFT Digital EditionGlobal news & analysisExpert opinionSpecial featuresExclusive FT analysisPlusEverything in Premium DigitalEverything in Standard DigitalGlobal news & analysisExpert opinionSpecial featuresFirstFT newsletterVideos & PodcastsFT App on Android & iOSFT Edit app10 gift articles per monthExclusive FT analysisPremium newslettersFT Digital Edition10 additional gift articles per monthMake and share highlightsFT WorkspaceMarkets data widgetSubscription ManagerWorkflow integrationsOccasional readers go freeVolume discountFT Weekend Print deliveryPlusEverything in Standard DigitalFT Weekend Print deliveryPlusEverything in Premium Digital More

FRANKFURT (Reuters) -Thyssenkrupp on Thursday said its supervisory board approved a planned sale of 20% of the conglomerate’s steel division to Czech billionaire Daniel Kretinsky in the face of continued opposition from labour representatives.The German industrial group said that labour leaders, who hold half of the non-executive board’s seats, voted against the deal. Board Chairman Siegfried Russwurm’s vote was counted twice, which is allowed under German corporate governance laws to break a stalemate.Shop stewards warned last week they might oppose the deal unless there were written assurances regarding jobs and sites.Approval of the partial sale marked a key step in Thyssenkrupp (ETR:TKAG)’s path to what it hopes will be a 50/50 steel joint venture with Kretinsky, whose energy holding EPCG would help lower electricity costs, a major factor in steelmaking.Earlier this month, Thyssenkrupp cut its 2024 guidance for the second time in three months, highlighting troubles in the steel business, which has been hit by lower demand and prices.Juergen Kerner of trade union IG Metall, who is deputy board chairman, said labour leaders in principle welcomed Kretinsky’s willingness to invest in the business but the stake sale amounted to a rushed separation of the steel unit from the parent company.”This will be met with fierce opposition by us,” said Kerner. More

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By Davide BarbusciaNEW YORK (Reuters) – Jeffrey Gundlach, the chief executive of investment management company DoubleLine Capital, expects a U.S. recession as soon as this year, he said on Thursday, as higher interest rates pressure U.S. consumers and companies.Signals of brewing trouble in the U.S. economy such as rising credit card delinquencies and softer retail sales data suggest the possibility of an economic contraction is more imminent than the risk of an inflationary rebound, he said.”There’s a lot of recessionary signals out there,” he said, speaking at a webinar hosted by David Rosenberg, founder and president of Rosenberg Research. “There’s more of a recessionary feel than an inflationary feel,” he added.The money manager, often dubbed ‘the bond king’, said he was staying away from the riskiest parts of the corporate debt market such as triple-C rated companies’ bonds as well as private credit investments because he expects companies’ debt defaults to surge.Specifically, regarding private credit, he said investors looking for higher returns in private markets than in public debt markets run the risk of remaining stuck with illiquid assets in case of a sharp economic slowdown.”There is no factor on which private credit looks better than public credit at the present moment. It’s riskier, it doesn’t have the same reward, it’s the absolute worst,” he said.On the other hand, DoubleLine is heavily exposed to U.S. government debt, he said, despite concerns over rising U.S. debt levels and soaring government interest debt payments caused by higher rates. “We have more Treasuries now in our strategies than we’ve ever had,” said Gundlach.Over time, a growing debt burden could however lead to the need to restructure U.S. government debt, which would be unprecedented. “I’ve got this crazy idea that I want buy only the lowest coupon Treasuries … because if I have a very low coupon Treasury I don’t have to worry about being restructured,” he said. “I worry that the federal government might be forced to restructure the Treasury debt.” More

(Reuters) – A look at the day ahead in Asian markets.A classic economic data case of ‘good news is bad news’ from the United States on Thursday looks set to weigh on Asian markets on Friday, as that eagerly awaited first U.S. interest rate cut gets pushed back further into the distance.A quarter point rate cut from the Fed is now fully priced only in December, after the presidential election. It’s hard to believe now, but at the start of the year 150 basis points of easing was expected in 2024, starting in March.Coming on the heels of a similar tempering of UK rate cut expectations and more hawkish signaling from New Zealand’s central bank this week, the prospect of tighter global policy in the coming months could be problematic for risk assets.Stocks fell and bond yields rose on Thursday after figures showed that U.S. business activity accelerated in May to the highest level in over two years, trumping yet another earnings ‘beat’ from AI and chipmaking giant Nvidia (NASDAQ:NVDA).This should fuel risk appetite, but the U.S. PMI report also showed price pressures rising rapidly. With many equity indexes historically high and volatility historically low, investors are choosing caution over adventure.There are signs that some of the froth is coming off other markets – after hitting record highs on Monday, U.S. copper prices are on track for a 5.5% decline this week, which would be the biggest fall since November 2022. That’s the backdrop to the open in Asia on Friday. If markets close flat or lower, the MSCI Asia ex-Japan stock index will post its first weekly decline in five, China’s blue chip CSI300 its first fall in six weeks, and Hong Kong’s Hang Seng its biggest weekly loss since January.Japanese inflation tops Friday’s economic data calendar, which also includes inflation from Malaysia, trade from New Zealand and industrial production from Singapore.Annual core inflation in Japan is expected to fall to 2.2% in April from 2.6%, closer to the Bank of Japan’s 2% goal and perhaps enough to give policymakers some breathing room after Japanese Government Bond yields this week climbed to their highest in over a decade. In Italy, G7 finance chiefs get a two-day meeting under way on Friday, with the trade standoff between China and the West high on the agenda. And looking ahead to the weekend, South Korea hosts a two-day trilateral summit with China and Japan that starts on Sunday.From a markets perspective, it will be interesting to see if discussions touch on trade competitiveness, AI and the chips sector, and exchange rates, after Japan and South Korea last month signed a rare joint statement with the United States to “consult closely” on currencies.Here are key developments that could provide more direction to markets on Friday:- Japan CPI (April)- New Zealand trade (April)- G7 finance chiefs meet in Italy More