Aurelia Butler

NEW YORK (Reuters) – The U.S. Treasury Department is expected to offer markets some relief next week when it details refunding plans for the coming quarter, by keeping the size of most of its auctions steady after three quarters of increases.Investors will focus on an expected debt repurchase program and whether it offers any insights into longer-term financing plans as concerns mount over rapidly rising U.S. debt.While the Treasury may increase the size of some issues, including the 10-year Treasury Inflation-Protected Securities (TIPS), most auctions are expected to be unchanged.The pause in auction size increases would likely be positive for investors after larger than expected debt needs last year sent bond yields higher and rattled stock markets.”It shouldn’t be as big of an event risk as it was the past couple of quarters,” said Vail Hartman, U.S. rates strategist at BMO Capital Markets in New York.The Treasury will give its financing estimate for the coming two quarters on Monday and more detailed plans on Wednesday.Near-term financing needs are improving due to stronger tax receipts and a less bad than previously expected deficit. At the same time, the Federal Reserve is expected to taper its quantitative tightening program, in which it lets bonds roll off its balance sheet without replacement.That will also reduce the Treasury’s need to raise cash via Treasury bills, with issuance of short-term debt in the last nine months of 2024 likely to be net negative, said Angelo Manolatos, macro strategist at Wells Fargo in New York.A bigger focus will be on the likely launch of a buyback program, in which the Treasury will repurchase bonds for cash management purposes or to support liquidity.”We think that the buybacks are going to be unveiled next week and we’ll get that first actual schedule,” said Manolatos.For cash management purposes, the Treasury is likely to buy back shorter-dated debt mainly around major tax payment dates.For liquidity, it will focus on buying back off-the-run securities, older and less liquid issues trading at a discount.The U.S. government may give more details on how the program would work, including on selecting issues to repurchase.Meanwhile, any comments on the Treasury’s longer-term financing plans would be a focus as the rapidly rising U.S. debt gains more attention.”There are very large upside risks to the deficit in coming years … that’s the important issue for them to address, I just don’t know if necessarily they are going to be addressing them in great detail here because there’s an election looming,” said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York.TD sees a “significant risk” that the Treasury will need to resume auction size increases next year. More

This article is an onsite version of our Disrupted Times newsletter. Subscribers can sign up here to get the newsletter delivered three times a week. Explore all of our newsletters hereToday’s top storiesUS inflation rose more than expected to 2.7 per cent in March, according to the measure used as a target by the Federal Reserve. The “core” measure remained stuck at 2.8 per cent. Separate inflation data yesterday was also higher than expected, casting doubt on the potential for interest rate cuts and a blow to President Joe Biden’s re-election hopes. The yen hit a 34-year low after the Bank of Japan held interest rates near zero despite rising pressure on the central bank to tighten its policy and prop up the currency. The BoJ ended its negative rates policy in March, raising borrowing costs for the first time since 2007.US regulators’ move to ban non-compete agreements that tie down high-priced personnel has sent shockwaves across Wall Street. The Federal Trade Commission is invalidating existing contracts for most employees and for all new contracts starting in August. The FT editorial board said the ban was justifiable.For up-to-the-minute news updates, visit our live blogGood evening.The battle for natural resources crucial to the green energy transition is in the spotlight again with the biggest offer for a mining company in years and a new warning over China’s dominance of a critical mineral.BHP’s proposed £31bn takeover of Anglo American would make it the world’s biggest producer of copper, a barometer of global economic health, given its use in everything from electric batteries to power lines. Anglo has rejected the proposal, which provoked a backlash from the South African government and shareholders, raising the prospect of a bitter hostile takeover battle, possibly drawing in industry rivals such as Glencore and Rio Tinto.Traders have been betting on a tighter market for the red metal as supplies get squeezed, although the recent discovery of a vast copper deposit in Zambia by a mining start-up backed by Bill Gates and Jeff Bezos could help Mingomba, in the north of the country, become one of the world’s top three high-grade copper mines.Another crucial battery material, graphite, is at the centre of a warning from South Korea, the leading supplier for electric vehicle batteries in the US.  President Joe Biden’s Inflation Reduction Act seeks to cut out “foreign entities of concern” from EV supply chains, but with Chinese companies controlling more than 99 per of the global market for battery-grade graphite and 69 per cent of the market for synthetic graphite used in battery anodes, this makes it nearly impossible for any EV maker to qualify for US subsidies, South Korea says.Apple, meanwhile, is under fire from the Democratic Republic of Congo, which accuses the iPhone maker of using illegally exported minerals from the war-torn east of the country. Apple’s sourcing of the “3T” materials — tin, tungsten and tantalum, critical in the manufacturing of smartphones — has long been under scrutiny.Lithium, another important component for EV batteries, has also been in the spotlight as India rushes to catch up with rivals including China in the race to build next-generation energy supply chains. New Delhi is pushing state-owned mining groups to pursue mineral reserves in South America and Africa as well as inviting bids to develop domestic production. Magnesium, crucial for making lightweight aluminium alloys used in cars and packaging, is another metal dominated by China, which accounts for more than 90 per cent of EU supplies. The bloc is now restarting mining for the first time in more than a decade with a venture in Romania.China also accounts for about 70 per cent of mining and 90 per cent of processing of rare earths, a set of 17 elements used in a variety of products critical to the energy transition. That gives Beijing a near-monopoly on permanent magnets used in electric vehicles, wind turbines and fighter jets. The US and Australia are spearheading pushes to reduce this dependency but the task is not without difficulties: China in December banned exports of technologies for processing rare earths as it fought back against curbs on computer chip sales to Chinese companies.Need to know: UK and Europe economyThe UK opposition Labour party set out plans for “the biggest overhaul in a generation” of the railways, centred on nationalising all passenger train companies. The private sector will, however, continue to play an important role.Whatever happened to levelling up? A Big Read examines how the Tories’ flagship £15bn policy delivered virtually nothing over the course of a parliament. Economics commentator Chris Giles says a new Labour government may create a virtuous circle between higher growth and improved public finances and services.Join the FT’s political team for an expert Q&A to digest the results of next Thursday’s local and mayoral elections. Register here for free to watch live on May 8 at 13:00-14:00 BST.Pedro Sánchez is weighing up his position as Spain’s prime minister after right-wing “harassment” led to a graft inquiry into his wife. The country is left guessing ahead of an announcement on Monday.Need to know: Global economyChinese President Xi Jinping told US secretary of state Antony Blinken that the two countries should avoid “vicious competition” amid tensions over issues including Taiwan and Beijing’s support for Russia’s war in Ukraine.The World Bank warned that geopolitical tensions were again likely to drive up commodity prices, reigniting inflationary pressures that could hit central banks’ ability to lower interest rates. The austerity and deregulation programmes of Argentine President Javier Milei have cheered markets but are causing deep pain for households. The economy shrank 3.6 per cent in the first two months of 2024 and consumer spending has plummeted. Need to know: BusinessIt’s been a big week in Big Tech. Google parent company Alphabet announced a 15 per cent jump in first-quarter revenues, its first-ever dividend and a $70bn share buyback, sending its market value past $2tn. Microsoft also reported buoyant revenues and earnings as its cloud sales received a boost from AI. Meta chief Mark Zuckerberg vowed to increase spending and turn the social media group into “the leading AI company in the world”. Investors were not impressed and sent the company’s shares diving more than 12 per cent.Several European banks also reported first-quarter results. NatWest profits fell more than a quarter as interest rate windfalls receded; Barclays’ profits dropped 13 per cent due to weakness in its domestic business and its investment bank, but were better than expected. Meanwhile, trading and investment banking helped Deutsche Bank report its highest quarterly profit in 11 years.ExxonMobil profits fell a more-than-expected 28 per cent on weaker gas prices and refining margins as the oil major highlighted “troubling” events in the Middle East and Russia. Rival Chevron was hit by the same problems but was boosted by a 35 per cent increase in US production.Stellantis boss Carlos Tavares said the UK’s EV policy was “terrible” and could bankrupt carmakers. Tavares said the quota regime, which requires manufacturers to meet sales targets that rise annually, was set at “double the natural demand” and would mean carmakers having to sell vehicles at a loss to avoid fines.Dealmaking in European commercial property has hit a 13-year low as investors lose hope of early interest rate cuts.France’s Hermès is emerging as a winner in the luxury goods sector thanks to strong demand for its Birkin handbags. It is defying an industry slowdown that has hit rivals such as Kering, and to a lesser extent, LVMH.Is the end nigh for call centres? Indian IT giant Tata Consultancy Services said AI could lead to their disappearance within a couple of years. Science round-upIntense heatwaves in India, Thailand and Bangladesh and fatal floods in China and Pakistan coincided with the latest UN warning that climate change is causing major repercussions across Asia.Despite increasing evidence of global warming, politicians and investors are softening their opposition to fossil fuels. This “energy pragmatism” is indefensible, argues science commentator Anjana Ahuja.A simple new blood test could help spot cancer cases in poorer countries. The method can detect multiple diseases within minutes and could slash missed diagnosis rates for colorectal, gastric and pancreatic cancers.The EU approved a new antibiotic to tackle the scourge of superbugs. Pfizer’s Emblaveo is aimed at some of the most dangerous drug-resistant bacteria. Anti-microbial resistance is estimated to be linked to 5mn deaths a year worldwide.Scientists are making great strides towards tackling the effects of ageing, but will regulators ever agree to consider it a “treatable” condition, asks columnist Camilla Cavendish.Next-generation nuclear developers such as Rolls-Royce are battling “regulatory marathons” that are slowing down the nascent industry for small modular reactors. Some good newsA new study provides the strongest evidence to date that nature conservation efforts are having a positive impact on the environment.Recommended newslettersWorking it — Discover the big ideas shaping today’s workplaces with a weekly newsletter from work & careers editor Isabel Berwick. Sign up hereThe Climate Graphic: Explained — Understanding the most important climate data of the week. Sign up hereThanks for reading Disrupted Times. If this newsletter has been forwarded to you, please sign up here to receive future issues. And please share your feedback with us at [email protected]. Thank you More

When checks on food entering the UK from the EU begin on Tuesday, lorries will have to drive 22 miles from Dover to border control posts at Sevington on the outskirts of Ashford.Anyone found to be carrying unsafe or contaminated food could be asked to turn around and drive back again.The government has not explained how lorries will be monitored between the port and its control post, or how it will ensure goods that have been identified as unsafe leave the country. “How are we going to make sure those products get back on the ferry?” asked Nan Jones, technical policy manager at the British Meat Processors Association. “With that gap, how do we know they haven’t unloaded a load of products when they’ve been rejected?” Returning a large consignment of high value product like meat would constitute a big loss for a business, she said, so relabelling the product and finding an alternative market, like a wholesaler or restaurant markets, may be tempting. “Once it’s in the country, if you’re that way inclined, there are ways you can disguise it,” Jones added. The UK has been determined to “take back control” of its border and implement its own checks on goods from the EU, despite relying on the bloc’s border controls to keep UK consumers and animals safe for decades. The EU carries out strict controls on all goods coming into the bloc, but exerts a lower degree of control on goods transiting, for example from outside the EU to the UK. Officials at the Dover Port Health Authority, which is part of Dover District Council, have raised the alarm that commercial volumes of illegal meat have been making their way to the UK through non-trade routes on cars, vans and coaches. Inspectors have seized tonnes of illegal meat, much of which is from Romania, where pork exports to other EU countries are banned due to African Swine Fever. Yet the DPHA said the government plans to cut their funding by 70 per cent. The government said it had strict border controls in place to protect food and animal safety. “Work is under way with the Food Standards Agency to ensure there are robust procedures in place for goods arriving at Sevington — an established border facility — to ensure there is absolutely no compromise on food safety or biosecurity,” said a spokesperson. In a letter to environment secretary Steve Barclay earlier this month, the Cold Chain Federation trade group said the volumes of illegal meat seized at Dover demonstrated the determination of criminals to bring in and trade illicit goods. “The 22-mile corridor now open to them, or indeed, other criminals to intercept high value goods, adds further risk to the UK food chain in that it provides numerous routes to exit from the inspection process,” the CCF wrote. Farmers and producers meanwhile live in fear of an outbreak of disease that could wipe out herds. “As a sector, we are doing everything within our power to protect our animals and prepare our businesses, but this is all just a futile effort if our borders are permitted to remain so vulnerable to illegally imported meat,” said, Rob Mutimer, chair of the National Pig Association. Customs experts are concerned that the government is more occupied with avoiding queues and negative media coverage than implementing a secure system.The new UK rate of checks for these goods will be between 1 and 30 per cent, depending on their risk category. Among goods counted as high risk are live animals; medium-risk goods include milk, eggs and most meats; while low-risk goods, which are not subject to physical checks, encompass products not intended for human consumption. In the EU, animal and plant goods are subject to more stringent inspection rates: 15-30 per cent for dairy products and medium-risk meat compared with 1-10 per cent in the UK. “Prioritising ‘highest risk’ goods at a mere 1 per cent inspection rate benefits trade, but falls short in ensuring food safety,” said Arne Milken, managing director of trade facilitation business Customs Manager.Milken argued the solution was to secure a veterinary agreement with the EU, which would harmonise UK and EU animal health rules, removing the need for many of the physical checks on animal and plant products moving between the bloc and the UK. The EU has such an arrangement with Switzerland but Rishi Sunak’s government has ruled out seeking such a deal.“This strikes the right balance between safety and trade ease,” said Milken. “To achieve this, we must break down Brexit’s ideological barriers.” Another potential problem is that UK government computer systems used to identify potentially risky consignments are prone to errors, which could send thousands of trucks for physical inspection. People who attended a meeting on border management on Tuesday with the Department for Environment, Food and Rural Affairs said officials admitted the error rate was currently 33 per cent. To avoid a third of goods turning up at border facilities, the government plans to phase in checks, starting with the highest risk goods. “As we have always said, the goods posing the highest biosecurity risk are being prioritised as we build up to full check rates and high levels of compliance,” said Defra. A spokesperson added there had been “extensive engagement” with businesses and their approach was welcomed by several trade associations and port authorities.Video: We need to talk about Brexit | FT Film More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Barely any international summit on economics or trade can go by these days without warnings about the dangers of protectionism and the post-cold war globalisation era coming to an end.Policymakers and officials at the recent spring meetings of the IMF duly expressed concern over the distortive potential of the newfound enthusiasm for industrial policy — governments intervening to target specific companies or sectors. The amounts of public money that Joe Biden’s administration has shovelled into the green economy through the Inflation Reduction Act have aroused envy in many governments around the world. But the trade and technology restrictions the US has imposed have caused concern.Some of the alarm is overdone. For one thing, industrial policy is not necessarily inefficient or distortive. The US turn away from globalisation is atypical, certainly among advanced economies. And cross-border movements of goods, services, investment, people and data have survived multiple shocks over the past 30 years.Intervention is certainly rising. Studies by the IMF and the Global Trade Alert research service show more than 2,500 industrial policy interventions last year, more than two-thirds of them trade-distorting. But their overall impact is unclear. Hundreds of modest spending or regulatory moves won’t have much effect. GTA reports also showed distortive interventions rising rapidly after the global financial crisis in 2008, yet global trade recovered.It is not surprising or necessarily destructive for governments to intervene in fast-evolving sectors like electric vehicles, both to gain first-mover competitive advantage and to reduce carbon emissions. The IRA spending is not perfect, but America is at least making an overdue contribution to combating climate change.Attempts in other countries to match the US approach are relatively modest. France’s suggestion of a large new pan-EU green sovereignty fund foundered on German scepticism. Japan went on a spending spree to rebuild its semiconductor industry, but high debt loads across the world mean the capacity for new fiscal outlays is limited.Meanwhile, America’s out-and-out trade protectionism also has relatively weak echoes elsewhere. True, the EU has tooled up with an array of weaponry to go after what it perceives as unfair competition. Using its latest instrument, the foreign subsidies regulation, Brussels conducted a raid on a Chinese company in Europe this week.But if applied fairly, such levelling of the playing field does not constitute protectionism. The EU’s actual use of trade instruments so far has been restrained. Brussels is considering anti-subsidy duties on EV imports from China, but such tariffs are likely to be modest, intended only to give EU automakers breathing space to catch up.Nor is the neurotic US aversion to signing new trade deals shared elsewhere. Governments in the Asia-Pacific are lining up to join the CPTPP that the US abandoned. China’s apparent return to export-led growth raises concerns about distortive interventions and trade imbalances but it could hardly be called protectionist.As ever, the best defence for world trade would be binding global rules, but, as ever, the World Trade Organization falls well short of providing them. Its rule book is inadequate to constrain China’s state capitalist model, and the US is keener on subverting the institution by crippling its dispute settlement system than on truly reforming it.Without that strong legal framework, conditions for a surge of government interventionism with protectionist elements remain in place. But there have been so many false alarms over the decades that the onus is on the worriers to show that this time is different and that globalisation is in serious trouble. So far, there does not seem to be truly compelling evidence that it is. More

On the High Street in Hungerford, a historic market town about an hour west of Reading, is Nigel Montgomery’s stamp and coin shop. He has traded precious metals for about 50 years, but has never seen a gold rush like this: the price of a troy ounce, the unit used to weigh precious metals that dates to the Middle Ages, hit an all-time high this month, above $2,400.“We’ve never seen so much retail demand as we are seeing at the moment,” says the 67-year-old. “I’ve been through various gold and silver booms since the 1970s — we’re seeing a more sustained, stronger and genuine rally.”Investors have snapped up tax-free capital gains in gold sovereign and Britannia coins to hedge their portfolios against inflation and any escalation of conflict in the Middle East. So much so that Montgomery is continuously having to replenish his stock.But the origins of this gold rush are thousands of miles from Montgomery’s town — and far from the historic global trading centres of London, Zurich and New York — in Beijing and Shanghai. The People’s Bank of China led record gold purchases by central banks in 2022 and 2023, collectively buying above 1,000 tonnes each year, as emerging markets sought to diversify their reserve holdings away from the US dollar, which was weaponised by Washington in sanctions against Russia after its invasion of Ukraine. Chinese retail investors have amassed gold as other investments from property to local equities turn sour. Chinese hedge funds and other speculators have also piled in.“This rally has Chinese characteristics written all over it,” says John Reade, chief market strategist at the World Gold Council, an industry lobby group. “Everything leads back to different actors in China.”While punters in Hungerford and at Costco stores across the US go gaga for gold, the western investor has, by and large, sat on the sidelines of gold’s latest rally. Gold-backed exchange traded funds (ETFs) have continued to experience monthly outflows, while bar and coin demand has been abysmal in Germany, typically the world’s third-largest market.Andreas Habluetzel, chief executive of Degussa Goldhandel, Europe’s largest gold dealer, which owns London’s Sharps Pixley, says the cost of living crisis and stubborn inflation is driving customers to sell. “We all want to keep the same lifestyle: sending your kids to good schools and owning two cars. When we talk to the middle-income people they are liquidating as they need money,” he says.That creates a dilemma for the western armchair investor. Gold has rallied some $600 per troy ounce since conflict erupted between Israel and Hamas in October, yet the staggering rise is widely seen by analysts as disproportionate to the gold price’s usual drivers: real rates on US Treasuries, the dollar and ETF flows. “This is not the behaviour of gold. It’s more or less the behaviour of crypto,” says Habluetzel.When the asset is so volatile, should investors rely on it as a haven asset? And if the market’s centre of gravity is shifting to a set of investors in China with a fundamentally different set of concerns to your own, should you bank on backing bullion?You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.From a tactical perspective, gold’s sharp rise could make it poised for a sharp correction, having already fallen about $50 this week, making it a dangerous entry point. But others argue gold has a cohort of buyers waiting in the wings for any dips to pile into gold — including western ETF investors that have not participated yet. Deutsche Bank analyst Michael Hsueh says that it is likely that “any profit-taking by early investors would be replaced by investment from those who have so far not participated in the move”.Looking further out, the question for investors is whether they believe the global monetary system is at the early innings of sweeping transformation. That might be a new era of persistent inflation that erodes the purchasing power of fiat currencies and great power competition that increases gold’s share of reserve assets at the US dollar’s expense.Max Belmont, portfolio manager of the Gold strategy at First Eagle Investments, an asset manager, says that gold is “sniffing out” mounting concerns over the sustainability of global debt levels.US debt increases by about $1tn every 100 days or so with interest rates at their current levels, while investors fear Europe could struggle to manage debt levels if Donald Trump enters the White House and pushes for Nato defence spending to rise. The IMF warned this month that the US, China, Italy and the UK “critically need to take policy action” on debt. Neither US presidential candidate shows much sign of wanting to rein in spending.Nicky Shiels, precious metals analyst at MKS Pamp, a Swiss refinery and trader, says surging gold prices anticipate a “big regime change the west is going through”, from erosion of US dollar purchasing power, higher-for-longer inflation and a multipolar world.When it comes to US debt, she says the market has grown increasingly convinced that the Fed may cut interest rates even if inflation roars higher in order to reduce the interest payments that the US government is servicing (the Fed is independent of the Treasury).“This is it: two decades of easing monetary policy coming to a head,” she says.On the other hand, emerging market central banks and sovereign wealth led by China, Russia and the Middle East are buying gold after the US sanctioned billions of dollars of Moscow’s reserves held in US bonds. “It’s the dollar losing utility as an asset to store trade surpluses,” says John Hathaway, managing partner of Sprott Inc, a Canadian asset manager specialising in metals. Gold has traditionally tracked real rates of US Treasuries but he adds that “the Fed’s policies may not matter anymore to gold prices” given the new club of buyer’s motivations.And Chinese investors are taking cues from their own central banks’ purchases. “An awful lot of private wealth is going to be running into gold as there’s nothing else to buy: property sucks, equities lose you money, cash in the bank is paying nothing and they can’t get the money offshore,” says Adrian Ash, director of research at BullionVault, an online gold marketplace.But others say geopolitical risks, the dollar’s demise and debt concerns are over-egged.“The world is not nearly as risky as [in] 1980,” says James Steel, chief precious metals analyst at HSBC, when gold hit its inflation-adjusted record high well above $3,000 per troy ounce.For retail investors concerned that they missed riding the wave of frothy gold prices, one option could be gold mining equities. Valuations of the world’s gold producers, led by Newmont and Barrick Gold, have rarely been as heavily discounted in the past 40 years versus the gold price as they are now, according to asset manager Schroders. That has made the gold mining sector’s collective valuation at roughly $300bn no bigger than Home Depot, the US DIY retailer.The theory is that lofty gold prices will feed through to higher margins when gold producers next report earnings, sending share prices shooting up.“It’s a different risk-reward. If gold prices double then you should get a bigger increase in your margin,” says Robert Crayfourd, who manages the Golden Prospect Precious Metals fund at CQS, an asset manager.Jim Luke, fund manager at Schroders, wrote in a recent note that “dismal western sentiment” on gold and poor operational delivery by the sector’s leading companies were behind the low valuations. “It is not hyperbole to say the sector could rally 50 per cent and still look inexpensive,” he says.Gold mining equities face structural challenges from their ESG credentials, as they play little role in the energy transition, rising political risk in cash-strapped developing nations from Mali to Mexico and declining reserves.More troubling, however, is that this gold rally has been driven by the Chinese central bank, retail investors, asset managers and funds for whom western gold mining equities hold little appeal.Investors have been deterred by the sector’s inability to tame cost inflation from vital inputs such as fuel, explosives and cyanide in the past couple of years and overspending during previous booms. Fund managers want to see proof that margins will march higher.John McCluskey, chief executive of Alamos Gold, a mid-sized Canadian gold producer, says that the tech-led run for equity markets, with the Dow Jones breaking above 38,000, makes it hard to call when gold producers will get a look in. “‘The party is going full tilt. I think I’ll go home to check the gas is on’ — you’re not going to do that now. ‘I’ll stick it out and put it in these gold funds that haven’t performed well for 10 years’ — you don’t do that,” he says. But, he adds: “When they see the margins then they will buy those equities.”Jason Todt calls himself one of the new breed of “retired gold bugs” who are partying hard. After the global financial crisis, the manager of a car dealership in Missouri spent $100,000 from a property sale on gold. Had the 47-year-old held on to all of his bullion until now, it would be worth $120,000. Instead, Todt earned $1.5mn by selling $65,000 of his gold hoard in 2017 to buy bitcoin and other assets, enabling him to retire early in 2020, meet his Ukrainian wife and travel the world in a sailboat.“It has taken seven years to get a 100 per cent return on gold when you can do that in bitcoin in a year,” he says.Jason Todt and his wife Evgenia Grydnieva on their sailboat, moored in Gulfport, Mississippi More

Before policymakers begin to ease borrowing costs, they say they want to see more data confirming that inflation is returning to the U.S. central bank’s 2% target. Here’s a recap of key data watched by the Fed:INFLATION (PCE released April 26; next release CPI May 15):The personal consumption expenditures (PCE) price index, which the Fed uses to set its 2% inflation target, accelerated to a 2.7% annual rate in March, up from 2.5% the month before. Core inflation stripped of volatile food and energy prices rose 2.8%, the same as February. Neither number is likely to boost confidence among Fed policymakers that inflation will steadily return to the central bank’s target. But neither will it set them back from thinking the jump in inflation early this year may just have been a “bump” on the way to lowered price pressures. The March numbers had already been anticipated by Fed chair Jerome Powell in earlier remarks, and the release of the data matched his expectations. The Consumer Price Index accelerated in March to a 3.5% annual rate versus 3.2% in February, a blow to Fed officials hoping for signs inflation would resume its decline after progress stalled at the start of the year. Core prices, excluding food and energy costs, rose at a 3.8% annual rate, the same as the month before. The numbers led investors to push back to September their expectations for an initial Fed rate cut, and they now see only two quarter-percentage-point cuts this year. Rising gasoline and shelter costs again contributed the bulk of the CPI increase, defying hopes among some policymakers that housing inflation is on the verge of a steady decline.RETAIL SALES (Released April 15; next release May 15): Consumer spending rose more than anticipated in March, and upward revisions to earlier data again defied expectations that stressed households would pull back and slow the economy. Data for March showed retail sales rose 0.7%, more than twice the figure projected by economists in a recent Reuters poll. The unexpected jump is likely to add to already growing sentiment among Fed officials that there is no urgent need to cut interest rates in an economy that is showing little sign of buckling under the pressure of current credit conditions. EMPLOYMENT (Released April 5; next release May 3):U.S. firms added a larger-than-expected 303,000 jobs in February, and employment gains in the previous two months were revised up by 22,000. The unemployment rate fell unexpectedly to 3.8%, marking the 26th straight month below 4% – the longest such run since the 1960s – and prompting Richmond Fed President Thomas Barkin to remark: “That’s a quite-strong jobs report.”Fed officials have become more comfortable with the idea that continued strong job growth could still allow inflation to fall, especially if the supply of labor keeps growing and wage growth eases. Both did in March: The workforce grew by 469,000, the most since last August, and annual wage growth eased to 4.1%, the lowest rate of increase since June 2021. Still, that rate is above the 3.0%-3.5% range that most policymakers view as consistent with the Fed’s inflation target. JOB OPENINGS (Released April 2, next release May 1)Fed Chair Jerome Powell keeps a close eye on the U.S. Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) for information on the imbalance between labor supply and demand, and particularly on the number of job openings available to each person who is without a job but looking for one. The ratio had been falling steadily towards its pre-pandemic level, but since October has remained in the 1.35-1.43 range, higher than the 1.2-to-1 level seen before the health crisis. The number fell in the most recent release, for February, as the number of people seeking work rose, pushing up the unemployment rate.Other aspects of the survey, like the quits rate, have edged back to pre-pandemic levels. More