Aurelia Butler

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The number of American voters who approve of Joe Biden’s handling of the economy is rising, but concern over inflation, including rising fuel prices, could derail his re-election bid, according to a new poll.The latest monthly poll conducted for the Financial Times and the University of Michigan’s Ross School of Business found that 41 per cent of registered voters said they approved of Biden’s handling of the economy.That is a five-point jump from a month earlier, when just 36 per cent said they approved, and the highest approval rating since pollsters began asking the question in November.Biden’s overall approval rating has climbed to 43 per cent, four points higher than in March and another record high since the monthly poll started.But while Biden has improved his standing with younger voters, women, independents and Black and Hispanic voters, in particular, since last month’s poll, it highlights warning signs for the president.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.The poll found 41 per cent of voters trusted Donald Trump more than Biden on the economy against 35 per cent who preferred the president. Sixteen per cent of registered voters said they trusted neither man to handle the economy.At the same time, the poll showed inflation continues to weigh on voter sentiment. The latest official data, out last week, showed a 3.5 per cent increase in consumer prices for the year to March, higher than economists had expected.Nearly four in five voters cited price increases as one of their biggest sources of financial stress, and almost three in four said food prices were having the “biggest impact” on their financial situation. The FT-Michigan Ross poll also revealed a sharp increase in the number of Americans saying the cost of petrol was hitting their pockets, with 52 per cent saying it had a big impact on their financial situation, compared with 47 per cent last month. In early April, the US Energy Information Administration raised its monthly forecast for retail petrol prices, citing increasing wholesale petrol and crude oil prices. Rising petrol prices are also playing an important role in month-to-month changes in inflation, according to official figures released last week.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Still, the findings will be welcomed by Biden, who has faced persistently low approval ratings, most notably on his handling of the economy, even as the US benefits from relatively strong growth and a robust labour market.“Voters worry as much about inflation as they ever did, but they blame Mr Biden less,” said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. “Mr Biden’s recent, more strident accusations that greedy corporations are responsible for price increases seem to have won him points.”The poll also suggested that voters from across the political spectrum were open to supporting third-party candidates. While No Labels, the bipartisan group that had tried to field an independent “unity ticket,” dropped its bid this month, several third-party candidates, including environmental lawyer Robert F Kennedy Jr, academic Cornel West and Green party activist Jill Stein are still seeking ballot access in states across the country.Nearly half — 46 per cent — of voters, and two-thirds of independents said they would consider voting for a third-party candidate.The latest survey nevertheless showed the majority of voters were supportive of a range of Biden administration actions and policy proposals. Asked about the Department of Justice’s recent move to sue Apple alleging the technology giant was using its power to crush competition and limit consumer choice for smartphones, nearly three-quarters of voters said large tech groups have too much power. Separately, asked whether they back the Biden administration’s latest proposals to raise taxes on corporations and high-income individuals, nearly two-thirds said they supported the idea. If enacted, the policy would require billionaires to pay at least a quarter of their income in taxes and raise the corporate tax rate to 28 per cent from 21 per cent.You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.The FT-Michigan Ross poll was conducted online by Democratic strategists Global Strategy Group and Republican polling firm North Star Opinion Research between April 4-8. It reflects the opinions of 1,010 registered voters nationwide, and has a margin of error of plus or minus 3.1 percentage points. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.It’s easy to mock gold bugs, but their moment may finally have come. The precious metal has been breaking out recently amid higher than expected inflation in the US, and general anxiety over everything from geopolitics to the November presidential elections to where monetary policy and markets go from here.All these things are predictable reasons for gold to surge. But there are deeper, longer-term messages in this rise that investors should pay very close attention to.Let’s start with inflation. Whatever happens over the next few quarters, I’ve long thought that we were in for a period of “higher for longer” inflation. Aside from the possibility of a technology-driven productivity miracle, it’s hard to think of a macro-trend at the moment that isn’t inflationary. The economy is running hot — from fiscal stimulus in the US to more supply chain redundancy as countries de-risk, to all the capital investment required for the clean energy transition and re-industrialisation in rich countries. Even ageing US baby boomers are likely to be an inflationary force, since they have health, time and plenty of money to spend.Gold is historically an inflation hedge. But it’s also something investors turn to when they are worried about the stability of the status quo. It will languish for decades, then break out when the world is at a major pivot point, as it is now. It’s no secret that the Washington consensus — which expected emerging nations to fall in line with free-market rules written by the west — and the postwar Pax Americana are over. Trade tensions between the west and China are growing. Meanwhile, the weaponisation of the dollar following the outbreak of war in Ukraine has quickened moves in many countries, most importantly China, to sell Treasury bills and buy gold as a hedge against America’s financial might. It is easy to imagine this weekend’s escalation in Middle East tension boosting gold further.That pendulum shift has many analysts predicting a massive run up in gold. Philippe Gijsels, the chief strategist for BNP Paribas Fortis, and his colleague chief economist Koen De Leus — the authors of The New World Economy in 5 Trends — are predicting gold will rise from its current price of about $2,374 an ounce to reach $4,000 in “the not so distant future”. As Gijsels puts it, “this isn’t just an interest rate thing. People are hedging against a new world”.I was interested to see a tweet last week by economist Brad Setser noting that China’s holdings of US financial assets as a share of its gross domestic product are back down to where they were when the country joined the World Trade Organization in 2001. Not all of that went into gold, of course (much went out of foreign exchange reserves and into China’s own beleaguered banks). But it speaks to that changing world. As a recent report by Currency Research Associates noted, “China buying gold and selling Treasuries mirrors how Europe’s central banks began to redeem dollars for gold in the late 1960s as the Bretton Woods System began to break apart.”Indeed, that was the beginning of the last long, sustained run up in gold, between 1968 and 1982, when it rose against both the Dow and the dollar. There are other ways in which that period chimes with today. In 1971 when Richard Nixon, then president, took the US off the gold standard, he also imposed a 10 per cent tariff on imports. This was a kind of unofficial devaluation of the dollar to protect US-made goods from exchange rate fluctuations. Donald Trump has, of course, proposed a 10 per cent across-the-board import tariff if he’s elected to a second presidential term. He has also decried the way in which a strong dollar penalises American manufacturers abroad. But the recent trip to Beijing by Treasury secretary Janet Yellen to protest against Chinese dumping underscores the fact that the Biden administration is equally worried about US industries and workers. I wouldn’t be surprised to see some depreciation in the dollar no matter who wins the White House. That, too, would be good for gold, which tends to go up when the dollar weakens.The final reason to be bullish on gold is the picture on US debt and deficit, which is quickly becoming unsustainable. The most recent congressional Budget Office projections put US debt at 99 per cent of GDP by the end of this year, and have it on track to reach 172 per cent by 2054. If this happens the result would be monetisation, inflation, financial repression and a period of extreme chaos in monetary policy and markets. Bad for the world; good for gold.Is there any hope of a different outcome? One could imagine inflation eating away some debt. But higher-for-longer rates would create an even more fiscally unsustainable position, given that asset prices and thus tax receipts would be likely to fall. Gold bull Luke Gromen, who pens an investment newsletter, “The Forest for the Trees”, has argued that since the only thing that can be trimmed from the US budget is interest payments (cuts to welfare entitlements and defence spending are not politically viable), the Federal Reserve will eventually be forced to shift direction and lower interest rates so that the US can avoid a debt death spiral.Yet more easy money would undoubtedly be good for gold. In this strange moment of economic and political paradigm shifts, it seems that most things [email protected] More

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SEOUL (Reuters) – South Korea’s finance minister stepped up warnings on Monday that the government is ready to act to counter any renewed volatility in currency markets after the won has extended declines against the dollar to hit the lowest in a year and a half.”We will swiftly act according to contingency plans and will play any necessary role to respond to any excessive volatility in forex and other financial markets,” Choi Sang-mok said at a policy meeting urgently scheduled to discuss escalating tensions in the Middle East.He also said the government will extend a tax cut on fuel consumption by two months until the end of June in an effort to curb inflation amid escalating global geopolitical risks.The comments come as Iran launched explosive drones and fired missiles at Israel late on Saturday in its first direct attack on Israeli territory, a retaliatory strike that raised the threat of a wider regional conflict.South Korean currency markets open at 0000 GMT. More

The dollar went up 1.6% against a basket of six major currencies last week after a small but unnerving upside surprise in U.S. inflation cast doubt over bets on U.S. rate cuts, while European policymakers signalled a cut within a few months.The dollar made a 34-year high on the yen and five-month top on the euro on Friday and traded near those levels early in the Asia day, buying 153.24 yen and a euro for $1.0646. There was little initial reaction to a weekend attack on Israel by Iran.The Australian and New Zealand dollars rose very slightly to lift away from lows, with the Aussie up 0.2% to $0.6475 after briefly touching a two-month trough of $0.6455.The kiwi, which hit a five-month low on Friday, nudged 0.2% higher to $0.5946. Bitcoin, which like the Aussie and kiwi can be a barometer of market sentiment, fell last week and in weekend trade but steadied on Monday to $65,721.Iran had warned of a strike on Israel and over the weekend launched drones and missiles in retaliation for what it said was an Israeli attack on its Damascus consulate. It caused modest damage and Iran said it now “deemed the matter concluded.”Two senior Israeli ministers signalled on Sunday that retaliation was not imminent and that Israel would not act alone, leaving the region on edge over the risk of a broader war, while financial markets were in wait-and-see mode.”It is too early to judge,” said Jason Wong, senior market strategist at BNZ in Wellington.”It was really a symbolic attack over the weekend … never really designed to inflict much damage – it’s now over to what Israel’s response will be.”Sterling was 0.1% firmer to $1.2460, not far from Friday’s five-month low at $1.2426. [GBP/]U.S. two-year yields rose 15 basis points last week and markets have dialled down U.S. interest rate cut expectations to price in just a 50 basis-point reduction this year, with the first cut not fully priced until September. That is a long way from January pricing for more than 150 bps in cuts by December.U.S. retail sales data is due later on Monday. Canadian and New Zealand inflation figures are due on Tuesday, along with Chinese growth numbers. British inflation data is out on Wednesday and Aussie jobs data on Thursday.========================================================Currency bid prices at 0005 GMTDescription RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.0645 $1.0642 +0.04% +0.00% +1.0652 +1.0630 Dollar/Yen 153.2950 153.2450 +0.06% +0.00% +153.3150 +153.1900 Euro/Yen 163.19 163.08 +0.07% +0.00% +163.2400 +162.9400 Dollar/Swiss 0.9138 0.9144 -0.06% +0.00% +0.9141 +0.9115 Sterling/Dollar 1.2456 1.2449 +0.06% +0.00% +1.2463 +1.2451 Dollar/Canadian 1.3759 1.3774 -0.11% +0.00% +1.3779 +1.3757 Aussie/Dollar 0.6474 0.6463 +0.18% +0.00% +0.6479 +0.6455 NZ Dollar/Dollar 0.5942 0.5935 +0.16% +0.00% +0.5950 +0.5937 All spotsTokyo spotsEurope spots Volatilities Tokyo Forex market info from BOJ More

LONDON (Reuters) – Emerging countries will pay a record $400 billion to service external debt this year, and nearly four dozen cannot spend the money they need for climate adaptation and sustainable development without risking default in the next five years, according to a report led by Boston University released on the eve of the IMF/World Bank spring meetings. The report from the Debt Relief for Green and Inclusive Recovery Project (DRGR) found that 47 developing countries would hit external debt insolvency thresholds, as defined by the International Monetary Fund (IMF), in the next five years if they invested the necessary amounts to hit 2030 Agenda and Paris Agreement goals. “They would be in such high debt distress that they would be knocking on the door of (default), given the current debt environment, if they were going to try to mobilize that kind of financing,” said Kevin Gallagher, director of Boston University’s Global Development Policy Center. A further 19 developing countries lack the liquidity to meet the spending targets without help, though they would not approach default thresholds. The report called for an overhaul of the global financial architecture, alongside debt forgiveness for the most at-risk countries and an increase in affordable finance and credit enhancements. “We need to mobilize more capital and bend down the cost of capital for countries if we’re going to have any prayer to meet this,” Gallagher told Reuters. The DRGR Project is collaboration between the Boston University Global Development Policy Center, Heinrich-Böll-Stiftung, the Centre for Sustainable Finance, SOAS and the University of London. The report also presses the International Monetary Fund to rejig the way it calculates debt sustainability — arcane-sounding assessments that are crucial to determining how much debt relief defaulted countries get.If the IMF determines a country can handle an amount of debt that is too high, it can saddle the nation with unaffordable payments — possibly pushing them back into default. Private creditors, however, have at times criticised the Fund’s analyses for being too pessimistic, making them closely watched and politically charged.The DRGR says the IMF, which is conducting a years-long review of the analyses, must incorporate climate spending needs — as well buffers to weather shocks, from climate to economic crises to pandemics. “If the international community does not act in a swift and uniform manner to provide comprehensive debt relief where needed alongside new liquidity, grants and concessional development finance, the costs of inaction will be exorbitant,” the report warned. More

SINGAPORE (Reuters) – Gold prices rose on Monday, attracting some safe haven bids, while oil prices were choppy after Iran’s retaliatory attack on Israel over the weekend stoked fears of a wider regional conflict and kept traders on edge for what comes next.U.S. stock futures ticked higher after major indexes ended sharply lower on Friday as results from major U.S. banks failed to impress. [.N]Iran had, late on Saturday, launched explosive drones and missiles at Israel in retaliation for a suspected Israeli attack on its consulate in Syria on April 1, marking its first direct attack on Israeli territory.The threat of open warfare erupting between the arch Middle East foes and dragging in the United States has left the region on tenterhooks, as U.S. President Joe Biden warned Prime Minister Benjamin Netanyahu the U.S. will not take part in a counter-offensive against Iran.Israel said “the campaign is not over yet”.Global markets struggled for direction early in Asia on Monday after the weekend developments in the Middle East, as oil prices edged broadly lower in volatile trade, gold jumped and the dollar held broadly steady. [FRX/]Brent crude futures eased 0.25% to $90.21 per barrel, while U.S. West Texas Intermediate crude futures fell 0.35% to $85.36 a barrel. [O/R]Gold rose 0.7% to $2,359.92 an ounce, after having scaled a record of $2,431.29 on Friday. The yellow metal has climbed some 14% for the year thus far. [GOL/]”Everything seems pretty well contained,” said Chris Weston, head of research at Pepperstone. “From a very simplistic perspective, the actions from Iran haven’t really surprised anyone, they’re very much in line with what we were pricing late last week.”What may be causing a slight move up in the gold price… is the idea that we could see another counter response from Israel, and if that was to happen… that could cause risk (assets) to move down.”Elsewhere, U.S. 10-year Treasury futures edged slightly lower with an implied yield of 4.53%, while the dollar held near a 34-year high against the yen at 153.27.The euro and sterling were similarly pinned near five-month lows. [FRX/]A continued run of resilient U.S. economic data, particularly last week’s hotter-than-expected inflation report, has prompted investors to reset their expectations of the pace and scale of rate cuts from the Federal Reserve this year as inflation proves stickier than previously thought.Futures now point to about 50 basis points worth of easing expected this year, a huge pull back from the 160 bps that was priced in at the start of the year.That sea change in the rate outlook has in turn sent the dollar on a tear and U.S. Treasury yields surging, with the two-year yield rising above 5% for the first time since November last week. [US/]”We have updated our forecasts for the U.S. FOMC, pushing out the timing of the start of the interest rate cutting cycle to September 2024, from July previously,” said Kristina Clifton, a senior economist at Commonwealth Bank of Australia (OTC:CMWAY).”The U.S. CPI has been stronger than expected over the first three months of 2024. We expect that it will take a string of inflation prints of 0.2%/month or lower to give the Fed confidence that inflation can stay sustainably lower and that interest rates do not need to remain at a restrictive level.”A slew of Fed policymakers are due to speak this week, including Chair Jerome Powell, who could give further clarity on the future path of U.S. interest rates.In stock markets, S&P 500 futures and Nasdaq futures each rose 0.3% in early Asia trade, reversing some of the heavy losses in U.S. equities on Friday.All three major indexes had registered losses on the week, weighed down by lacklustre bank earnings and the evolving expectations for Fed policy.”At the end of the day, what we’re seeing at the moment is the market is really trying to understand what’s going on. Their visibility to price risk in this market has become a bit more troublesome, and I think when you don’t have that visibility, you do get higher volatility. That’s kind of where we are,” said Pepperstone’s Weston.Bitcoin was last more than 2% lower at $65,547, after falling below $62,000 on Sunday. The world’s largest cryptocurrency scaled a record high last month thanks to flows into new spot bitcoin exchange-traded funds and expectations of imminent Fed rate cuts. [FTX/] More

BEIJING (Reuters) -Foreign buyers will throng the vast halls of China’s biggest trade expo from Monday, scouting for deals on Chinese goods that U.S. and European governments complain are flooding global markets.The 135th Canton Fair comes as China is making a strategic policy shift, accelerating resource distribution towards its manufacturing complex and away from its crisis-hit property sector, in the hope that it can move up the value scale.This is causing alarm in Washington and Brussels, especially over what China calls the “new three” industries of electric vehicles, batteries and solar energy, where the world’s second-largest economy is becoming a dominant export power.U.S. and EU officials are concerned their own industries won’t be able to compete with China’s vast industrial capacity driving down prices. But deep and prolonged factory gate deflation has become a concern domestically as well, as many manufacturers – especially at the lower technological end – are locked in a price war, competing for rigid and tepid global demand.”For this year’s fair, the keyword will be ‘low price’, whether it is low-tech or high-tech products out of China,” said Zhiwu Chen, professor in finance at HKU Business School.”Since domestic demand for goods within China is much lower than usual and overcapacity is high across most industries, manufacturers have to cut their prices to achieve more exports.”Around 93,000 foreign buyers are expected to attend the three-week long fair, perusing the goods of 28,600 exhibitors selling everything from massage chairs and frying pans to garden ornaments in booths covering a 1.5 million square metre space – or 280 football fields.Organisers said the fair will show off China’s efforts to move up the value chain in line with President Xi Jinping’s push for “new productive forces” in the economy.For all the hype around China’s rise in the green energy sector, exports of the “new three” accounted for only 4.5% of total shipments last year. The majority of factories are less sophisticated and depressed domestic demand leaves them at the whim of foreign buyers.Regular Canton fair exhibitor Kris Lin, who owns a lighting products factory in the eastern province of Zhejiang, spent tens of thousands of yuan to rent a booth this year, but he’s not travelling with great expectations.”Fewer and fewer buyers from Europe and the U.S. have been coming to check our products in recent years,” Lin said.”A big Western supermarket buyer used to send five-to-eight people, dressed in nice suits. I only saw one or two of them in recent years and they were just looking around.”Some $22.3 billion worth of deals were signed at the last Canton Fair in October, up 2.8% on the April 2023 show – which was the first after three years of pandemic disruptions. That’s still well below pre-COVID returns of around $30 billion.Given the producer price deflation in China, the lower numbers may reflect more of a drop in value than volume. On Friday, more evidence of exporters’ woes were highlighted by China’s dismal March exports and imports, which both contracted.”Foreign procurement managers coming to the fair will find many prices too low to resist and they will sign many fire-sale-like deals,” Chen said.”This year’s fair will showcase the contradiction between developed countries’ government preferences and micro-level business priorities.” More