Aurelia Butler

(Reuters) – Americans are increasingly getting shot down when they seek out loans, new data from the New York Fed, released Monday, said. The bank reported that in June, across a number of fronts, credit was the hardest to get in years, with fewer people seeking out loans, at least for now. The report’s findings were compiled as part of the New York Fed’s monthly Survey of Consumer Expectations, with respondents polled every four months about credit access issues. The bank said that the overall rejection rate for credit applicants rose to its highest level since June 2018, and stood at 21.8%, from 17.3% in February. The bank noted the rise in the rejection rate “was broad-based across age groups and highest among those with credit scores below 680.” The survey also found that rejection rates for auto loans hit the highest level for a data series that goes back to 2013 and stood at 14.2%, from 9.1% in February. Rejection rates for credit cards, credit limit increases also gained ground. The rejection rate for mortgages stood at 13.2% in June from 10% in February, while the rejection rate for mortgage refinancing jumped to 20.8% last month, from 16.3% in the prior survey. The survey found that what it called the average probability that a loan will be rejected “sharply” surged to record levels for auto loans, credit cards, credit limit increases and housing related credit. The survey found a modest pullback in those seeking loans, to 40.3% of respondents in June—that’s the lowest level since October 2020–from February’s 40.9%. But it noted that respondents who plan to apply for credit over the next year ticked up a touch to 26.4% of respondents, from February’s 26.1%. The New York Fed data arrives amid a sea change for U.S. lending, as the Fed has pumped up its short-term target interest rate very aggressively since the spring of 2022, as it has sought to cool high levels of inflation. The Fed wants to temper demand and a key part of that process has been to make credit harder to get, and it is widely expected to raise rates again next week. The housing sector has been particularly hard hit by rising rates as mortgage costs have surged from sub 3% levels in the fall of 2020 through most of the following year, to mortgages that are now hovering around the 7% mark. The surge in home lending costs has caused Americans to cut back on borrowing there: The New York Fed reported in May that during the first quarter demand for mortgages fell even as overall household debt levels ticked higher. Meanwhile, bank lending to consumers has remained relatively stable although it is also showing some signs of slowing down. More

LONDON (Reuters) -Insurers are reviewing whether to freeze cover for any ships willing to sail to Ukraine after Russia on Monday quit a U.N.-backed deal that allows the export of grain through a wartime Black Sea safe corridor, industry sources said.The agreement, brokered by Turkey last July, aimed to alleviate a global food crisis by allowing Ukrainian grain blocked by Russia’s February 2022 invasion of its neighbour to be exported safely.”Due to the collapse of the Black Sea corridor deal, most shipowners will now refrain from calling Ukrainian ports,” said Christian Vinther Christensen, chief operating officer with Danish shipping group NORDEN. The last ship left Ukraine under the deal on Sunday. Insurance has been vital to ensure shipments through the corridor and industry sources said Russia’s decision was being evaluated in terms of whether cover in some form could continue. “Some underwriters will look to take advantage with a hefty increase in rates. Others will stop offering cover. The (key) question is whether Russia mines the area which would effectively cease any form of cover being offered,” one insurance industry source said.The Lloyd’s of London insurance market has already placed the Black Sea region on its high risk list.”Annual cover remains in place but voyages to listed areas will be assessed individually as and when seen,” said Neil Roberts, head of marine and aviation at Lloyd’s Market Association (LMA), which represents the interests of all underwriting businesses in Lloyd’s.Additional war risk insurance premiums, which are charged when entering the Black Sea area, need to be renewed every seven days. They already cost thousands of dollars and are expected to go up, while shipowners could prove reluctant to allow their vessels to enter a war zone without Russia’s agreement.”I don’t believe there are many enquiries at the moment as getting an owner to operate on past charter terms without an initiative would be difficult,” another industry source said.”Danger money hire rates would probably be required, aside from the provision for extra insurance costs.”Moscow’s withdrawal from the deal means “the guarantees for the safety of navigation issued by the Russian side will be revoked”, Russia told the U.N. shipping agency the International Maritime Organization on Monday in a letter seen by Reuters.The LMA’s Roberts said the letter “adopts a tone that diverges from previous pronouncements”. “From the insurance angle, quotes for corridor voyages would have expired, so renegotiation of terms should be expected,” he said.”With the withdrawal of the Russian security guarantees, the risk profile would need to be re-assessed. It may also be the case that some charterers will reconsider their options.” More

Today’s top storiesMicrosoft will next week face its first formal EU antitrust investigation in 15 years over claims it is unfairly tying its video conferencing app Teams with its popular Office software. BlackRock will give retail investors in its biggest exchange traded fund the chance to participate in proxy voting in 2024 as the $9.4tn asset manager reacts to criticism from both left and right over their influence on US companies.Officials in Crimea have halted traffic on the bridge connecting the occupied peninsula to Russia after a deadly Ukrainian attack that caused parts of it to collapse earlier today.For up-to-the-minute news updates, visit our live blogGood evening.China’s economy — the second largest in the world — has lost steam in the second quarter, with gross domestic product expanding 0.8 per cent against the 2.2 per cent quarter-on-quarter expansion over the January-March period.The country has also seen an increase in youth unemployment. In May, 20.8 per cent of 16 to 24-year-olds were unemployed, the largest proportion since the data series started in 2018.Jobless Chinese graduates, unenthused by work opportunities, are getting little sympathy from their head of state, who has previously urged them to “roll up their sleeves” and try manual work. But President Xi Jinping, who began an unprecedented third term in office in March, has his own problems. Namely, does his administration need an economic plan B? Property and trade are two indicators that have been flashing red. Demand for China’s exports has fallen this year and, in June, they suffered their biggest year-on-year decline since the pandemic started. With high interest rates in the west weighing on consumer purchases of Chinese-made goods, exports in June fell 8.3 per cent compared with a year earlier, according to the National Bureau of Statistics.Moreover, the property sector is experiencing downturn. According to a sample of 25 cities, prices of existing homes declined by 1.4 per cent in June compared with May, accelerating falls in the previous months. In the wake these setbacks, Xi and his top policymakers are practising something they call dingli, which means, “maintaining strategic focus”. Economists interpret this as continuing to reduce debt, especially in the overleveraged property sector while pursuing a policy of tech self-sufficiency and global leadership.Though top US officials have signalled scope for a more constructive relationship with Beijing, the Biden administration has dimmed hopes of an immediate easing of tariffs against China.Yesterday, US Treasury secretary Janet Yellen stressed that while it would be useful to identify ways to de-escalate tensions over time, it is “premature” to relax trade restrictions.Meanwhile, observers of China’s own foreign policy have been mystified by the three-week absence of Chinese foreign minister, Qin Gang, prompting growing speculation about his whereabouts. In China, disappearances of senior officials, celebrities and businesspeople are commonplace. It often later emerges that they have become embroiled in investigations or other controversies.

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Need to know: UK and Europe economyEU economy chief Paolo Gentiloni warned the bloc would need to step up its response to the US Inflation Reduction Act, as President Joe Biden’s plan to finance the industrial green transition looks to be bigger than expected.The EU hopes to reboot relations with Latin America at a summit with the region’s presidents this week. Delays to trade deals and a rift over the Ukraine war have underlined their political differences after eight years without a top-level meeting. UK Prime Minister Rishi Sunak wants to tighten regulatory controls on universities offering courses with poor employment prospects and high student dropout rates. This aligns with a wider ambition to crack down on “rip-off degree courses”. Need to know: Global economyArgentina’s economy minister Sergio Massa is running for president this October while struggling to address runaway inflation and negotiate with the IMF as the country stands on the brink of default. Russia has pulled out of a UN-brokered deal to export Ukrainian grain across the Black Sea, putting tens of millions of tonnes of the food export at risk. Russia has complained that western sanctions were holding up a parallel agreement around payments, insurance and agricultural shipping. Dmitry Peskov, president Vladimir Putin’s spokesman, said Russia would resume its participation in the deal “as soon as the relevant agreements are fulfilled”.The transatlantic inflation gap looks set to hit its highest level in decades. The gulf between US and UK price pressures is likely to widen to levels not seen since the late 1970s. Need to know: businessMultinationals are racing to decouple China data after Beijing’s move to expand its anti-espionage rules and data regulation.Trade experts say new EU regulations that diverge from UK equivalents mean British companies must to start preparing for “Brexit 2.0”. “As the UK stays static, you’re having to treat the EU and the UK as two completely different markets from a regulatory perspective,” said Fergus McReynolds at industry body Make UK.It’s dangerous to assume UK banks are profiteering, writes FT deputy editor Patrick Jenkins. “Undermining banks’ margins arguably erodes their financial strength, weakens the City and thus the industry’s ability to fuel the economy,” he says.The World of WorkOf all the management techniques, few are as powerful as listening to your staff and asking follow-up questions. People are also more likely to bring looming problems to your attention if they know they are being heard. In a bid to increase the number of female CEOs in the US and UK, companies need to broaden their search beyond traditionally male-dominated jobs like finance and operational roles, or step up efforts to appoint women to these positions. The FT analyses the pipeline of potential future female bosses and the path to greater equality.Toxic workplaces not only cause stress and burnout but can also increase the risks of serious illness. Organisational change consultants could be the answer to a dysfunctional working environment.Working through the summer poses the constant risk of being asked to fill in for absent colleagues and do work that equally absent bosses fail to notice. Don’t be afraid to say no, writes columnist Pilita Clark.Some good newsA new drug developed by Eli Lilly has been shown to slow Alzheimer’s progression. The full findings of the phase 3 clinical study showed that the new drug donanemab significantly slowed memory loss and cognitive decline. Dementia experts have hailed this as a “watershed moment”. More

The IBC-BR economic activity index, a key gauge of gross domestic product (GDP), declined by a seasonally adjusted 2.0% compared to April, disappointing analysts who had expected zero growth according to a Reuters poll.This marked the largest monthly drop since March 2021. The observed data series recorded a 2.15% increase on a year-on-year basis, resulting in an accumulated growth rate of 3.43% over the past 12 months.Gabriel Couto, economist at Santander (BME:SAN) Brazil, stated that the frustrating outcome could be attributed to the end of contribution from the record grain production witnessed during the 2022-23 summer crops.Speaking to reporters, Finance Minister Fernando Haddad said the numbers came in “as expected” amid an environment marked by persistently high borrowing costs. “The economic slowdown intended by the central bank has arrived strongly, and we need to be cautious about what may happen,” he said, emphasizing that current real interest rate levels are imposing a heavy burden on the economy.The central bank has held its benchmark interest rate steady at a cycle-high of 13.75% since September to tackle inflationary pressures. Still, it has recently indicated the possibility of a rate cut in August if the inflation scenario continues to improve.Andres Abadia, chief Latin America economist at Pantheon Macroeconomics, wrote in a note to clients that the performance underscores the need for interest rate cuts.”Several key economic sectors are under pressure, on the back of tighter financial conditions, but low inflation, a resilient labor market, and still-supportive external conditions for Brazil’s key exports, suggest that economic growth will not grind to a halt,” he said. Economists have continuously revised their expectations for the performance of Latin America’s largest economy this year, particularly following a stronger-than-anticipated first quarter, buoyed by a thriving agricultural sector. However, due to seasonal factors, the farm sector is expected to decelerate in the year’s second half.According to a weekly survey conducted by the central bank among private economists, GDP growth for 2023 is now estimated at 2.24%, a decrease from 2.9% in 2022 but still significantly higher than the approximately 0.8% initially forecast when the year started. Nevertheless, expectations going forward point to a slowdown amid financial constraints and high borrowing costs. More