Aurelia Butler

TOKYO (Reuters) – Bank of Japan Governor Kazuo Ueda said changing the central bank’s policy target to the five-year bond yield, from the current 10-year zone, would be among options if it were to modify its yield curve control (YCC) policy in the future.With falling raw material costs likely to slow inflation in coming months, the BOJ must avoid tightening monetary policy prematurely to ensure Japan sustainably achieves its 2% target, Ueda told a group interview with media on Thursday.But he said the BOJ could make tweaks to YCC “if the balance between the benefit and cost of the policy shifts.””If the BOJ were to modify YCC in the future, there are various ways of doing so,” he said, adding that shortening the duration of bond yields it targets to the five-year zone from the current 10-year zone “could be among options.””But I won’t comment on whether we would definitely do so, how likely this could happen, or under what conditions the BOJ would see this option as desirable,” Ueda said.The remarks focus somewhat more on the possibility of a policy tweak than those in Ueda’s speech last week, where he stressed the BOJ’s resolve to remain an outlier amid a global wave of central banks raising rates to combat inflation.In an examination of YCC in 2021, the BOJ said short- and medium-term interest rates had the biggest impact on economic activity. It also warned that excessive declines in super-long yields were undesirable as it could hurt pension returns and household sentiment.That has led some analysts to bet the BOJ could shorten the duration of bonds it targets, and allow longer-term interest rates to rise more freely reflecting economic fundamentals.Ueda said the BOJ could keep five-year borrowing costs stable and low even by maintaining its 10-year yield target, as long as the shape of the yield curve was a normal upward slope.”This means that just because the five-year maturity has a strong effect (on the economy), it’s not necessarily wrong to target the 10-year yield,” he added.IF WRONG, WE’LL ACT SWIFTLYMarkets are rife with speculation that Ueda, who took the helm in April, would phase out his predecessor’s controversial policy that combines a negative short-term interest rate target with a 0.5% cap for the 10-year government bond yield.Japan’s core consumer inflation has stayed above the BOJ’s 2% target for more than a year, casting doubt on its view recent cost-push price rises would prove temporary.Ueda said he expects consumer inflation to slow ahead as global fuel and raw material prices have begun to fall.”But we can’t completely rule out the possibility that this projection could prove wrong,” Ueda said. “If that’s the case and if we see the need to revise our forecast, we’d like to act swiftly,” he said.The BOJ kept monetary settings unchanged last month but announced a plan to conduct a review of its past monetary policy moves, laying the groundwork to gradually phase out the massive stimulus deployed by former chief Haruhiko Kuroda.Under the review, the BOJ would conduct various surveys and hearings including from regional areas of Japan, as well as workshops inviting academics and experts, Ueda said.He said the BOJ should stick to its 2% inflation target, brushing aside calls from some academics to water down the price target to quicken an exit from ultra-loose policy. More

Initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 229,000 for the week ended May 20, the Labor Department said on Thursday. Data for the prior week was revised to show 17,000 fewer applications received than previously reported. Economists polled by Reuters had forecast 245,000 claims for the latest week. Though claims surged recently, boosted by fraudulent applications in Massachusetts, they remain at levels consistent with a still-tight labor market.The low claims align with recent data on retail sales, factory production and business activity that have suggested the economy regained speed at the start of the second quarter. The labor market has been resilient, despite 500 basis points worth of interest rate increases from the Federal Reserve since March 2022, when the U.S. central bank embarked on its fastest monetary policy tightening campaign since the 1980s to tame inflation. There were 1.6 job openings for every unemployed person in March, well above the 1.0-1.2 range that is consistent with a jobs market that is not generating too much inflation.Employers have been hoarding workers after experiencing difficulties finding labor in the wake of the COVID-19 pandemic.Economists expected layoffs to increase as the effects of the punitive rate hikes spread through the economy and tightening financial conditions make it harder for small businesses to access credit. Most expect a mild recession by the second half of the year.Minutes of the Fed’s May 2-3 policy meeting published on Wednesday showed that while “participants noted that the labor market remained very tight,” they “anticipated that employment growth would likely slow further, reflecting a moderation in aggregate demand coming partly from tighter credit conditions.” The number of people receiving benefits after an initial week of aid, a proxy for hiring, fell 5,000 to 1.794 million during the week ending May 13, the claims report showed. The so-called continuing claims covered the period during which the government surveyed households for May’s unemployment rate. Continuing claims dropped between the April and May survey weeks. The unemployment rate fell back to a 53-year low of 3.4% in April.Labor market tightness is supporting wage growth, helping to drive consumer spending and keep the overall economy afloat. In a separate report on Thursday, the Commerce Department confirmed economic growth slowed in the first quarter, restrained by businesses liquidating inventories. The inventory drawdown likely reflected strong consumer spending as well as businesses reducing stock in anticipation of a recession. Gross domestic product increased at a 1.3% annualized rate last quarter, the government said in its second estimate of first-quarter GDP growth. That was revised up from the 1.1% pace reported last month. The economy grew at a 2.6% pace in the fourth quarter. Economists had expected first-quarter GDP growth would be unrevised. More

BARCELONA (Reuters) – Scrawled across Barcelona’s opera house, along the city’s renowned La Rambla boulevard, is expletive-laden graffiti urging tourists to “go home”.In another district, the messaging is more emphatic still: “Tourism kills neighbourhoods”. The signs, which appeared in recent days, underline how anti-tourism sentiment is bubbling up in the Spanish city most-visited by foreigners, as arrival numbers return to near pre-pandemic levels following the lull during lockdowns.Mass tourism regulation has surfaced as a political hot-button topic across Spain ahead of local and regional elections on Sunday. Several candidates, the most prominent being Barcelona’s far-left mayor who is seeking a third term, have vowed to curtail tourism activity, by reducing cruise ship arrivals or reconverting hotels into social housing.”We like tourism, to have visitors, but tourist overcrowding triggers problems of mobility, speculation and gentrification that put our local way of life at risk. Therefore, we have to regulate it,” Barcelona Mayor Ada Colau told Reuters.Spain was the world’s second most-visited country in 2019, after France, according to data from the United Nations, with tourism accounting for 12% of the economy.Barcelona, Spain’s second-largest city of 1.6 million people, received around 30 million visitors, including day trippers, the same year. When the pandemic hit, many residents breathed a sigh of relief at the suddenly empty streets and beaches.Its authorities also took the opportunity to focus on higher value tourism, marketing the city as a high-end gastronomic destination for example. This year, tourist numbers are within a whisker of pre-pandemic levels once more, with first-quarter international tourist arrivals to Spain up 41% from the same period of 2022.Tourists arriving earlier to avoid increasingly sweltering summer temperatures due in part to climate change and water restrictions imposed amid an intense drought affecting Catalonia, could also be factors increasing frustration over mass tourism, said Gemma Canoves, geography professor at Barcelona’s Autonomous University. Colau believes residents want a different model now. “We welcome tourism but we need to grow other strategic sectors,” she said, arguing that restrictions imposed since taking office in 2015 have strengthened and diversified Barcelona’s economy towards new sectors such as tech startups. Seeking to protect rents and local identity, Barcelona was among the first cities in Europe to ban new hotels in the centre and restrict short-term room rentals. It also shut around 8,000 unlicensed tourist apartments. In her re-election campaign, Colau proposes halving the numbers of passengers arriving at Barcelona’s cruiseship port, and stripping licenses from tourist apartments and shops. She also opposes expanding its airport, maintaining Barcelona cannot absorb 20 million more tourists. Her rival Xavier Trias, from the separatist, business-friendly Junts party now tied with Colau and the Socialists in opinion polls, accuses her of scaring investors.”Tourism is a competitive asset for a city,” Trias, who was mayor before Colau, told Reuters, arguing her opposition to economic activity is ideological. “It makes no sense to be against tourism”.He wants to promote family and business-driven tourism, and to modify the cap on hotel openings to win back five-star projects that were cancelled, while conceding restrictions make sense in some areas. QUALITY OVER QUANTITYTourism is a central electoral theme in the Balearic islands too, where a left-wing coalition government capped cruises and accommodation in recent years.”Our priority is not quantity but quality. We propose zero growth in accommodation and holiday rental units,” regional president and Socialist candidate Francina Armengol told Expansion newspaper this week.She also proposes acquiring “obsolete” one and two-star hotels to shut or reconvert them into social housing. While Barcelona’s Colau envisions less cruise ships, Malaga in the southern region of Andalucia hit a record this month for arrivals by boat. Malaga’s conservative mayor is weighing a “solidarity” tax on tourist apartments, while the far-left candidate wants to tax cruise ship passengers.”The problems we are seeing in Barcelona will appear in every Spanish province soon,” warned Jorge Marichal, chairman of Spanish hotels business association CEHAT.He referred to an unregulated proliferation of tourist apartments in the past decade, which he said has triggered a rise in housing costs and “loss of identity in city centres”.But even Barcelona’s approach of diversifying tourism away from landmark areas can backfire. This month, a park that had become a popular attraction for tourists in a less affluent neighbourhood was fenced off and closed at night following protests over overcrowding and rubbish.”Neighbours feel the place has been stolen from them,” said protester Fran Bernal. “Tourism does not bring wealth but a negative impact to the area … It’s a scourge”. More

President Tayyip Erdogan led rival Kemal Kilicdaroglu comfortably in the presidential vote on May 14 but he fell just shy of the 50% needed to win outright. The outcome will be decided in a May 28 runoff.Forex demand in Turkey surged to record levels ahead of May 14 on companies’ and individuals’ expectations that the lira, which lost 44% in 2021 and 30% in 2022, will plunge after the vote.The central bank’s forex reserves have sagged in recent years due to costly market interventions and other efforts to cool forex demand.The bank’s net reserves dropped by $2.48 billion in the week to May 19, to their lowest level since February 2002. They have dropped $27.7 billion since the end of 2022.The exchange rate used by Reuters on Thursday was 19.7607. The net forex reserves are pushed deeper into negative territory once outstanding swaps, which stood at $33.50 billion on Wednesday, are deducted.In the first five weeks of 2002, net reserves were in negative territory, according to official data that goes back to the beginning of that year. Date Net international Net international reserves(mln lira) reserves (mln USD) 19-05-2023 -2,989 -151 12-05-2023 45,455 2,325 05-05-2023 131,982 6,781 28-04-2023 123,478 6,361 21-04-2023 160,742 8,294 14-04-2023 232,594 12,047 07-04-2023 264,885 13,770 31-03-2023 353,626 18,470 24-03-2023 360,025 18,926 17-03-2023 379,267 19,987 10-03-2023 353,057 18,618 03-03-2023 390,262 20,685 24-02-2023 380,790 20,196 17-02-2023 402,962 21,398 10-02-2023 459,698 24,438 03-02-2023 509,094 27,090 27-01-2023 484,844 25,810 20-01-2023 501,579 26,716 13-01-2023 466,890 24,886 06-01-2023 455,489 24,307 30-12-2022 514,984 27,544 23-12-2022 497,410 26,668 16-12-2022 523,937 28,130 09-12-2022 498,206 26,756 430,273 23,118 02-12-2022 25-11-2022 362,915 19,507 18-11-2022 348,590 18,746 11-11-2022 338,707 18,230 04-11-2022 270,255 14,532 28-10-2022 249,925 13,446 21-10-2022 214,663 11,560 14-10-2022 261,478 14,084 07-10-2022 230,886 12,441 30-09-2022 179,900 9,722 23-09-2022 177,303 9,667 16-09-2022 220,557 12,090 09-09-2022 256,621 14,085 02-09-2022 256,040 14,083 26-08-2022 228,983 12,618 19-08-2022 249,442 13,882 12-08-2022 281,262 15,682 05-08-2022 211,824 11,811 29-07-2022 163,261 9,118 22-07-2022 118,105 6,700 15-07-2022 110,970 6,356 104,818 6,073 08-07-2022 01-07-2022 125,185 7,514 24-06-2022 130,637 7,531 17-06-2022 127,601 7,381 10-06-2022 140,203 8,152 03-06-2022 172,885 10,517 27-05-2022 199,511 12,189 20-05-2022 152,223 9,561 13-05-2022 176,994 11,529 06-05-2022 222,391 14,995 29-04-2022 251,397 17,010 22-04-2022 251,640 17,165 15-04-2022 279,135 19,128 08-04-2022 269,590 18,303 01-04-2022 240,065 16,401 25-03-2022 236,508 15,955 18-03-2022 252,309 17,199 11-03-2022 233,847 15,861 04-03-2022 256,101 18,148 25-02-2022 258,873 18,119 18-02-2022 269,383 19,802 11-02-2022 214,035 15,817 04-02-2022 221,360 16,331 28-01-2022 143,166 10,532 21-01-2022 124,610 9,269 14-01-2022 102,192 7,547 07-01-2022 108,359 7,947 31-12-2021 108,219 8,339 118,321 15,530 25-12-2020 27-12-2019 243,910 41,130 28-12-2018 159,352 30,130 Note: The figures are released every week on the central bank balance sheet as per a letter of intent with the International Monetary Fund dated 18 January 2002. The figures are released in Turkish liras and are converted by Reuters to U.S. dollars using the central bank’s official exchange rate from the previous work day. More

Shares of the top U.S. electronics retailer were up 5% in premarket trading as Best Buy joined a small group of retailers in maintaining full-year profit and revenue forecasts.Discretionary goods retailers have been offering steeper discounts in a bid to counter an inflation-led weakness in demand for TVs, laptops and other electronic products.Best Buy’s adjusted net earnings stood at $1.15 per share in the quarter ended April, above the average analyst estimate of $1.11 per share, according to IBES data from Refinitiv.The results come at a time when several other major retailers have taken a cautious approach in their outlook as economic uncertainties weigh on consumer spending on discretionary items. Last week, Home Depot (NYSE:HD) and Target Corp (NYSE:TGT) maintained their expectations for 2024, as inflation-hit Americans turn away from spending on non-essential goods.Best Buy expects comparable sales to decline in the range of 6% to 8% in the second quarter as customers remain cautious amid strong inflation and higher interest rates.”Customers are clearly feeling cautious and making tradeoff decisions as they continue to deal with high inflation and low consumer confidence,” said Chief Executive Officer Corie Barry.Best Buy logged a smaller-than-expected decline in comparable sales of 10.1% in the first quarter, compared with analysts’ average estimate of a 10.3% fall. More

A combination of U.S. monetary policy, the banking system stress and “any consequences of the debt ceiling impasse” contribute to weak credit conditions in emerging markets, the credit agency said, adding that the world’s biggest economy is set for a mild recession in the second half of the year.The White House and congressional Republicans are expected to resume negotiations on a deal to raise the government’s $31.4 trillion debt ceiling on Thursday, with as little as a week remaining until a potential default.”The focus of many market participants has returned to the global economic growth outlook and the future path for U.S. interest rates,” the report, led by analyst Vittoria Zoli, said. “Risks to our baseline include whether and how quickly U.S. inflation subsides and the Fed’s response to it.”Moody’s expects growth to decline “in most emerging markets this year.” Commodity exporters in the Middle East, Africa and Latin America are set to suffer the most, as commodity prices decline due to recession fears and excess supply concerns.”The increase in commodity prices (with the exception of iron ore) since China’s reopening has been relatively muted if not negative,” the report said. The credit agency, which rates sovereign debt in 105 emerging markets, added that frontier economies are at a higher risk of default as they are unable to tap international markets.But it also pointed out that there is a “degree of stabilization,” with the rate of sovereign downgrades relative to upgrades slowing. Moody’s recently downgraded Bolivia’s rating to Caa1 from B2, Pakistan to Caa3 from Caa1 and changed its outlook to stable from negative, and Kenya’s rating to B3 from B2. Additionally, it placed Egypt’s outlook under review for possible downgrade from stable. More