Aurelia Butler

(Reuters) – The Biden administration on Thursday added a unit of prominent Chinese genetics company BGI Genomics Co Ltd to a trade blacklist, accusing the firms of posing a significant risk of contributing to monitoring and surveillance by the government of China, which has been utilized in the repression of ethnic minorities in China.The Commerce Department, which oversees export controls, added BGI Tech Solutions (Hongkong), as well as BGI Research and Forensic Genomics International, which belong to BGI Group, the parent of BGI Genomics Co Ltd. In 2020, the Commerce Department added two units of BGI Group, the world’s largest genomics company, to its economic blacklist over allegations of conducting genetic analyses used to further the repression of China’s minority Uighurs has denied wrongdoing. BGI denied allegations of wrongdoing in 2020. More

NEW YORK (Reuters) – Jeffrey Gundlach, the chief executive of DoubleLine Capital, said a recession could happen within the next four months, as recent U.S. bank failures have exacerbated the tightening of financial conditions caused by higher borrowing rates.”With all that’s going on I think a recession is probably within four months at the most,” Gundlach said in a Twitter Spaces audio chat on Thursday. More

The European Central Bank went ahead with a planned half a percentage point rise in interest rates on Thursday despite the outbreak of financial turmoil, while signalling future increases would depend on the market panic seen in recent days dissipating. The ECB’s decision to lift its benchmark deposit rate from 2.5 per cent to 3 per cent — in line with what it had promised last month — came ahead of crunch policy votes by rate-setters in the US and UK next week. The meeting was seen as a test of policymakers’ appetite to keep raising rates despite the stress on banks in the wake of the failure of Silicon Valley Bank and worries over Credit Suisse. While the ECB’s governing council stuck to the script set during its February meeting, its members ditched a previous commitment to keep “raising interest rates significantly at a steady pace” in a sign they are unsure about how much further they will be able to increase borrowing costs. That was despite acknowledging inflation remained “too high”. Christine Lagarde, ECB president, indicated some of the council wanted to stop raising rates as soon as this week, saying three or four members were waiting for clarity on “how the situation unfolds”. The “vast majority” that kept to the plan went ahead with the rate rise to show confidence in the eurozone banking system.Katharine Neiss, an economist at investor PGIM Fixed Income, said the change in the ECB’s guidance was “a notable shift towards a more dovish tone”, adding that it “opens the door to the possibility that this hike may well be the last — at least for the foreseeable future”.Shares in Credit Suisse and other European banks clawed back some earlier losses on Thursday after Switzerland’s second-biggest lender said it would borrow up to SFr50bn ($54bn) from the Swiss central bank and buy back about SFr3bn of its debt in an attempt to boost liquidity and calm investors.The Swiss central bank’s intervention lightened the mood among eurozone rate-setters on Thursday morning, with one saying it had “stopped the panic”. The ECB said eurozone banks were “resilient, with strong capital and liquidity positions”, while emphasising it had the tools to “provide liquidity support” if needed.The central bank also cut its inflation forecasts for the next three years, while saying price pressures were still “projected to remain too high for too long”. Frederik Ducrozet, an economist at Pictet Wealth Management, said he was “not sure the ECB is done raising rates yet, but they have given themselves a lot more flexibility” to pause. The euro traded between gains and losses against the dollar as Lagarde responded to questions from journalists. Germany’s rate-sensitive two-year borrowing costs rose 0.17 percentage points to 2.57 per cent, partly reversing recent falls.The US Federal Reserve and the Bank of England are seen as more likely than the ECB to adopt a wait-and-see approach.Economists said central banks were entering a new phase in their efforts to tame decades-high inflation, requiring them to balance monetary tightening with measures to avoid a financial crisis. Krishna Guha, head of policy and central bank strategy at US investment bank Evercore ISI, said rate-setters would have to show they can “walk and chew gum at the same time — address financial stability concerns with financial stability instruments while using rates to control inflation and so avoid financial dominance”.Lagarde, however, said there was “no trade-off” between the two as rates could be used to tackle inflation while other tools — including new ones if required — addressed any financial turmoil.Italy’s hard-right League party run by deputy prime minister Matteo Salvini criticised the ECB decision as “detached from the real economy” and warned it risked “artificially provoking a recession in order to fight inflation with poverty”. The European Trade Union Confederation was also unhappy, as its general secretary Esther Lynch said the ECB move was “pre-emptive and reckless at a time when banks are failing”, inflation is falling and bankruptcies are rising.The central bank lowered its quarterly inflation forecast for this year from the 6.3 per cent expected in December to 5.3 per cent and for next year from 3.4 per cent to 2.9 per cent. Price growth in 2025 would also be slightly lower than anticipated but remain above its 2 per cent target, at 2.1 per cent. Core inflation, a measure excluding energy and food, would be higher than expected at 4.6 per cent this year, indicating more policy tightening could be required.“If our baseline was to prevail when the uncertainty reduces, we know we still have a lot of ground to cover,” said Lagarde, while adding there was “a big caveat” because its forecasts were based on data before the recent banking turmoil.Additional reporting by George Steer More

UK chancellor Jeremy Hunt’s policies to boost the workforce will cost £70,000 for each person who enters employment, the Institute for Fiscal Studies think-tank said on Thursday.The main reason for the high cost is that the government’s £5bn expansion of free childcare to children under three years old will mostly benefit parents who are already working, according to the IFS. But because families where one parent earns more than £100,000 a year will not qualify for the new 30-hour entitlement, the policy will also deal a “huge hit” to work incentives for high earners, the think-tank said. Economists have largely welcomed the chancellor’s efforts to bring more people into work by increasing support for childcare, making changes to the benefits system and helping those with health conditions.But the IFS analysis shows that this policy package will have a high price tag for relatively limited gains — while creating some perverse effects.In particular, anyone with a child below school age earning between £100,000 and £134,500 would be better off if they kept their taxable income below £100,000 in order to qualify for the childcare offer.Robert Joyce, IFS deputy director, said that taking this alongside a similar cliff edge in eligibility for child benefit when a parent’s salary reached £50,000, the government was making “an absolute pig’s breakfast” of the tax and transfer system for higher earning households.The expansion of state-funded childcare will still have a bigger effect on employment than any other policy: the Office for Budget Responsibility fiscal watchdog estimated it will lead 60,000 people to enter work and about 1.5mn to work longer hours — potentially boosting their long-term earnings.But the IFS said this meant spending on the policy would double while only a sixth of the places funded would be new. Most of the money would go to parents who were previously paying for childcare.Another measure — the big tax giveaway for high earners saving into pensions — looks even more expensive given its uncertain contribution to the workforce. If the OBR’s central forecast proves correct, it will boost employment by just 15,000 — at a cost of £100,000 per job.The OBR thinks other measures to get people back to work — including upfront payment of childcare support for low income parents, intensive employment support for disabled people and a tougher regime for parents and carers claiming out of work benefits — will have a smaller effect on employment but they also come at a much lower cost per person, ranging from roughly £2,000 to £20,000.Its forecasts suggest the overall package will raise employment by 110,000 by 2027-28 at a cost of about £7bn a year — nearly £70,000 for each job.Paul Johnson, IFS director, said this gain would be “just a fraction of the number lost from the workforce in the last couple of years” and would be dwarfed by annual net migration.

But Tony Wilson, director of the Institute for Employment Studies think-tank, said spending on childcare could be justified by the wider benefits to society, parents and children’s development — while £10,000 to £20,000 was “well worth paying” to help disadvantaged people into work and cut inequality.Intensive support for disabled people to enter work could boost employment by about 10,000, the OBR said. This would be separate from any effects of a bigger shake-up of disability benefits, which will remove any link between people’s ability to work and their eligibility for benefits. This is meant to give disabled people confidence that they can take a job without risking the loss of vital income. More

Single-family housing starts, which account for the bulk of homebuilding, increased 1.1% to a seasonally adjusted annual rate of 830,000 units last month, the Commerce Department said on Thursday. Data for January was revised down to show single-family homebuilding falling to a rate of 821,000 units instead of the previously reported 841,000 unit-pace.Single-family homebuilding increased in the Northeast and West, but tumbled in the densely populated South as well as the Midwest. Single-family housing starts dropped 31.6% on a year-on-year basis in February. The housing market has been choked by the Federal Reserve’s most aggressive interest rate hiking cycle since the 1980s to tame inflation. But the worst of the housing market downturn could be over. A survey on Wednesday showed the National Association of Home Builders/Wells Fargo Housing Market Index increased for a third straight month in March, though homebuilder sentiment remains depressed.Mortgage rates, which had resumed their upward trend, could start falling as U.S. Treasury yields have declined sharply after the recent collapse of two regional banks sparked fears of contagion in the banking sector. Some economists believe financial market instability could make it harder for the Fed to continue raising rates next week.Starts for housing projects with five units or more shot up 24.1% to a rate of 608,000 units, the highest level since last April. Multi-family housing construction remains underpinned by demand for rental accommodation.With both single- and multi-family homebuilding rising, overall housing starts surged 9.8% to a rate of 1.450 million units last month, the highest level since September. Economists polled by Reuters had forecast starts rising to a rate of 1.310 million units in February. Starts dropped 18.4% on a year-on-year basis in February.Single-family building permits increased 7.6% to a rate of 777,000 units. They had declined for 11 straight months.Permits for housing projects with five units or more jumped 24.3% to a rate of 700,000 units. Overall, building permits vaulted 13.8% to a rate of 1.524 million units.The number of houses approved for construction that are yet to be started was unchanged at 294,000 units. The single-family homebuilding backlog fell 3.0% to 130,000 units, but the completions rate for this segment increased 1.0% to a rate of 1.037 million units. The inventory of single-family housing under construction fell 1.7% to a rate of 734,000 units. More