Aurelia Butler

The German automaker plans to raise the share of battery electric vehicles in total sales to 15% in 2023, the person added.The core BMW brand sold 2.1 million vehicles last year, down from a record 2.2 million in 2021, as COVID-19 lockdowns in China stymied supply and European inflation weighed on demand.Still, BMW has so far offset the dip in sales volumes with higher prices, with third-quarter profits rising in 2022.The carmaker will report full 2022 sales figures on Jan. 10. More

UK mortgage approvals fell to the lowest level in more than two years in November, as rising prices and higher borrowing costs put a strain on household spending.According to data from the Bank of England, mortgage approvals to fund house purchases fell to 46,100 in November, down from 57,900 the previous month.The figures was the lowest for mortgage approvals since June 2020, and less than the 55,000 estimated by economists polled by Reuters.The figures underscore the turmoil in the UK housing market, sparked by the September 23 “mini” Budget of then-prime minister Liz Truss, which prompted some lenders to withdraw home loans.The BoE said the interest rate paid on new mortgages rose 26 basis points to 3.35 per cent in November, the highest mortgage rate since 2013.The rise in mortgage costs follows a string of interest rate increases from the BoE’s Monetary Policy Committee, as it tries to tackle high inflation. More

Full-year U.S. auto sales are forecast to be about 13.9 million units, down 8% from 2021 and 20% from the peak in 2016, according to industry consultant Cox Automotive.Inventory shortages, caused by surging material costs and persistent chip shortage, spilled into 2022, hobbling production at many automakers. Tight supplies kept car and truck prices elevated, even as auto inventory improved in the second half of the year. Toyota Motor (NYSE:TM) Corp has been among those hit acutely by parts shortages, which forced the Japanese company to cut its full-year production target in November.The cutback will lead to the company ceding its spot as the top-selling U.S. automaker in 2022 to GM, which gave up that position at the end of 2021 for the first time since 1931, according to Cox Automotive and automotive marketplace TrueCar (NASDAQ:TRUE). GRAPHIC : U.S. auto sales over the years – https://www.reuters.com/graphics/USA-AUTOS/lgpdkkydqvo/chart.png GM’s 2022 U.S. sales are set to rise 2.3%, while Toyota’s is expected to fall 9%, according to Cox Automotive. Both automakers are set to report sales figures on Wednesday.Some industry observers fret that price hikes by automakers to blunt inflationary pressures and rising interest rates will take a toll on new vehicle sales in the new year.”We expect 2023 to carry a high level of risk and uncertainty as several markets could be dealing with a recession,” said Jeff Schuster, president of global forecasts at LMC Automotive.Automakers will need to begin incentivising buyers, a trend that was briefly paused during the pandemic as manufacturers and dealers struggled to fulfill demand, TrueCar said. More

WASHINGTON (Reuters) – The Federal Reserve ended 2022 with a firm promise at its December policy meeting that interest rates would continue rising this year, but at a slower pace and perhaps only by another three-quarters of a percentage point.That session’s readout, due to be released at 2 p.m. EST (1900 GMT) on Wednesday, may provide further insight into just how the endgame of the current tightening cycle will play out, and how deeply Fed officials are beginning to weigh risks to economic growth against their top-of-mind concern about inflation.The overall tone of the minutes is still likely to show inflation has top billing among policymakers. It has been slowing for several months, but as of November the Fed’s preferred inflation gauge – the personal consumption expenditures price index – was still rising at a 5.5% annual rate, more than twice the U.S. central bank’s 2% target.The minutes “will lean against easing prematurely” and keep the focus on the likelihood that rates will rise further and remain high, Derek Tang, economist at LH Meyer, wrote on Tuesday.But the details of the document, with its descriptions of different points of view and the rough sizes of groups of policymakers offering them, could show the Fed’s internal deliberations entering a new phase where risks to economic growth and employment are given more standing. The projections of Fed officials released on Dec. 14 showed near unanimity about where interest rates are heading in 2023, with 15 of 19 policymakers expecting the target rate to rise by either three-quarters of a percentage point or a full percentage point in coming months, a narrow range that would see the current cycle end this spring with that rate around 5.25% or 5.5%.But in 2024 the projections diverge dramatically, with one official seeing the policy rate continuing at 5.625%, one seeing it slashed to 3.125%, and no more than seven officials in agreement on any particular rate in an economy that still may be flirting with or muddling through a recession.”The FOMC seems united on getting policy above 5% but is quite split on exit strategy; how long to hold and how deeply and rapidly to ease on the other side,” Tang wrote, referring to the central bank’s policy-setting Federal Open Market Committee. COGNIZANT OF RISKSThe minutes could help pin down how much sentiment there is to ease the pace of upcoming rate increases to a quarter of a percentage point as of the Jan. 31-Feb. 1 meeting. The Fed used three-quarters-of-a-percentage-point hikes for much of 2022, but trimmed that to a half-percentage-point increase in December and indicated it may slow the pace even further as it looks for a proper stopping point.New economic data between now and then will shape that decision. Closely watched statistics on U.S. job openings will be released ahead of the minutes on Wednesday, followed on Friday by the monthly jobs report for December – both important benchmarks for Fed officials who hope the U.S. labor market will adjust to slower growth and higher interest rates with a limited loss of employment.Consumer inflation data for December will be released next week.Though Fed Chair Jerome Powell in December remained adamant the central bank will do what it takes to control inflation, he also said officials are cognizant of the risks of overdoing it – something Fed staff also have begun to emphasize. In the minutes for the Nov. 1-2 meeting, Fed staff put roughly even odds on a recession in 2023, and new research late last month warned that with the world’s major central banks raising rates simultaneously the combined impact may be greater than anticipated as policy in one country influences bond yields, currency values and trade patterns in another. “It is especially challenging to estimate spillovers, and there are concerns that policymakers may underestimate them. In such a case, there is a risk of overtightening that central banks need to be, and we believe are, cognizant of,” Fed economists Dario Caldara, Francesco Ferrante, and Albert Queralto wrote. More

The first Fed meeting minutes release of the year is due later, along with manufacturing data and job openings numbers – a fairly chunky package of risk events to wake investors up from any post-Christmas or New Year’s Day torpor. Federal Reserve rate hikes were one of, if not the major factor that drove markets last year, and Wednesday’s package of releases will set the tone for early 2023. Any surprises could provide a shock to current market pricing for rate cuts to begin late this year. The minutes are of the Fed’s December meeting, at which the central bank raised rates by 50 basis points and chair Jerome Powell tried to deliver a hawkish message but U.S. Treasury yields finished the day slightly lower. That reaction suggests, according to ING, that should the minutes fail to confirm that dovish bias, Treasury yields are likely to rise. The JOLTS survey of job openings and the ISM Manufacturing index are both also due and will be helpful data points for investors, and indeed the Fed, in trying to assess whether the U.S. economy is slowing and whether that means the Fed will be pushed to cut rates this year. If U.S.-focused traders do have a busy day, their European counterparts are likely to show little sympathy as they’ve already been busy this year. European markets reacted strongly to Wednesday’s data that showed French inflation came in cooler than expected, mirroring similar developments in Germany on Tuesday, and Spain last week. Germany’s 10 year yield dropped 7 basis points to a two week low, with sharp moves in government bonds across the euro zone, as well as a 7 basis point fall in the benchmark U.S. 10 year Treasury yield. Europe’s STOXX 600 share index also rose around 1%, set for its third day of gains as the positive mood swept through European markets.That could all change, however, if markets decide the Fed minutes and the economic data suggest significantly more U.S. rate hikes are needed this year. Key developments that could influence markets on Wednesday:Economic events: Minutes from Fed’s December meeting; JOLTs job openingsISM manufacturing data More

Investing.com — U.K. consumers ramped up their credit card spending ahead of the holiday season, as inflation for groceries in particular continued to run well ahead of the rate of wage growth. Figures from the Bank of England showed consumer credit rose £1.507 billion (£1=$1.2062) in November, its biggest increase in five months and well ahead of analysts’ forecasts, as households prepared for the Christmas holiday season with inflation running at over 10%. The British Retail Consortium said on Wednesday that overall shop price inflation had eased moderately to 7.3% in December from 7.4% in November. but food prices – which loom particularly large during the festive season –  accelerated strongly to 13.3% from 12.4%, offsetting declines in non-food prices. A parallel survey by market research firm Kantar Worldpanel, meanwhile, suggested that grocery prices rose 14.2% from a year earlier in December, while sales volumes fell 1%. The BRC, a retail industry body, blamed the war in Ukraine for keeping the price of key inputs into food production – such as animal feed, fertilizer and energy – higher than they would otherwise be. Others, such as UBS Global Wealth Management chief economist Paul Donovan, noted that rising corporate profit margins have also played an important role. “If companies can convince customers that price increases are due to forces beyond their control, they can persuade customers to accept expanding profit margins,” Donovan said in a daily briefing, adding that “in recent months, agricultural output prices have been falling.”Analysts said the figures provide a weak backdrop to the U.K. retail sector ahead of updates from High Street stalwarts Next (LON:NXT) and Greggs (LON:GRG) later this week. “With shoppers having less money to spend on discretionary retail having paid for their essential groceries, there will be little to stimulate demand across the non-food channels,” said Mike Watkins, head of retailer and business insight at NielsenIQ. “The increase in food inflation is going to put further pressure on household budgets and it’s unlikely that there will be any improvement in the consumer mind-set around personal finances in the near term.”The trend in consumer credit stood in stark contrast to housing-related credit in November. The Bank of England’s data showed mortgage approvals fell by some 20% as the market struggled to recover from the volatility in local capital markets caused by the disastrous and short-lived premiership of Liz Truss.  More

Lower energy prices helped push inflation down in France, as European stocks rose on growing expectations that inflation has peaked across the region. French inflation fell to 6.7 per cent in the year to December, against economists’ expectations of a slight rise following the 7.1 per cent figure recorded for November. European stocks built on their early 2023 rally after the inflation report came out. The region-wide Stoxx 600 rose 0.9 per cent, leaving it up almost 3 per cent this week. Shares in the region are on track to post one of their top five performances for the first five trading days of any year since 1987, according to Financial Times calculations based on Refinitiv data. The measure of harmonised prices — produced by Insee, France’s statistics agency — follows similar slides in Spain and Germany and boosted expectations that headline inflation in the eurozone will fall sharply following last year’s surge to double-digit levels. Bourses in France, Germany and Spain have all rallied by a similar margin in the first trading days of the year on the back of the better than expected data. A sharper than expected fall in inflation during the early months of 2023 would allow the European Central Bank, which increased borrowing costs aggressively over the course of 2022 to counter record-high prices, to stop raising rates before the summer. Eurozone inflation is expected to drop into single digits for the first time in three months on the back of the fall in energy prices paid by the region’s households and businesses — a consequence of measures from the region’s governments to keep the cost of gas in check and warmer than usual weather in recent months. December price data for the bloc is published on Friday. Economists polled by Bloomberg predict a decline to 9.5 per cent — the lowest level since August and far below the October peak of 10.6 per cent. Claus Vistesen, an economist at Pantheon Macroeconomics, said this week’s price data pointed to “a significant downside surprise” in Friday’s eurozone inflation figures, predicting a fall to as low as 9 per cent in the headline rate for the bloc.Governments’ borrowing costs have fallen slightly, with the yield on France’s 10-year sovereign bond declining 0.1 percentage points this week to 2.82 per cent, while the German equivalent has dipped by 0.07 percentage points to 2.3 per cent.However, the data out this week also indicate that, while falling energy prices have reduced overall inflation, underlying price pressures for other goods and services have remained largely unchanged or even continued to increase. Core inflation — which excludes changes in energy and food prices — rose in Spain, and Germany reported higher services inflation although in France the pace of price growth for services also slipped. Vistesen said the lack of a fall in underlying pressures would “keep the ECB on alert at the start of the year”. Economists still expect the bank to raise its deposit rate by half a percentage point in February and March, taking it to 3 per cent. The euro traded 0.7 per cent higher against the dollar at $1.061 on Wednesday, despite the French inflation figures coming in cooler than expected.

Headline inflation in the region is expected to drop sharply in the spring, as the impact of last year’s surge in energy prices falls out of the annual index. Carsten Brzeski, head of macro research at ING, said price pressures “could — temporarily — fall to 2 per cent before the year end” — a level in line with the ECB’s target. France’s finance minister Bruno Le Maire told France Inter radio that inflation would track downward over the course of this year.Earlier and more aggressive government energy subsidies have helped to shield the country from the double-digit surge in consumer prices that has swept across much of the rest of Europe.Analysts polled by Reuters had expected an increase to 7.3 per cent in the French number. More