Aurelia Butler

The remarks at a media briefing came against the backdrop of a pledge by Yi Gang, the governor of the People’s Bank of China (PBOC), to keep monetary policy accommodative to support economic recovery.”We will use various monetary policy tools in a timely and flexible manner, give better play to the dual functions of aggregate and structural tools, boost support for the real economy,” said Ruan Jianhong, head of the statistics department.The central bank will keep liquidity reasonably ample and push financial institutions to lower financing costs for firms, said Zou Lan, head of its monetary policy department.”In the second half of the year, the economic operation still faces great uncertainty and instability,” he added.”We need to work hard to stabilise the economy and pay attention to the changes in the inflation situation.”Analysts polled by Reuters estimated that China’s economic growth is likely to have slowed sharply to 1% in the second quarter from 4.8% in the period from January to March, suggesting policymakers may have to do more to spur growth.In June, the interest rate on new corporate loans was at 4.16%, down 34 basis points from a year earlier, while the interest rate on new time deposits was 2.5%, or 16 basis points lower than the year-earlier period, Ruan said.New bank lending in China leapt in June, rising more than expected, while broad credit growth quickened, as the central bank stepped up efforts to revive the pandemic-hit economy.In the first quarter of 2022, China’s macro leverage ratio, which measures the economy’s overall indebtedness, was at 277.1%, 4.6 percentage points higher than the end of the previous year, Ruan said.The leverage ratio will rise periodically because of slowing growth and counter-cyclical policies, but a recovery in the economy will create conditions for maintaining a reasonable debt level in the future, she added.A recent move to allow policy banks to issue 300 billion yuan ($44.62 billion) in bonds will help some key infrastructure projects meet the minimum capital requirement of 20%, which will help speed up bank lending for such projects, Zou said.Authorities have also given policy banks 800 billion yuan in new credit quotas to fund infrastructure projects.The PBOC has worked with local authorities to maintain financial stability and monitor liquidity risks after uncovering problems at some banks in the central province of Henan, said Sun Tianqi, head of the central bank’s financial stability bureau.China will replenish capital for smaller banks and rein in the number of high-risk financial institutions, Sun said.Some banks in Henan froze millions of deposits in April, leaving firms unable to pay workers and locking individuals out of savings, prompting protests in the province over the weekend.($1=6.7236 Chinese yuan renminbi) More

Investing.com — U.S. inflation is set to reach another 4-decade high in June, but whether that will be enough to make the Fed even more aggressive about raising interest rates isn’t clear. Data from China suggested that the infamous global supply chain bottlenecks are easing as lockdown restrictions are lifted. New Zealand and South Korea raise their key interest rates, and Canada and Chile are expected to do the same later. Delta Air Lines heralds the start of the second-quarter earnings season, and oil stabilizes after slumping below $100 on rising U.S. stockpile data. Here’s what you need to know in financial markets on Wednesday, July 13.1. US CPI set for new highAnnual consumer inflation in the U.S. is set to hit a new four-decade high in June, with energy and shelter prices expected to have pushed the headline number up to 8.8% from 8.6% in May.The data will likely cement expectations of another 75 basis-point increase in U.S. interest rates when the Federal Reserve meets on July 27, but limits to the pace of Fed tightening already appear to be in sight, as Kansas City Fed President Esther George – by no means an inflation dove – warned of the danger of ‘oversteering’ with rate hikes as the economy cools down.Evidence of that cooling may come with the weekly mortgage applications at 07:00 AM ET. The CPI report follows at 08:30 AM ET.2. Chinese exports leap, easing supply chain woes China’s exports posted an impressive comeback in June as the lifting of lockdowns in and around Shanghai eased the bottleneck on one of the world economy’s biggest trade hubs.Export growth accelerated to 17.9%, confounding expectations of a slowdown to only 12% and indicating that the notorious ‘supply chain constraints’ that are likely to feature in a bunch of upcoming U.S. earnings reports may actually be improving rather quickly. Fears of a return to lockdowns in Shanghai eased a little as Wednesday’s testing data showed no new cases outside quarantined areas.There was less good news for the world economy on the other side of China’s trade balance. Import growth fell to only 1.0% on the year and has effectively stagnated for the last four months, with sharp drops in base metals imports pointing to sustained weakness in industrial output ahead.China releases second-quarter growth figures on Friday that are expected to leave it well short of meeting the government’s 5.5% GDP growth target.3. Stocks set to edge higher ahead of CPI; Delta earnings eyedU.S. stock markets are set to open cautiously higher later but remain hostage to the inflation print.By 06:15 AM ET, Dow Jones futures were up 64 points, or 0.2%, while S&P 500 futures were up 0.3% as were Nasdaq 100 futures. The three main cash indices had fallen by between 0.6% and 1.0% on Tuesday.Stocks likely to be in focus later include Alphabet (NASDAQ:GOOGL), after The Wall Street Journal reported that its main unit Google will slow hiring for the rest of the year, and – of course – Twitter (NYSE:TWTR), which formally filed suit on Tuesday to enforce Elon Musk’s aborted takeover deal.Fastenal (NASDAQ:FAST), Progressive (NYSE:PGR), and perhaps most interestingly, Delta Air Lines (NYSE:DAL), all report earnings.4. Rate hikes on three continents as economic picture improves a little Recession fears eased slightly in Europe, after Eurozone industrial output was reported to have risen a surprisingly strong 0.8% in May, while April’s increase was revised up to 0.5%. That gives the Eurozone a better chance of staying in positive growth territory for the second quarter.The U.K., too, posted better-than-expected economic figures for May, with monthly GDP rising 0.5% thanks to strong activity in trucking, travel, and – who knew? – more appointments with GPs. Construction output was also strong.The data remove some of the resistance to central bank interest rate rises by the Bank of England and ECB, but still gave little relief to the pound and euro. Elsewhere overnight, the central banks of South Korea and New Zealand both raised their key rates by 50 basis points, and those of Canada and Chile are expected to follow suit later.5. Oil stabilizes as IEA sees supply-demand balance improvingThe International Energy Agency said that the global oil supply crisis may be easing, although not in the way that western governments would necessarily like.The Paris-based agency revised up its estimate for global oil supply this year by 300,000 barrels a day, chiefly due to the fact that western sanctions are not hurting Russian output as much as hoped. Russia accounted for 80% of the revision.At the same time, the IEA trimmed its estimates for demand both this year and next, saying that high prices are starting to choke it off.Crude had slumped on such concerns already on Tuesday to its lowest level since Russia’s invasion of Ukraine. By 06:30 AM ET, U.S. crude futures had bounced 0.5% to $96.28 a barrel, while Brent futures were up 0.4% at $99.88 a barrel.The U.S. government releases its weekly inventories data at 10:30 AM ET, a day after the American Petroleum Institute reported the third big rise in U.S. stockpiles in four weeks. More

The UK economy returned to growth in May after a contraction in April, surprising economists and raising analysts’ expectations of a significant interest rate rise by the Bank of England at its next meeting.Output grew 0.5 per cent between April and May, figures from the Office for National Statistics showed on Wednesday, much better than the flat performance expected by economists polled by Reuters. Darren Morgan, ONS director of economic statistics, said: “The economy rebounded in May with growth across all main sectors.” With gross domestic product figures for the previous months also being revised up to a 0.1 per cent expansion in March and a milder 0.2 per cent contraction in April, Paul Dales, chief UK economist at Capital Economics, said the data suggested “that the economy is holding up well in the face of high inflation”. He added that the news might prompt the BoE to raise interest rates by 0.5 percentage points at its next policy meeting in August. The central bank has raised rates by 0.25 percentage points at its last five meetings. After the data were released, analysts raised the probability of a 0.5 percentage point increase at the August meeting to 67 per cent from 59 per cent. Sterling barely moved after the announcement.Health was the biggest driver of the rebound in May, with many more people seeing general practitioners, despite the Covid-19 test-and-trace and vaccination programmes winding down. Health and social work activities grew by 2.1 per cent month-on-month, boosting services output to 0.4 per cent growth.Road hauliers also had a busy month, while travel agencies fared well, with business growing by 11 per cent, with pent-up demand for summer holidays. Construction also performed well, with housebuilding and office refurbishment driving growth, while the strongest growth in the manufacturing sector since November 2020, at 1.4 per cent, boosted the sector above its pre-pandemic levels. The rebound is “likely due to the recovery in supply chain disruptions enabling manufacturers to start to fulfil the backlog of orders”, said Gabriella Dickens, economist at Pantheon Macroeconomics.Chancellor Nadhim Zahawi said: “It’s always great to see the economy growing but I’m not complacent. I know people are concerned so we are continuing to support families and economic growth.”

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

However, May’s data might not be as strong as at first glance. They were not adjusted for the shift of the second May bank holiday to June, which could have boosted output. Moreover, output in consumer-facing services — which include pubs, restaurants and entertainment venues — fell 0.1 per cent despite still being 4.7 per cent below its pre-pandemic level of February 2020. Weakness in this sector “suggests the cost of living crisis is starting to take a toll on consumer spending”, said Thomas Pugh, economist at audit, tax and consulting firm RSM UK.Consumer price inflation rose to a 40-year high of 9.1 per cent in May and the BoE expects it to climb to more than 11 per cent in the autumn. This means that while the latest data suggest that GDP in the second quarter might be stronger than the BoE’s forecast of a 0.3 per cent contraction, there is still a risk of a recession. The data suggest “that the recession did not begin as soon as we had feared, but it does little to dispel worries about the outlook”, said Kallum Pickering, economist at Berenberg Bank. “The big picture is that the economy could be just 1 per cent larger in 2023 than it was in 2019, before the pandemic,” said Pugh. The ONS also released trade data that showed imports of goods and services rising more than exports, resulting in the widest trade deficit since records began in 1992.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Stronger fuel exports to the EU, which reflects the region’s waning reliance on Russian energy, helped to boost UK trade with the bloc. Despite the positive May figures, the UK economic performance “may prove to be a poisoned chalice for whoever wins the race to be the next prime minister, regardless of whether or not they cut taxes”, said Dales, pointing to the likelihood of real household incomes falling further in the third quarter. More

Earlier this year, the war in Ukraine raised fears of famine in countries that depend on wheat imports. In Chicago, the grain’s price soared to historic highs. Ukraine’s situation remains precarious. Yet three months on, wheat prices have retreated sharply. Markets have not misread the geopolitical situation. True, financial markets can at times exaggerate supply risks in commodities. But Russia and Ukraine contribute 28 per cent of the world’s supply. India’s announced wheat export ban in May did not help. Always a large producer, India hoped to expand its wheat exports to 12mn tonnes — ranking it in the top five countries — for the coming year. However, two recent events have helped to calm fears of a severe shortage of wheat, at least in Europe and Africa. Winter wheat harvests from the US appear in spring and early summer. This renewed seasonal supply, plus talk of a good harvest in Australia (not to mention Russia), has sapped some of the energy from the initial price spike. Australia is the world’s fourth largest wheat exporter after the US. More importantly, interest rates are rising — pushing prices down. Traders nervous about the impact of a global economic recession on demand for commodities took fright when May’s US consumer price data confirmed that the annual inflation rate had accelerated to 8.6 per cent. That led the US Federal Reserve to raise its target interest rate range by an aggressive 75 basis points.All global commodity prices subsequently sank in June. That included wheat, both for feed and high protein premium grades. Share prices of grain specialists such as ADM and Bunge followed suit.Two factors should underpin the wheat price for the rest of this year, thinks Ole Hanson at Saxo Bank. This month, Ukraine’s normal two-month wheat harvest season begins. Even if harvested, that grain would need storage space. A significant amount of grain stored in Ukraine’s ports remains in situ. Elsewhere, unseasonably hot weather in the northern hemisphere could cause damage to spring wheat crops. Given both these factors, expect wheat prices to stabilise in the coming months. More