Aurelia Butler

Chinese banks extended 1.89 trillion yuan ($282.62 billion) in new yuan loans in May, nearly tripling April’s tally and handily beating expectations, data released by the People’s Bank of China on Friday.Analysts polled by Reuters had predicted new yuan loans would surge to 1.3 trillion yuan in May from 645.4 billion yuan in April and against 1.5 trillion yuan a year earlier.”Credit growth was stronger than expected last month and is likely to accelerate further following the clear signal in late May that policymakers want banks to step up lending,” Capital Economics said in a note. “More policy easing is likely. But private sector credit demand is likely to remain subdued while, on current budgetary plans, local government borrowing is about to slow. A dramatic increase in credit growth still seems unlikely.”New household loans, including mortgages, rose to 288.8 billion yuan in May, after contracting 217 billion yuan in April, while new corporate loans soared to 1.53 trillion yuan in May from 578.4 billion yuan in April.However, 38% of the new monthly loans were in the form of short-term bill financing, which was down from 80% in April but still higher than 10% in the first quarter, suggesting real credit demand remains weak. Chinese policymakers have recently stepped up support for the slowing economy as Shanghai and other cities ease tough COVID-19 lockdowns following a drop in new infections.The cabinet announced a package of policy steps last month, including broader tax credit rebates and postponing social security payments and loan repayments to support businesses.Local media also reported last month that financial authorities had told commercial banks to speed up lending.In May, the central bank cut its benchmark reference rate for mortgages by an unexpectedly wide margin, its second reduction this year, in a bid to turn around the contracting housing market, a key economic growth driver.But analysts say both banks and potential borrowers remain cautious in case there are further virus disruptions. After discovering a handful of new cases, China’s commercial hub of Shanghai will lock down millions of people for mass COVID-19 testing this weekend – just 10 days after lifting a gruelling two-month lockdown – unsettling residents and raising concerns about a fresh blow to businesses. MORE POLICY EASING UNDERWAYPremier Li Keqiang has vowed to achieve positive economic growth in the second quarter, although many private sector economists have pencilled in a contraction.China will increase the credit quota for policy banks by 800 billion yuan ($120 billion) for them to support infrastructure construction, state television CCTV quoted a cabinet meeting as saying. Broad M2 money supply grew 11.1% from a year earlier, central bank data showed, above estimates of 10.4% forecast in the Reuters poll. M2 grew 10.5% in April from a year ago.Outstanding yuan loans grew 11.0% in May from a year earlier compared with 10.9% growth in April. Analysts had expected 10.7% growth.Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, quickened to 10.5% in May from 10.2% in April. Chinese provinces are racing to issue hundreds of billions of dollars worth of special bonds in June, frontloading investment to revive the slowing economy.Analysts and policy insiders expect China to issue special treasury bonds later this year, to maintain a steady stream of funding.TSF includes off-balance sheet forms of financing that exist outside the conventional bank lending system, such as initial public offerings, loans from trust companies and bond sales.In May, TSF jumped to 2.79 trillion yuan from 910.2 billion yuan in April. Analysts polled by Reuters had expected May TSF of 2.02 trillion yuan. More

The US economy will tip into a recession next year, according to nearly 70 per cent of leading academic economists polled by the Financial Times. The latest survey, conducted in partnership with the Initiative on Global Markets at the University of Chicago’s Booth School of Business, suggests mounting headwinds for the world’s largest economy after one of the most rapid rebounds in history, as the Federal Reserve increases efforts to contain the highest inflation in about 40 years. Almost 40 per cent of the 49 respondents project that the National Bureau of Economic Research — the arbiter of when recessions begin and end — will declare one in the first or second quarter of 2023. A third believe that call will be delayed until the second half of next year.The survey results, which were collected between June 6 and June 9, run counter to the Fed’s stance that it can damp demand without causing substantial economic pain. The central bank predicts that, as it raises interest rates, employers in the red-hot US labour market will opt to pare back historically high job openings as opposed to laying off staff, in turn cooling wage growth.

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The Fed has already embarked on what will be one of the fastest tightening cycles in decades. Since March it has raised its benchmark policy rate by 0.75 percentage points from near-zero levels.The Federal Open Market Committee gathers once again on Tuesday for a two-day policy meeting, at which officials are expected to implement the first back-to-back half-point rate rise since 1994 and signal the continuation of that pace until at least September. Share your feedback on this newsletter by emailing [email protected]. Thanks for reading FirstFT Asia. Here’s the rest of the day’s news — AmandaFive more stories in the news1. Senators agree on modest US gun reforms in wake of shootings A bipartisan group of US senators reached a tentative deal on gun-control measures after a string of a deadly mass shootings. The agreement includes funding for states to enact “red flag” laws and tighten background checks. The agreement falls short of the more stringent measures supported by the Biden administration, including the reinstatement of an assault weapons ban.

Thousands of gun-control advocates marched in Washington this weekend in support of stronger gun-control laws © Saul Loeb/AFP/Getty Images

2. Russians get first taste of rebranded McDonald’s Vkusno & Tochka, the new name for the fast-food chain, opened its doors on Sunday under local ownership. McDonald’s sold its Russian business last month after declaring operations were “no longer tenable” due to the country’s war with Ukraine. The rebranded business expects to expand to 1,000 restaurants within five to six years.3. US companies lose billions in earnings as dollar reaches 20-year high The rise of the dollar to its highest level since 2002 has led to an estimated $40bn in losses for US companies this year. The dollar’s strength is being driven by higher interest rates and the country’s faster economic recovery from the pandemic. 4. Tory MPs attack Johnson over plan to rip up Northern Ireland Brexit deal Boris Johnson faces fierce opposition as he prepares to release legislation that will revise his Brexit deal with the EU covering trade in Northern Ireland. An internal note circulating among Tory MPs opposing the bill and seen by the Financial Times accused the legislation of breaking international law and damaging “everything the UK and Conservatives stand for”. 5. Leftwing alliance makes strong first-round showing in French election Jean-Luc Mélenchon’s leftwing alliance made a strong showing in the first round of France’s legislative elections yesterday. While it is unlikely Mélenchon’s group will win the majority in the final round, yesterday’s results mark a dramatic comeback for the French left and give them leverage to voice opposition against Macron’s plans for economic reform. The day aheadUK GDP figures The UK will release its April gross domestic product data today plus figures on trade and construction output.India’s Consumer Price Index India will publish its May Consumer Price Index today. Last week, the Reserve Bank of India raised interest rates and said it would remove Covid-19 era stimulus measures to help bring down inflation. What else we’re reading Xi Jinping is reshaping China’s capital markets Beijing’s IPO pipeline is in flux as Xi Jinping aligns the stock market with party objectives. More IPOs now come from industries central to China’s competition with the West (think: biotechnology, renewable energy, and artificial intelligence). Analysts warn this growing state influence could come at a hefty cost if Western governments decide to cut off investment flows.US oil producers ignore Biden’s call to drill Petrol prices in the US are reaching record highs, helping fuel the country’s rampant inflation and spelling trouble for Democrats in the upcoming midterm elections. President Joe Biden has pleaded with oil producers to increase production, but investor demand, supply chain woes, and soaring input costs are making operators reluctant to drill.China fires back at US claims of aggression China’s defence minister Wei Fenghe pushed back against US accusations of aggression at a security conference on Sunday. Wei also said Beijing’s annexation of Taiwan “absolutely must be achieved” and that it was “natural” that China was developing new weapons. His remarks are the closest Beijing has come to confirming special hypersonic missile tests. WTO takes aim at export controls in effort to stem rising food prices At the start of the World Trade Organization’s first ministerial meeting in five years, director-general Ngozi Okonjo-Iweala urged governments to end restrictions on food exports to alleviate the hunger crisis caused by Russia’s invasion of Ukraine. At least 30 countries have imposed such restrictions, according to the IMF.Food vs fuel Millions of people are at risk of “hunger and destitution” as a result of food shortages caused by Russia’s invasion of Ukraine. Some companies and policymakers are eyeing limits on biofuel to boost food supply, but biofuel producers say they are not to blame. Attack on female diners in China sparks outrage over gender violence Chinese authorities raced to silence the backlash after a brutal attack on three female diners sparked uproar over the lack of protections for women. The country has had to grapple with numerous incidents of sexual violence and gender inequality in the past year, including the disappearance of Olympic tennis star Peng Shuai after she spoke up about sexual misconduct.Visual ArtArtist Rashid Johnson evokes feelings of longing and homesickness in his exhibition in Menorca and talks about the potential of new media for artists of colour. “A lot of artists of colour at that time were interested in these new media, partly because it didn’t have all this canonical history that was so framed by western constructs — it was like, maybe we can affect the discourse here,” Johnson said.

Rashid Johnson with his seascape “Angola’ (2022) © Courtesy the artist/Hauser & Wirth. Photo: Daniel Schäfer More

OTTAWA (Reuters) -Canada will announce a multi-million dollar investment on Monday to make the Jansen potash mine run by the globe’s largest listed miner, BHP Group (NYSE:BHP), “the cleanest and most sustainable in the world,” a government source said on Sunday.Industry Minister François-Philippe Champagne and Agriculture Minister Marie-Claude Bibeau are scheduled to make an announcement on “moving toward the net-zero emission economy” in Saskatoon, Saskatchewan, on Monday at 10:00 a.m. central time (1500 GMT).The source declined to say the exact amount of the federal investment in BHP’s Jansen mine, which is located about 150 km (93 miles) east of Saskatoon.The investment will allow BHP to use electric vehicles and equipment to operate the mine, said the source, who is familiar with the investment but was not authorized to speak on the record about it.Prime Minister Justin Trudeau’s government has been investing heavily in clean energy projects, including plants for producing electric vehicle batteries and battery materials, after it set a goal to reach net zero carbon emissions by 2050.Anglo-Australian miner BHP said last month it may accelerate its Jansen potash project in Canada by a year as Russia’s invasion of Ukraine has tightened global supplies.Prices of potash, a key input used in nitrogen fertilizers, have soared since Western sanctions were imposed against Russia.Russia and Belarus, which also faces sanctions, are the world’s second- and third-largest producers of the crop nutrient, while Canada is the No. 1 producer.”We’re looking to do anything we can do to support a commodity in short supply because of the war,” the government source said.When contacted, BHP declined to comment. More

The US economy will tip into a recession next year, according to nearly 70 per cent of leading academic economists polled by the Financial Times.The latest survey, conducted in partnership with the Initiative on Global Markets at the University of Chicago’s Booth School of Business, suggests mounting headwinds for the world’s largest economy after one of the most rapid rebounds in history, as the Federal Reserve ramps up efforts to contain the highest inflation in about 40 years.The US central bank has already embarked on what will be one of the fastest tightening cycles in decades. Since March it has raised its benchmark policy rate by 0.75 percentage points from near-zero levels.The Federal Open Market Committee gathers once again on Tuesday for a two-day policy meeting, at which officials are expected to implement the first back-to-back half-point rate rise since 1994 and signal the continuation of that pace until at least September.

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Almost 40 per cent of the 49 respondents project the National Bureau of Economic Research — the arbiter of when recessions begin and end — will declare one in the first or second quarter of 2023. A third believe that call will be delayed until the second half of next year. The NBER characterises a recession as a “significant decline in economic activity that is spread across the economy and lasts more than a few months”. Just one economist pencilled in a recession in 2022, with a majority predicting monthly jobs growth to average between 200,000 and 300,000 for the remainder of the year. The unemployment rate is set to steady at 3.7 per cent, according to the median estimate for December.The survey results, which were collected between June 6 and June 9, run counter to the Fed’s stance that it can damp demand without causing substantial economic pain. The central bank predicts that, as it raises interest rates, employers in the red-hot US labour market will opt to pare back historically high job openings as opposed to laying off staff, in turn cooling wage growth.Jay Powell, the Fed chair, has conceded that the Fed’s efforts to moderate inflation may cause “some pain”, leading to a “softish” landing that sees the unemployment rate rise “a few ticks”. But many of the economists polled are concerned about a more adverse outcome given the severity of the inflation situation and the fact that monetary policy will need to shift towards much tighter settings in short order to address it.“This is not landing a plane on a regular landing strip. This is landing a plane on a tightrope, and the winds are blowing,” said Tara Sinclair, an economist at George Washington University. “The idea that we are going to bring incomes down just enough and spending down just enough to bring prices back to the Fed’s 2 per cent target is unrealistic.”

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Compared to February’s survey, more economists are now of the view that core inflation, as measured by the personal consumption expenditures price index, will exceed 3 per cent by the end of 2023. Of the June respondents, 12 per cent thought that outcome was “very likely”, up from just 4 per cent earlier this year. The share of economists surveyed who thought that level “unlikely” over the same time period has since nearly halved.Geopolitical tensions, and the increase in energy costs that is likely to accompany that, were cited overwhelmingly as the factor potentially keeping upward pressure on inflation over the next 12 months, followed by prolonged supply chain disruptions. By year-end, the median estimate for core inflation is 4.3 per cent.Jonathan Wright, an economist at Johns Hopkins University who helped to design the survey, said the notable pessimism around both inflation and growth has stagflationary undertones, although he noted the circumstances are far different than the 1970s, when the term embodied a “much nastier mix of high inflation and recession”.

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Nearly 40 per cent of the economists warned that the Fed would fail to control inflation if it only raised the federal funds rate to 2.8 per cent by the end of the year. This would demand half-point rate rises at each of the central bank’s next three meetings in June, July and September before downsizing to its more typical quarter-point cadence for the final two gatherings of 2022. Few respondents expect the Fed to resort to 0.75 percentage point increases.Further rate rises are also likely well into next year, says Christiane Baumeister, a professor at the University of Notre Dame who thinks the Fed could lift its benchmark policy rate as high as 4 per cent in 2023. That is just above the level the majority of economists surveyed believe will be the peak of this tightening cycle.

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Dean Croushore, who served as an economist at the Fed’s Philadelphia branch for 14 years, cautioned that the central bank may need to eventually raise rates to roughly 5 per cent to contain a problem he believed was largely caused by the Fed waiting “far too long” to take action.“It’s always tough to bring inflation down once you let it out of the bottle,” said Croushore, who now teaches at the University of Richmond. “If they would just accelerate the rate increases a little bit more, it might cause a little financial volatility in the short-run, but they might be better off by not having to do as much later.” More

Hello and welcome to the working week,Prepare yourselves to be reminded of past scandals and war, which still resonate today. Tuesday is the fifth anniversary of the fire that engulfed west London’s Grenfell tower block, exposing shortcomings in the building’s cladding and sparking a crisis for apartment owners across the UK that continues to generate repercussions. It also happens to be the 40th anniversary of the end of the Falklands war, the wounds from which remain fresh in Buenos Aires.Friday marks the half-century mark since the break-in at the Watergate hotel-apartment-office complex in Washington. Thankfully, this one was resolved more quickly, although it did leave the irritating legacy of the suffix tacked on to what seems to be every subsequent political scandal.The latest of these, “partygate”, has a way to run, although the main protagonist, UK prime minister Boris Johnson, will (ironically) this week be the centre of a legitimate social gathering since he turns 58 on Saturday. Partygate’s spin-off series, Are You Being (Poorly) Served, is likely to see another instalment with the government promising to publish controversial and long-delayed legislation to override the Northern Ireland protocol on Monday. As my colleague Peter Foster noted in his excellent Brexit Briefing newsletter last week, this is unlikely to end well.Johnson is also expected to announce a new “plan for growth” this week alongside his chancellor Rishi Sunak. After the OECD’s verdict on UK growth next year — only sanctions-hit Russia is forecast to come off worse among G20 nations — the country clearly needs a new plan, if not a new PM to deliver it.France goes to the polls again on Sunday for the second round of the parliamentary election. The concern for newly elected president Emmanuel Macron is not the far right this time but an alliance from the far left.There will be at least one resolution this week. Colombians will go to the polls on Sunday for the second round of their country’s presidential election, which will decide whether the populist Rodolfo Hernández can see off former leftwing guerrilla Gustavo Petro. Whatever the outcome, it will be an interesting contest.Thanks for your emails about the content of The Week Ahead: [email protected] dataIt’s going to be a(nother) week for interest rate news. The main attraction will be the gathering of the Federal Reserve’s Open Market Committee, but there will also be decisions from the Bank of England and its equivalents in Japan, Switzerland and Brazil. The question is not whether the tightening of monetary policy will be accelerated but by how much — the answer to this question depends in part on your confidence in the given economy’s ability to achieve a soft landing or whether it is doomed to enter recession. The jump in US inflation on Friday has fuelled talk of a rapid tightening. Policymakers have already signalled that, at a minimum, the Fed will deliver a string of half-point rate rises. Traders have priced in the federal funds rate rising to roughly 2.9 per cent by the end of the year from its current target range of 0.75 to 1 per cent. The OECD placed its marker last week before the US inflation numbers were announced, calling for faster action from the Fed.CompaniesRetail is strongly represented in the earnings calendar this week. The headline act is Tesco, Britain’s biggest supermarket chain, with observers keen to hear more about how inflation is hitting household spending. However, just two months on from its full-year results, few expect the company to deviate from its cautious script that profits this year will be held back by the need to keep prices for shoppers in check. I asked Jonathan Eley, the FT’s retail correspondent, for a view. “The company has been gaining market share in recent months, but first-quarter sales growth figures will be muddied by the closure of pubs and restaurants in the same period a year ago,” he said. “That boosted supermarket sales but hurt Booker, Tesco’s wholesale operation.” Among analysts’ comments, Barclays has forecast an overall decline of 1.8 per cent in the UK, with lower volumes partially offset by higher prices.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayIndia, May consumer price index (CPI) figuresUK, final April GDP data plus April production statistics, construction output and trade figuresTuesdayGermany, final May CPI figures plus ZEW economic sentiment surveyOpec monthly oil market reportUK, unemployment figuresUS, May producer price index (PPI) figures.Results: Ashtead Group Q4, Bellway Q2 trading update, Ferguson Q3, Paragon Banking Group H1WednesdayBrazil, Banco Central do Brasil’s Monetary Policy Committee rate decisionChina, May industrial production and retail sales figuresEU, March industrial production and April trade in goods dataFrance, final May CPI and harmonised index of consumer prices (HICP) figuresIndia, trade statisticsJapan, April industrial production dataRussia, flash Q1 GDP figuresUS, Federal Open Market Committee interest rate decision. Also, Wells Fargo housing market index plus May retail and food sales data.Results: Clariant Q1, WHSmith Q3 trading updateThursdayCanada, April wholesale trade figuresEU, eurozone Q1 wages dataFerrari holds capital market day in Maranello, Italy. Chief executive Benedetto Vigna is expected to unveil the company’s new long-term strategy as the sports car maker adjusts to growing demand for electric vehicles.Italy, May CPI dataJapan, May trade balance figuresSwitzerland, interest rate decisionUK, Bank of England Monetary Policy Committee interest rate decisionUS, May residential construction figuresResults: Adobe Systems Q2, Boohoo Q1 trading update, Halfords FYFridayCanada, monthly industrial product and raw materials price indicesEU, May HICP figuresJapan, Bank of Japan Monetary Policy Committee’s interest rate decisionUK, May insolvency plus retail sales figuresUS, May industrial production dataResults: Tesco Q1 trading updateWorld eventsFinally, here is a rundown of other events and milestones this week. MondayFrance, the Eurosatory defence industry exhibition event begins in ParisSwitzerland, the 12th ministerial conference of the World Trade Organization (MC12), a biennial gathering of the WTO’s most senior decision-making body, continues in GenevaUK, the Cinch Championships, considered a gauge of players’ performance in the upcoming Wimbledon tennis tournament, starts at the Queen’s Club plus London Technology Week begins at various venues in the capital and onlineTuesday40th anniversary of the Argentine surrender in the Falklands warUK, the fifth anniversary of the fire that engulfed the west London high-rise block Grenfell Tower, leaving 72 people dead and 203 households homeless. Today, the first flight to Rwanda carrying migrants who crossed the English Channel is set to leave. Royal Ascot, the most famous race meeting in the world, considered by many to be the highlight of the British summer social calendar, begins. The first “supermoon” of 2022 will be visible.US, former president Donald Trump turns 76WednesdayBelgium, Nato defence ministers gather in Brussels for a two-day meeting. The event will include a working dinner to which representatives of Finland, Georgia, Sweden, Ukraine and the EU are invited. A separate meeting of the Ukraine Contact Group, hosted by the US, will take place at Nato headquarters.European Centre Bank president Christine Lagarde speaks at a London School of Economics eventThursday122nd US Open golf tournament tees off at the Country Club in Brookline, Massachusetts. Tiger Woods will not be taking part but there will be many other familiar faces on the greens despite the US Golf Association’s unhappiness about players joining the breakaway LIV series. The contest finishes on Sunday.FridayThe annual feast of Corpus Christi is celebrated by the Catholic Church and some other western churchesIceland celebrates its national dayUS, 50th anniversary of the break-in at the Democratic National Committee headquarters in Washington’s Watergate office-apartment-hotel complex that led to the Watergate scandalSaturdayUK, final of the rugby union Aviva Premiership season at Twickenham. Plus, Boris Johnson turns 58.US, the 146th annual Westminster Kennel Club Dog Show — rescheduled from February — begins in New York with almost 3,000 dogs from more than 200 breeds taking part in the second-longest running US sporting eventSundayColombia, second round of voting in the presidential electionFrance, second round of voting in the parliamentary electionUS, Juneteenth commemoration of the emancipation of enslaved African-Americans as well as celebrating African-American culture More