Economy

LONDON (Reuters) – Euro zone government bond yields rose back towards recent multi-year highs on Monday, after European Central Bank policymaker Francois Villeroy de Galhau said a weak euro threatened price stability in the currency bloc.The euro’s weakness on currency markets could threaten the ECB’s efforts to steer inflation towards its target, Villeroy said.The currency has tumbled almost 9% since February and fell to its lowest levels since 2017 last week, a move that accelerated upward pressure on inflation in the euro area, which is already running at record highs at 7.5%.Villeroy’s comments injected fresh volatility into bond markets that rebounded in price last week as growing concerns about the global growth outlook prompted investors to reassess the prospects for battered sovereign debt.Germany’s 10-year Bund yield rose more than 5 basis points (bps) to just over 1% , reversing earlier falls. Having hit roughly eight-year highs earlier this month above 1%, Bund yields fell to as low as 0.85% last week. Italian 10-year bond yields rose 7.5 bps to 2.92%, pushing the gap over safer German Bunds to 193 bps, versus 189 bps late on Friday.”The move in bonds is euro led so I think it is those comments from Villeroy,” said Rabobank senior bonds strategist Lyn Graham-Taylor. “This explains why spreads are widening also.”Money markets also reacted as investors again ratcheted up rate-hike bets, with roughly 95 bps worth of ECB tightening priced in by year-end. That’s up from roughly 80 bps on Friday and would be the equivalent of the ECB delivering more than three, 25-bps interest rate hikes. The ECB last hiked rates in 2011 and its depo rate is at -0.50%.At the weekend, ECB policymaker Pablo Hernandez de Cos said the ECB would likely decide at its next meeting to end its stimulus programme in July and raise rates “very soon” after that.”We had a strong correction in bonds last week with inflation worries moving to the background and recession worries helping lower rates from high levels, DZ rates strategist Christian Lenk said.”But this was more of a short-term reaction, the trend is still to the upside (for yields) and markets are still worried about the prospects of a rate hike in July.”Money market pricing suggests investors are positioned for a 25-bps rate hike at the ECB’s July meeting.Elsewhere, a key gauge of long-term euro area inflation expectations rose to 2.23%. It fell to its lowest levels since March last week. More

BRUSSELS (Reuters) – The European Commission is set to propose on Wednesday a new package of financial aid to Ukraine including new loans to provide immediate liquidity to Kyiv and commitments for the long-term financing of the country’s reconstruction, officials said.The size of the short-term financial support is still being defined but two officials familiar with the discussions told Reuters they expected it to roughly cover Ukraine’s financial needs for two months, largely through loans.A third official said the money would come from the EU budget and from EU governments, dismissing earlier talk that the funds could be raised in the market with the issuance of joint bonds backed by the EU budget.The International Monetary Fund (IMF) estimated in April that Ukraine needed around $5 billion dollars a month for at least three months to plug the immediate financial shortfall caused by Russia’s invasion. The Fund’s chief, Kristalina Georgieva, has called for this support to come in the form of grants rather than loans.The scale of EU support will depend also on how much G7 countries are willing to contribute. A meeting of finance ministers of the Group of Seven major economies is scheduled in the second half of this week, just after the Commission is expected to unveil its proposals.A spokesperson for the Commission declined to comment on the new package.EU states will have to sign off on the Commission’s plan, and could try to tweak it.Governments are divided over how to support Ukraine, with many favouring loans despite the IMF’s views and Ukraine’s likely inability to repay them. Germany is among a number of EU governments that support grants, EU diplomats said. The package could end up being a mix of grants and loans, officials said. The money would be used to pay salaries, pensions and hospitals’ costs.The new package would come on top of EU emergency loans to Kyiv worth 1.2 billion euros that the EU agreed in January, of which half has already been disbursed, with the remainder expected to be paid shortly, a Commission spokesperson said. The Commission will also indicate on Wednesday its commitment to support the long-term reconstruction of Ukraine, officials said, setting out principles for what is estimated to be a colossal financial effort worth trillions of euros. More

Hello and welcome to Trade Secrets. As this lands in your inbox, the EU and the US will be coming towards the end of their second Trade and Technology Council (TTC) meeting, this one in Saclay, a tech hub on the outskirts of Paris. (Did you know Paris had a tech hub? I didn’t.) The atmosphere has been a lot more positive than the first one, in Pittsburgh in September last year. For one thing, France, which came close to sabotaging the last one, is much more enthusiastic now. First, it’s hosting the meeting. Second, the techno-interventionist French internal markets commissioner Thierry Breton, who was excluded from the Pittsburgh meeting, has been allowed a walk-on part, if not actually chairing the thing, this time. Today’s main piece looks at how the TTC model is being applied more broadly, and its limitations. Charted waters revives the topical subject (with Boris Johnson in Belfast to try to facilitate a new Northern Ireland government) of the impact of Brexit on UK-EU trade.And as ever, let me know what you’re thinking on [email protected], don’t negotiateIt’s amazing how much transatlantic co-operation on tech and security becomes possible when there’s an enemy like Russia to unite against. Today’s TTC is riding on the momentum of an unusually rapid and effective co-ordination of export controls and financial and trade sanctions between Brussels and Washington since the invasion of Ukraine. The concluding statement for the meeting, drafts of which have been floating around for a couple of weeks, are expansive in their ambitions for the US and EU to work together in areas from technology standards to the rare earth supply chain to foreign direct investment. The final agreement will be published later this afternoon Paris time and the press conference will be streamed here around 13.30 CEST.This looks a vindication for the strategy that the EU and US (particularly the latter, which was very keen on this format) have taken with the TTC. Instead of getting bogged down in a massive binding treaty-based trade agreement where agreement on one subject requires agreement on all — no one wants the traumatic Transatlantic Trade and Investment Partnership (TTIP) experience again — the two set up a flexible multi-stranded consultation and co-operation arrangement. You could also see as part of the same phenomenon the US’s proposed Indo-Pacific Economic Framework (IPEF) agreements in Asia, which are supposed to replace the Trans-Pacific Partnership (TPP) the US started but has now abandoned.Such frameworks are easy to set up, as they don’t require formal negotiating mandates or treaty ratifications, but will they deliver? International organisations and agreements have various functions. One is to develop and disseminate best practice. Another is to overcome purely organisational challenges to co-operation. The TTC and IPEF can do both of these. What they can’t do, unlike formal trade deals, is make trade-offs across different areas. Governments can’t compensate for the political cost of exposing one domestic constituency to competition by giving a different industry export markets or regulatory influence in return. The US in effect expanded some of its intellectual property regime abroad in TPP by trading off improved access to its consumer market. If it doesn’t have market access to bargain, what will it expect to get back? This was a point forcibly made last week by a gang of Republican senators, who don’t think much of the IPEF.Frameworks such as TTC or IPEF aren’t, or probably shouldn’t be, a model to replace formal trade agreements where those are still possible. Ursula von der Leyen, European Commission president, announced a TTC with India recently while on a trip to New Delhi. This came as a surprise to the officials at various directorates back in Brussels who would have to run it: they are currently negotiating an actual binding trade deal with India and have hopes of finishing it next year. (It’s not the first time von der Leyen, who is unimpressive on trade issues, has unhelpfully freelanced in a meeting with a foreign leader.)For the moment, the shared need to take on Russia has given the EU and US enough incentive to co-operate. But EU officials privately reckon that longer-term co-operation is likely to be limited in breadth and depth. There still remain institutional jealousies that prevent Washington and Brussels agreeing unified regulation across a bunch of areas. And while there are 57 references to Russia in the draft TTC conclusions and only three to China, the main antagonist in the medium-term on tech, trade and security issues is Beijing, not Moscow. There the EU and US maintain marked contrasts in approach — the US much more confrontational, the EU more nuanced.The TTC statement is ambitious. But at this point it’s still much bigger on best practices and exchanges of experts, joint road maps and moving towards shared methodologies, promoting transparency and early warning systems for disruptions and what have you, than on anything more practical. The transatlantic pals aren’t coming up with a single technical standard for electric vehicles or a rare earths mining and depository scheme.They’ve promised to “minimise the impact of any protective measures” in solar power supply chains, but the US is in a right old mess at the moment trying to onshore solar manufacturing — not to mention potentially imposing new “national security” tariffs on neodymium magnets, which are used to make electric vehicles. Both sides have agreed to be transparent on semiconductor production subsidies, but not to limit or co-ordinate them. They’re generally in favour of reforming the World Trade Organization, but they don’t say how. And so on.Let’s give them some space: the TTC was always supposed to be a process, not a single deal. The Ukraine war has created the best opportunity for transatlantic regulatory and trade co-operation for decades. There’s still time to take it. But it would be nice to see some solid results soon.As well as this newsletter, I write a Trade Secrets column for FT.com every Wednesday. Click here to read the latest, and visit ft.com/trade-secrets to see all my columns and previous newsletters too.Charted watersSome things look so obvious that you wonder whether there is a catch. But no. The following is a pretty clear chart based on research by the London School of Economics Centre for Economic Performance. The researchers analysed movements in trade patterns for 1,200 individual product lines in the EU — a fairly comprehensive study and, according to the Centre for Economic Performance, the largest. The figures, published last month, are worth reconsidering today as the UK prime minister flies to Belfast and the Northern Ireland protocol is once again the subject of British (and Irish) political debate.

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The data chime with warnings from business groups that smaller firms have struggled to absorb customs controls, value added tax and regulatory red tape, with many quitting exporting altogether. There are undoubtedly winners as well as losers from any new trade arrangement, but in this instance cross-border trade between the EU and the UK is not one of them. (Jonathan Moules)Trade linksThe US is suffering from a shortage of baby formula and continuing to block imports, but then that’s what happens when you confuse resiliency with self-sufficiency.The Financial Times looks at whether blockchain can ease clogged-up supply chains.Unhelpfully, given the interruption to supply from the Ukraine war, the global wheat crop will fall for the first time in four years. Just to ring the changes, Bangladesh has decided to slap import tariffs on onions to protect its own farmers, with a consequent sharp rise in domestic prices. (h/t @SimonEvenett).Trade Secrets is edited by Jonathan Moules More

The Treasury secretary is traveling to Warsaw, Brussels and Bonn, Germany, this week at an uncertain time for the global economy.WARSAW — Treasury Secretary Janet L. Yellen arrived in Europe this week to join U.S. allies in confronting multiple threats to the world economy: Russia’s war in Ukraine, soaring inflation and food shortages.But one of Ms. Yellen’s first orders of business during a stop in Poland will be trying to get the global tax deal that she brokered last year back on track after months of fledgling deliberations about how to enact it. The two-pronged pact among more than 130 countries that was reached last October aimed to eliminate corporate tax havens by enacting a 15 percent global minimum tax. It would also shift taxing rights among countries so that corporations pay taxes based on where their goods and services are sold rather than where their headquarters are.Turning the agreement into a reality is proving to be a steep challenge.The European Union has already delayed its timeline for putting the tax changes in place by a year and progress has been halted over objections by Poland, which last month vetoed a plan to enact the new tax rate by the end of next year. Despite initially signing on to the deal, Poland has voiced reservations, including whether the minimum tax will actually prevent big tech companies from seeking out lower-tax jurisdictions. Polish officials have also expressed concern that the two parts of the tax agreement are moving ahead at different paces, as well as trepidation about the impact that raising its tax rate will have on its economy at a time when the country is absorbing waves of Ukrainian refugees.In meetings in Warsaw on Monday, Ms. Yellen pressed top Polish officials to let the process move ahead, making clear that the tax deal continues to be a priority of the United States. She is meeting with Poland’s prime minister, Mateusz Morawiecki, and the finance minister, Magdalena Rzeczkowska.According to the Treasury Department, Ms Yellen told Mr. Morawiecki that international tax reform and the global minimum tax would raise crucial revenues to benefit the citizens of both Poland and the United States.The meetings come at the beginning of a weeklong trip that also includes stops in Brussels and Bonn, Germany, which is hosting the Group of 7 finance ministers’ summit. Ms. Yellen will be focusing on coordinating sanctions against Russia with European allies and addressing growing concerns about how disruptions to energy and food supplies could affect the global economy.Poland’s finance minister, Magdalena Rzeczkowska, former head of the country’s tax agency. Her country has raised concerns over potential loopholes and the impact of the global tax plan.Radek Pietruszka/EPA, via ShutterstockThe tax agreement has been one of Ms. Yellen’s top priories as Treasury secretary. Gaining Poland’s support is critical because the European Union requires consensus among its member states to enact the tax changes.“I think the reality of turning a political commitment into binding domestic legislation is a lot more complex,” said Manal Corwin, a Treasury official in the Obama administration who now heads the Washington national tax practice at KPMG. “The E.U. has moved and gotten over most of the objections, but they still have Poland and it’s not clear whether they’re going to be able to get the last vote.”With President Emmanuel Macron of France heading the European Union’s rotating presidency until June, his administration was eager to get a deal implemented. But at a meeting of European finance ministers in early April, Poland became the sole holdout, saying there were no ironclad guarantees that big multinational companies wouldn’t still be able to take advantage of low-tax jurisdictions if the two parts of the agreement did not move ahead in tandem, undercutting the global effort to avoid a race to the bottom when it comes to corporate taxation.Poland’s stance was sharply criticized by European officials, particularly France, whose finance minister, Bruno Le Maire, suggested that Warsaw was instead holding up a final accord in retaliation for a Europe-wide political dispute. Poland has threatened to veto measures requiring unanimous E.U. votes because of an earlier decision by Brussels to block pandemic recovery funds for Poland.The European Union had refused to disburse billions in aid to Poland since late last year, citing separate concerns over Warsaw’s interference with the independence of its judicial system. Last week, on the eve of Ms. Yellen’s visit to Poland, the European Commission came up with an 11th-hour deal unlocking 36 billion euros in pandemic recovery funds for Poland, which pledged to meet certain milestones such as judiciary and economic reforms, in return for the money.Negotiators from around the world have been working for months to resolve technical details of the agreement, such as what kinds of income would be subject to the new taxes and how the deal would be enforced. Failure to finalize the agreement would likely mean the further proliferation of the digital services taxes that European countries have imposed on American technology giants, much to the dismay of those firms and the Biden administration, which has threatened to impose tariffs on nations that adopt their own levies.“It’s fluid, it’s moving, it’s a moving target,” Pascal Saint-Amans, the director of the center for tax policy and administration at the Organization for Economic Cooperation and Development, said of the negotiations at the D.C. Bar’s annual tax conference this month. “There is an extremely ambitious timeline.”Countries like Ireland, with a historically low corporate tax rate, have been wary of increasing their rates if others do not follow suit, so it has been important to ensure that there is a common understanding of the new tax rules to avoid opening the door to new loopholes.“The idea of having multiple countries put the same rules in place is a new concept in tax,” said Barbara Angus, the global tax policy leader at Ernst & Young and a former chief tax counsel on the House Ways and Means Committee. She added that it was important to have a multilateral forum so countries could agree on how to interpret and apply the levies.Yet, while Ms. Yellen is pushing foreign nations to adopt the tax agreement, it remains unclear whether the United States will be able to pass its own legislation to come into compliance.An earlier effort by House Democrats to adopt a tax plan that would satisfy terms of the agreement fell apart in the Senate, where Democrats continue to disagree over the scope and cost of a tax and spending bill that President Biden has proposed.Rep. Kevin Brady of Texas, the ranking member on the House Ways and Means Committee, has led Republican opposition to an international tax agreement, saying it makes the United States “less competitive.”Anna Moneymaker/Getty ImagesRepublicans in Congress have made clear that they are unlikely to support any agreement that the Biden administration has brokered and called on the Treasury Department to consult with them before trying to move ahead.“As it is, there’s very little chance of a global minimum tax agreement — there is already resistance to approval at the E.U., which should be the easiest part of these discussions, and it will only get harder going forward,” said Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee. “Meanwhile, here in the U.S., there’s little political support for an agreement that makes the U.S. less competitive and takes a big bite out of our tax base.”Ms. Yellen is expected to convey to her counterparts this week that the agreement is still a priority for the Biden administration and that she hopes that the United States can make the tax changes needed to comply with the agreement in a small spending package later this year, according to a person familiar with the negotiations. More

LONDON (Reuters) -Shares in Vodafone (NASDAQ:VOD) edged higher on Monday as a surprise $4.4 billion investment from the UAE-based telecoms company e& provided a much needed but possibly short-term boost to the British firm’s CEO Nick Read. The company previously known as Etisalat said on Saturday it had become the largest shareholder in Vodafone with a 9.8% stake, attracted to its management, its efforts to unlock value and a diversified currency base. It ruled out exerting control or launching a full takeover. Analysts were divided however over the group’s long-term plan, after activist investor Cevian and other long-standing shareholders called on Vodafone to simplify its portfolio, repair markets through consolidation and boost returns. While analysts at JPMorgan (NYSE:JPM) said e& could become more activist over time, possibly in conjunction with Cevian, Credit Suisse and Jefferies said the investment could give Read more breathing room to invest in assets and withstand pressure to sell off operations immediately. “Indeed it could even allow Vodafone to make investment decisions that come at the expense of short term Free Cash Flow generation now that it has an industrial backer with a long term time horizon,” Credit Suisse said.Jefferies said the presence of e& on the shareholder register could counteract the activist demands, and enable Vodafone to reset consensus demands, knowing that e& could increase its holding and prop up the shares. Shares in Vodafone were up around 3% in morning trading on Monday. However they remain around 25% below the level when Read moved from the finance director role to the top job of CEO in October 2018.Shares in e& were up 6.3%.Vodafone, with operations across Europe and Africa, said it looked forward to building a long-term relationship with Etisalat and noted that it had continued to make good progress with its long-term strategic plans.E&, or Etisalat, began life in the UAE but has since expanded into 15 other markets across the Middle East, Asia and Africa. Despite having lower revenues than Vodafone it has higher margins and a market cap of $74.5 billion, almost double the British company. It also has firepower for more deals. Vodafone, with 66.3 million mobile contract customers in Europe and 188 million in Africa, said earlier this year it would pursue mergers in multiple European markets, saying it believed regulators would be more accommodating as they realised the value of network investment during the pandemic. Since then it has rejected an approach for the group’s Italian assets and missed out on a deal between rivals in Spain. It reports full-year results on Tuesday. More

With swathes of China spending April under lockdown — 46 cities according to one estimate — it was inevitable that dining out, shopping, factory output and energy usage would all take big hits.The dire data overshadowed announcements that some COVID curbs would be loosened. A Q2 economic contraction looks inevitable. What’s more, the 6.7% urban unemployment rate — the highest since 2018 — won’t escape the notice of authorities, wary of any kind of unrest. So after a series of half-hearted measures, a decisive policy response might finally be unveiled on Friday, when the People’s Bank of China meets to decide benchmark loan prime rates.The central bank will be wary however, of further weakness in the yuan, already near 20-month lows to the dollar, and the possible implications for inflation.Brent crude futures slid around 1.5 % on Monday but remain firmly above $100 a barrel. But the data has extinguished the brief spark of optimism that lifted Wall Street on Friday, with equity futures and bond yields both lower. The China-reliant Australian dollar has shed 0.7%The optimistic may point to this month’s near-30 basis-point slide in five-year inflation expectations alongside a fall in where markets price U.S. interest rates would peak. But some, such as Goldman Sachs (NYSE:GS)’ ex-CEO Lloyd Blankfein, reckon those may amount to warning signals; recession is “a very, very high risk factor,” Blankfein said on Sunday.In any case, a Friday survey showing U.S. consumer sentiment at an 11-year low bodes ill for upcoming retail sales data. Finally, last week’s big movers, crypto and Twitter (NYSE:TWTR). Bitcoin has slid a further 5% but Twitter shares — with an Elon Musk takeover now in balance — are up 1% in Frankfurt trade after Friday’s 10% tumble. Musk’s weekend tweets may not help; he said there was “some chance” over 90% of daily active users were fake accounts”. TIPS https://fingfx.thomsonreuters.com/gfx/mkt/klvyklxyxvg/Pasted%20image%201652650383583.png More

There are further signs of a slowdown in the global economy today as the impact of Covid hurts economic activity in China, the war in Ukraine hits Europe’s economy and the Federal Reserve’s efforts to control rampant inflation threaten a recession.In China, the country’s main gauge of consumer activity, retail sales, slumped 11.1 per cent year on year, compared with forecasts of a 6.6 per cent fall from economists polled by Bloomberg. Industrial production, which underpinned China’s rapid economic recovery from the initial Covid shock in early 2020, dropped 2.9 per cent.The data are the most striking sign yet of the rising economic toll from China’s zero-Covid strategy. Dozens of cities and hundreds of millions of people across China have been placed under full or partial lockdowns as part of a policy that is expected to have deep ramifications for global supply chains.Meanwhile, in Europe the EU cut its growth forecasts and lifted its inflation outlook as the energy crisis triggered by Russia’s invasion of Ukraine exacts its toll on the EU economy.Both the EU and euro area are forecast to expand by just 2.7 per cent this year — well shy of the previous expectation of 4 per cent, forecasts published by the European Commission today showed.Inflation is expected to surge above 6 per cent in both the EU and euro area this year, with some central and eastern European countries likely to see double-digit price rises in 2022.Last week, European Central Bank president Christine Lagarde signalled that she would support raising the main interest rate in July, paving the way for the first increase in the eurozone for more than a decade.In the US, where annual inflation is running at the highest level for four decades, there is a “very, very high risk” of a recession, according to former Goldman Sachs chief executive Lloyd Blankfein. Blankfein, who stepped down as Goldman chief in October 2018 but remains the Wall Street bank’s senior chair, said in an interview with CBS yesterday that corporate America and US consumers should be prepared for a recession as the Federal Reserve tightens policy to combat high inflation.Do you think the US is heading for recession? Email your thoughts to [email protected]. Here’s the rest of the day’s news — GordonFive more stories in the news1. Police say racist extremism was motive for Buffalo shooting Police said they were treating the shooting which left 10 people dead in Buffalo over the weekend as “racially motivated violent extremism” and a hate crime. The suspected gunman, 18-year-old Payton Gendron, was “a lone gunman, armed with weapons of war and a hate-filled soul”, President Joe Biden said yesterday. Meanwhile, police arrested a 60-year-old suspected of shooting one person dead and injuring five others at a meeting of Asian church goers in southern California. (NBC)

Flowers are left at a makeshift memorial outside of Tops market on Sunday in Buffalo, New York © Scott Olson/Getty Images

2. Ukrainian counter-offensive reaches Russian border Ukraine is claiming today that a counterattack has pushed Russia’s invading forces back from the eastern city of Kharkiv to the Russian border. Ukrainian forces have been battling Russian forces for weeks in fierce fighting around the country’s second-largest city. The claim could not be independently verified. Meanwhile, McDonald’s is to sell its business in Russia.3. Goldman Sachs’ senior staff given as much time off as they want Under a new “flexible vacation” scheme introduced from May 1, partners and managing directors will be free to “take time off when needed without a fixed vacation day entitlement”, the Wall Street bank told staff in a memo last month. Junior bankers have been given a minimum of two extra days of holiday per year.4. Pimco’s Dan Ivascyn says bonds becoming a bargain Investors should “get ready” to snap up bargain bonds following a bruising sell-off in debt markets last week, according to the chief investment officer of credit trading house Pimco, which manages $2tn in assets. 5. Bitcoin has no future as payments network, says FTX chief Bitcoin’s inefficiency and environmental toll prevent the cryptocurrency from being an effective means of payment, according to Sam Bankman-Fried, the billionaire founder of digital asset exchange FTX, who said the system of validating blockchain transactions could not be scaled up.More on crypto: Over Lunch with the FT, Bankman-Fried discusses whether crypto is a Ponzi scheme. The collapse of a hyped stablecoin has sparked serious questions about the entire market.The day aheadOutlook for markets Weak Chinese economic data is expected to weigh on US equity markets when they open this morning. Futures contracts that wager on the direction of Wall Street’s S&P 500 fell 0.9 per cent and those on the technology-heavy Nasdaq 100 dropped 1.2 per cent, indicating another down day following the sixth consecutive week of declines.Hedge funds Large institutional investment managers are set to disclose their equity holdings in their quarterly 13F filings. Market watchers will be watching for funds changing their positions in high-profile stocks of recent weeks and months, mostly in the technology sector.Monetary policy John Williams, president of the Federal Reserve Bank of New York, will take part in a discussion about the economic outlook at the Mortgage Bankers’ Association’s Secondary & Capital Markets conference in New York.Financial services regulation Gary Gensler, chair of the US Securities and Exchange Commission, will discuss topics affecting the markets and financial services industry at the Financial Industry Regulatory Authority’s (Finra) annual conference.US earnings Take-Two Interactive, the software company behind the Grand Theft Auto video game series, news service BuzzFeed and fitness chain F45 Training are set to report earnings.Economic data Manufacturing activity in New York state is expected to have softened, with the New York Fed’s manufacturing index forecast to drop to 17 in May from 24.6 in April, according to a Refinitiv survey of economists. Manufacturing sales and wholesale trade figures, both for March, and housing starts for April are set to be released this morning. Northern Ireland Boris Johnson will visit Belfast to try to persuade Democratic Unionists to rejoin the power-sharing executive in Stormont, but the UK prime minister will face opposition over his plans to unilaterally scrap parts of the post-Brexit treaty.Biden meets Greek PM US president Joe Biden welcomes Greek prime minister Kyriakos Mitsotakis at the White House.Correction: In Friday’s quiz one of the questions did not match the answer. We apologise for an error.What else we’re readingLet the Fed put money where it is really needed The Federal Reserve was designed just over 100 years ago for one discrete task — to ensure that the country has enough money to keep the economy growing to its full potential. But over that time it has come to backstop the global market system, Rana Foroohar argues. As a result, she says, the Fed is trying to walk an impossible line.Is Elon Musk too big to regulate? Many on Wall Street saw Elon Musk’s tweet on Friday announcing he was putting his purchase of Twitter “temporarily on hold” as a way of softening up Twitter’s management to negotiate a lower offer. But legal experts said it was another example of the Tesla chief executive flouting securities regulation, leaving him open to the SEC’s nuclear option.Crimea could be Putin’s tipping point in a game of nuclear chicken The US thinks Vladimir Putin would authorise the use of nuclear weapons only if he perceived an existential threat to Russia. But what would qualify as such a threat, asks Malcolm Chalmers of the Royal United Services Institute.Inflation returns to haunt Brazilians Inflation in Brazil is nowhere near as bad as it was in the 1980s and 1990s, when supermarkets would remark prices twice a day to keep pace with the rising prices but at 12 per cent, it is now at an almost two-decade high. And the spectre of Brazilian hyperinflation was never entirely banished.Bonuses are outdated in the age of knowledge work The idea of paying for performance is deeply ingrained. But what if the concept is flawed? Two studies suggest it is, Pilita Clark writes, given that work is more complex and collaborative than ever. Offering bonuses can even backfire.MusicAfter the scourge of the pandemic, the first Summer for the City festival is offering New Yorkers a summer to “rejoice, reclaim and remember” with an outdoor dance floor and free installations. Here are a selection of other classical concerts taking place across the US this summer.

Marin Alsop conducts the Chicago Symphony Orchestra at Ravinia © Ravinia Festival More

(Reuters) – The Senate’s sign-off last week on Jerome Powell’s second term as head of the Federal Reserve leaves the helm of the U.S. central bank in the hands of a white male, just as it has been for most of its 108-year history.But later this summer, for the first time, white men will account for fewer than half of the Fed’s policymakers.By September, eight of the 18 officials who determine monetary policy for the world’s biggest economy will be women and five will be people of color – both records – with more opportunities to diversify further in the months ahead. Moreover, the more than 100 directors across the Fed’s regional bank system, who regularly provide their views on the economy to the central bank officials responsible for setting interest rates, more closely reflect the diversity of the U.S. population than at any prior time.Still, large gaps remain. No top policymaker is now or has ever been of Latin American heritage, for instance, and newly published data https://www.federalreserve.gov/aboutthefed/economist-and-research-assistant-diversity-data.htm from the Fed shows more than half of the nearly 1,000 PhD economists whose analyses lay the groundwork for policy decisions are white men. At the Fed bank boards, where Fed policymakers have successfully pushed for better gender and racial diversity, more than 75% of directors work in the banking, financial or business sectors, with labor representation particularly thin, a report https://www.populardemocracy.org/news/publications/uneven-progress-inadequate-representation-2022-analysis-diversity-federal-reserve published on Thursday by the Center for Popular Democracy found.Some 75% of directors with business backgrounds come from large firms rather than the small companies that make up the majority of U.S. employers, the study showed. It’s enough to keep the critics on the Fed’s – and Powell’s – heels. Indeed, the Dallas Fed’s decision last week to hire a white woman as its new president rather than a Hispanic led U.S. Senator Bob Menendez, a New Jersey Democrat of Cuban descent, to oppose Powell’s confirmation to a second term. Without any Latino policymakers at the central bank, “the voices of one-fifth of the citizens of America are repeatedly drowned out when the Fed is making critical decisions on economic policy,” Menendez said in announcing his “no” vote against Powell’s confirmation on Thursday even as a wide majority of other senators backed the Fed chief. DIVERSITY AND CREDIBILITYUnder Powell, the Fed has only just begun a fight against inflation that is rising faster than in the past four decades. Policymakers are expected to deliver a series of big interest rate hikes to help cool those price pressures and bring inflation down to the Fed’s 2% target. Many economists say those rate hikes will lead to job losses as the economy slows, if not an outright recession. Any rise in unemployment historically hits people of color and low-wage or lesser-educated workers hardest.So Powell has appealed to Americans directly for their understanding, saying that he knows it will be painful but ultimately less so than allowing inflation to continue to build.Other Fed officials have similarly laid out the case for administering strong medicine now to preserve the long-run health of the labor market. “Having a leadership group that looks more like America than it ever has will help the Fed remain credible in the eyes of the public,” says Kaleb Nygaard, a senior research associate at the Yale Program on Financial Stability. “And having public confidence is one of the most important tools a central bank has.” OPPORTUNITIES TO DO MOREBut the Fed still has plenty of distance to go on the diversity road.Some 55% of the 945 PhD economists employed at the Fed are white males, according to data recently published by the central bank. One-quarter are women, a majority of whom are white. In all, the Fed employs 159 economists who identify as Asian and 89 as Hispanic or Latino. Just 14 are Black while seven identify as being of two or more races. The central bank has had much more success diversifying the boards of its 12 regional Fed banks, a change driven by the Fed’s Board of Governors, which directly picks or has at least some say over the choice of two-thirds of the directors. These directors, in turn, pick new presidents at the regional Fed banks. And their influence may already be having an effect.The Boston and Dallas Fed banks, both previously led by white men who left last fall amid an ethics scandal, have hired women as their replacements. The Boston Fed’s pick, University of Michigan provost Susan Collins, will be the first Black woman to run a regional Fed bank. The Dallas Fed board last week appointed Lorie Logan, a markets expert currently at the New York Fed, as its next chief. Logan is white.Two more Fed banks, in Kansas City and Chicago, will also soon replace their current presidents, a white woman and white man, respectively, both of whom reach mandatory retirement age next January.At the Fed’s Board of Governors, whose seven members are picked by the White House, there is also change. Last week the Senate confirmed Michigan State University’s Lisa Cook and Davidson College’s Philip Jefferson, both Black economists nominated by U.S. President Joe Biden, as Fed governors. The Fed has only had three other Black governors, with the most recent one being in 2006.”Diversity of their leadership matters, not as a gesture, not as symbolism, but as a statement of how the Fed genuinely sees themselves as … in touch with the economic interests of the country,” said Benjamin Dulchin of the Center for Popular Democracy. More