Economy

China’s fiscal and monetary policy will prioritise employment, and various policy tools will be used to help stave off job losses, the cabinet was quoted as saying after a regular meeting.”The new downward pressure on China’s economy increased further in April due to the larger than expected impact from a new round of the pandemic and changes in the international situation,” the cabinet said.The economy has taken a hit as local authorities raced to stop the spread of record COVID-19 cases, which have led to a full or partial lockdown in dozens of Chinese cities, including a city-wide shutdown in the commercial hub of Shanghai.The official jobless rate hit 5.8% in March, a near two-year high.China will exempt interest payments on student loans due this year for college graduates of this year and last year, the cabinet said.Price stability, grain output and goods supplies will be ensured, it added.An additional 50 billion yuan ($7.45 billion) in renewable energy subsidies will be allocated for central-government backed power firms, the cabinet said.China will also expand effective investment by channeling more private funds into infrastructure projects via issuance of real estate investment trusts (REITs), the cabinet said.The China Securities Regulatory Commission (CSRC) said in a separate statement that it would launch a special corporate financing scheme in its unwavering support to the private economy.The scheme is funded by state-owned China Securities Finance Corp, and will support private firms with good prospects and competitive technology, the CSRC said. ($1 = 6.7135 Chinese yuan renminbi) More

LONDON (Reuters) -Euro zone government bond yields rose on Wednesday after data showing a bigger-than-expected rise in U.S. inflation last month suggested price pressures in the world’s biggest economy remain strong, keeping pressure on the Federal Reserve.Earlier in the session, yields across the currency bloc fell to their lowest levels in almost a week, with investors taking comfort from signs that any tightening in European Central Bank monetary policy will be gradual.The ECB is likely to end its bond-buying stimulus programme early in the third quarter, followed by a rate hike that could come just “a few weeks” later, ECB President Christine Lagarde said.But data showing U.S. annual inflation rose 8.3% in April, down from 8.5% a month earlier, but above analyst expectations for an 8.1% rise, triggered a few wave of selling in bonds.Germany’s 10-year Bund yield was last up 6.4 basis points on the day at 1.07%, having fallen just below 1%, its lowest level in almost a week earlier. Analysts said the tone of ECB comments on Wednesday suggested a gradual rather than rapid rate-hike path, taking the edge off the aggressive rate-rise bets that drove borrowing costs across the bloc to multi-year highs as recently as Monday.The ECB’s Francois Villeroy de Galhau said the ECB would start raising rates gradually from the summer.”One part of the message from the ECB is that rate hikes will start in July, but the other part is that the path will be gradual, which is what Lagarde is suggesting, too,” said Jan von Gerich, chief analyst at Nordea. “The ECB doesn’t see an active path of hiking policy like the Fed, so normalisation is going to be gradual and slower than what markets are pricing in,” he added, referring to the U.S. Federal Reserve which last week delivered a hefty half-point rate hike, with more expected in coming meetings.Italian 10-year bond yields also hit their lowest in almost a week at 2.93% before heading higher after the U.S. CPI data. They were last up 2.5 bps on the day just above 3%.In another volatile session for bond markets, a key gauge of the market’s long-term euro area inflation expectations bounced back to almost 2.25% after the U.S. data. It fell to a seven-week low at 2.1939% earlier.Elsewhere, the European Union priced 9 billion euros of bonds, maturing in 2025 and 2051, according to a memo seen by Reuters from one of the banks managing the syndicated-bond sale.Germany sold 3.23 billion euros of 10-year Bunds and Portugal auctioned 750 million euros of bonds maturing in 2030. More

“We must find an exit from crisis mode,” Lindner told reporters, reiterating his goal to bring back Germany’s debt brake in 2023.The Group of Seven leading economies were discussing Ukraine’s liquidity needs, he said.”Irrespective of the financing of Ukraine … the German government continues to reject joint borrowing in the EU or even in the monetary union,” Lindner added. More

FRANKFURT (Reuters) -Development of a new cancer treatment pioneered by Roche was thrown into doubt on Wednesday when the immunotherapy drug failed to slow progression of lung cancer in a second trial, hitting the Swiss pharmaceutical maker’s shares.In a study, a combination of the new drug tiragolumab and Roche’s established Tecentriq drug did not slow disease progression in newly diagnosed cases of advanced non-small-cell lung cancer when compared with patients on Tecentriq only, the company said.That was after tiragolumab in March failed to slow progression of a different, more aggressive form of lung cancer. Analysts had given the second trial better odds of success.Roche shares fell as much as 7.4% to their lowest in almost a year, and were trading down 6.3% at 1140 GMT, dragging the STOXX Europe 600 Health Care index 1.2% lower.The setback could unsettle development efforts at more than half a dozen companies exploring similar compounds in a class of drugs called anti-TIGIT. Merck & Co is closely behind Roche in that race. Roche added that its trial would continue after the disappointing interim readout, to gather more data on tiragolumab’s ability to prolong the lives of trial participants.”While these results are not what we hoped for in our first analysis, we look forward to seeing mature overall survival for this study to determine next steps,” said Roche Chief Medical Officer Levi Garraway.Investors had hoped the new drug would become an important next-generation therapy in immuno-oncology, with multi-billion dollar sales potential, Credit Suisse analysts said in a note.”We expect that investors will now discount the whole TIGIT franchise at Roche until we see signs of positive efficacy,” they added.TIGIT is a receptor found on immune system cells as a backstop to prevent misguided immune attacks against normal body tissue. Some cancer types, however, exploit TIGIT to grow unnoticed by cell-killing immune cells.A similar mode of action is behind a blockbuster class of immune drugs known as PD-1 and PD-L1, such as Merck & Co’s Keytruda and Bristol-Myers Squibb (NYSE:BMY)’s Opdivo. That multi-billion-dollar success has pushed the industry to explore similar anti-cancer concepts, such as anti-TIGITs which are believed to be well tolerated and which are typically being tested in a drug cocktail with established PD-1 or PD-L1 drugs.Gilead Sciences (NASDAQ:GILD) last November exercised an option to collaborate with Arcus Biosciences (NYSE:RCUS) on the anti-TIGIT drug domvanalimab.GlaxoSmithKline (NYSE:GSK) in June 2021 struck a licensing deal worth up to $2 billion with iTeos Therapeutics Inc for an anti-TIGIT candidate.Bristol-Myers Squibb and Agenus (NASDAQ:AGEN) Inc are collaborating on a drug under a May 2021 partnership. Coherus BioSciences in January exercised an option to licence a drug candidate by Shanghai Junshi Biosciences for the U.S. and Canadian markets.For Roche, which is seeking to offset a decline in sales due to competition from cheaper copies of a trio of established cancer drugs, hope now turns to an experimental Alzheimer’s drug for which trial results are expected later this year. More

One policy instrument, one policy target. Or at least no more targets than there are instruments. Economists have known this for a long time: the great Dutch scholar Jan Tinbergen, joint winner of the first economics Nobel Prize, pointed it out more than half a century ago.But try telling that to US trade policymakers. The number of targets grows ever longer but the range of trade instruments is struggling to expand, and some are marked “Do Not Touch”. In particular, the idea that tariffs can materially impact income inequality and revive the manufacturing industry — not the same thing, as we will see — is highly unrealistic.Give the Biden administration credit: reversing some of the income inequality that’s risen since the 1970s is an excellent idea. But its “worker centric” trade policy won’t do it. This is especially true when trade policy is also supposed to be hitting a bunch of other mainly laudable targets. These include but are not necessarily limited to: economic growth, supply chain resilience (including “ally-shoring” with like-minded countries), extending the US’s geopolitical reach (particularly in Asia), improving environmental and labour standards in trading partners, isolating Russia through sanctions and even, for the real old-school trade types, creating export opportunities for American companies.Meanwhile, the administration (and Congress) has chosen to deprive itself of one of its most powerful tools: the bargaining power that comes from granting access to the massive US domestic market through preferential trade agreements (PTAs). The Biden administration isn’t going back into the CPTPP deal, designed to shape the Asia-Pacific economy into an American model, for the foreseeable future, and there is widespread scepticism — including in Congress — that the voluntary Indo-Pacific economic framework it is pushing is a good substitute.Where the US already has PTAs as a lever, it’s not been shy about using them without much regard for trading partners’ sovereignty. It’s a good thing to have independent unions at Mexican auto plants, as the US has strongly encouraged via the US-Mexico-Canada agreement. But reducing low-cost Mexican competition in autos really isn’t going to do much for large-scale income inequality in the US, where many car workers, especially in unionised plants, are relatively well-paid. And as I’ve noted before, the continuing obsession with steel is the most obvious case of a worker-centric policy being centred on some workers more than others. The administration is still being difficult about steel and aluminium imports, despite the effect of higher input costs on downstream industries.Steel workers are also paid above average for the US workforce. Unless you have the wildly implausible belief that yet more trade protection will create vast new employment in a job-shedding, capital-intensive industry, prioritising steel producers redistributes income upwards to a limited number of people. There’s already one US political party catering for white men with above-average incomes: to have two seems to be overdoing it.The best news for a while in the US labour movement was the successful organisation of an Amazon warehouse in Staten Island, New York (notably by a recently-created union with a distinctly non-traditional leadership). Organising the private service sector — unions are typically concentrated in manufacturing and public services — is the great prize for labour movements in advanced countries. But Amazon is a dependent on cheap imports, and service industries in general are more likely to be in the non-traded sector or are otherwise in effect unreachable by trade policy. The US can’t protect its way to prosperity in a post-industrial economy.The first meeting of the US-EU Trade and Technology Council (TTC) in September was held in Pittsburgh, Pennsylvania, precisely because it’s a great example of a city that has moved on from a steelmaking past to excel in medicine, financial services and higher education. None of those is much affected by trade policy (though large-scale imports of foreign doctors would do US healthcare a lot of good). The TTC, whose second meeting starts in Paris this weekend, is designed to discuss regulation of tech and other new sectors. This is all fine, but again, with only non-binding agreements devoid of market access to offer, the US will struggle to export its regulations abroad.This is also a particularly bad time to be keeping consumer goods tariffs in place. Noting that workers are also consumers who benefit from cheap imports is the kind of thing that traditionally gets economists booed offstage as theorists of the metropolitan elite, but right now the trade-off is particularly clear. Low and middle-income American households are suffering from soaring prices. Cutting the Trump-era tariffs that remain on imports of goods such as bikes and clothing from China won’t solve this problem on its own, but as Treasury secretary Janet Yellen has repeatedly observed, it will certainly help. The administration is actively discussing the proposal: free-trade reality has come up against protectionist ideology.You can see why the administration has alighted on trade policy as a lever. It doesn’t have a surfeit of other options. Attempting redistribution and economic renaissance via public spending, a much better idea, is encountering wrong-headed resistance on Capitol Hill. Unfortunately, there doesn’t seem much appetite for another big expansion of public healthcare coverage. Education policy is largely reserved to the states. But that’s not a reason for putting yet more targets in the field which the US’s dwindling quiver of trade policy arrows is supposed to hit. Blaming trade and globalisation for a wide variety of America’s ills is an old habit, and one that the administration should try to [email protected] up to the Trade Secrets newsletter, published every Monday More

LONDON (Reuters) -Britain on Wednesday rejected European Union proposals to resolve a standoff over post-Brexit trade rules for Northern Ireland, saying it would not shy away from taking direct action in the latest escalation between the two sides. Striking a deal that preserved peace in Northern Ireland and protected the EU’s single market without imposing a hard land border between the British province and EU member state Ireland, or a border within the United Kingdom, was always the biggest challenge for London as it embarked on its exit from the bloc.Prime Minister Boris Johnson’s government agreed to a protocol which instead created a customs border in the sea between Northern Ireland and the rest of the UK, but it now says the required bureaucracy is intolerable. The Conservative government has been threatening to rip up the protocol for months, raising the risk of a trade war with Europe at a time of soaring inflation and prompting concern across Europe and in Washington. Brussels offered to ease customs checks in October but British Foreign Secretary Liz Truss said this failed to address the core problem, “and in some cases would take us backward”.”Prices have risen, trade is being badly disrupted, and the people of Northern Ireland are subject to different laws and taxes than those over the Irish Sea, which has left them without a (governing) executive and poses a threat to peace and stability,” she said in a statement.Truss said the government wanted a negotiated solution, but added we “will not shy away from taking action to stabilise the situation in Northern Ireland if solutions cannot be found”.Johnson again said the most important agreement was one made in 1998 which largely ended decades of sectarian violence between Irish nationalists and unionists – one which is being undermined, London says, by the protocol.”That means that things have got to command cross-community support. Plainly, as the Northern Ireland protocol fails to do that, we need to sort it out,” he said during a visit to Sweden on Wednesday.The Times newspaper reported that Johnson’s government could legislate to ditch checks on goods and tell businesses in Northern Ireland to disregard EU rules.The move to announce domestic legislation which would effectively disapply the protocol could come on Tuesday, a Conservative source said.’FURTHER ACTION’Johnson’s spokesman declined to comment on what action Britain could take to try to break the deadlock, but repeated that no decision had been taken as yet.”The EU have confirmed they’ll never change their mandate…, and so we reserve the right to take further action if solutions can’t be found urgently,” he told reporters.But not everyone in British governing circles will back a legislative approach, which could also take months to be passed by the lower and upper houses of parliament. Simon Hoare, a Conservative lawmaker who chairs parliament’s Northern Ireland select committee, said “no honourable country should act unilaterally within an agreement”.Were the House of Lords to object to the legislation, the government could try to resort to the Parliament Acts, a rarely used device that solves disagreement between the lower and upper houses, to force it through.Ireland, Germany and the EU leadership have urged Britain not to take matters into its own hands. But the outcome of regional elections in Northern Ireland last week added impetus and Britain says nothing must threaten the 1998 Good Friday peace deal.The Irish nationalist Sinn Fein, which accepts the protocol given the party’s goal of Irish unification, emerged as the largest party, while the Democratic Unionist Party (DUP), which fears losing ties with the rest of the UK, fell to second. The DUP has now refused to form a new power-sharing administration unless the trading rules are overhauled. More

WASHINGTON (Reuters) – U.S. consumer price growth slowed sharply in April as gasoline prices eased off record highs, suggesting that inflation has probably peaked, though it is likely to stay hot for a while and keep the Federal Reserve’s foot on the brakes to cool demand. The consumer price index rose 0.3% last month, the smallest gain since last August, the Labor Department said on Wednesday. That stood in sharp contrast to the 1.2% month-to-month surge in the CPI in March, which was the largest advance since September 2005. But the deceleration in the CPI is probably temporary. Gasoline prices, which accounted for most of the pull back in the monthly inflation rate, are rising again and were about $4.161 per gallon early this week after dipping below $4 in April, according to the Energy Information Administration. Russia’s unprovoked war against Ukraine is the main catalyst for the surge in gasoline prices. The war has also driven up global good prices. Inflation was already a problem before Moscow’s Feb. 24 invasion of Ukraine because of stretched global supply chains as economies emerged from the COVID-19 pandemic after governments around the world injected large amounts of money in pandemic relief and central banks slashed interest rates. President Joe Biden on Tuesday acknowledged the pain that high inflation was inflicting on American families and said bringing prices down “is my top domestic priority.”The Fed last week raised its policy interest rate by half a percentage point, the biggest hike in 22 years, and said it would begin trimming its bond holdings next month. The U.S. central bank started raising rates in March.In the 12 months through April, the CPI increased 8.3%. While that was the first deceleration in the annual CPI since last August, it marked the seventh straight month of increases in excess of 6%. The CPI shot up 8.5% in March, the largest year-on-year gain since December 1981.Economists polled by Reuters had forecast consumer prices gaining 0.2% in April and rising 8.1% year-on-year.While monthly inflation will likely pickup, annual readings are likely to subside further as last year’s large increases fall out of the calculation, but remaining above the Fed’s 2% target at least through 2023. China’s zero tolerance COVID-19 policy is seen putting more strain on global supply chains, driving up goods prices. Prices for services like air travel and hotel accommodation are also seen keeping inflation elevated amid both strong demand over the summer and a shortage of workers.Solid gains in rents, airline fares and new motor vehicle prices boosted underlying inflation last month. Excluding the volatile food and energy components, the CPI picked up 0.6% after rising 0.3% in March. The so-called core CPI increased 6.2% in the 12-months through April. That followed a 6.5% jump in March, which was largest gain since August 1982. More

US consumer price growth remained at a four-decade high in April, despite the first moderation in the annual pace in eight months, underscoring the urgency of the Federal Reserve’s push to stamp out inflation. The consumer price index rose at an annual pace of 8.3 per cent last month, a step down from the 8.5 per cent increase recorded in March, but slightly above economists’ expectations of 8.1 per cent.Prices climbed another 0.3 per cent from the previous month, slower than the 1.2 per cent rise recorded in March that was fuelled by soaring energy and food costs tied to Russia’s invasion of Ukraine. Stripping out volatile items like food and energy, however, the monthly rise in core CPI increased at a faster pace than the previous month, at 0.6 per cent compared to 0.3 per cent in March. On an annual basis, that amounted to a 6.2 per cent increase.The data, published by the Bureau of Labor Statistics, may represent the beginning of a peak in the coronavirus pandemic-era inflation surge caused by red-hot consumer demand coupled with severe supply chain bottlenecks. Economists broadly expect the pace of consumer price growth to moderate further from these levels as the immediate effects of the war in Ukraine abate. The headline annual inflation reading should also start to fall in the coming months as it starts being compared to the very elevated levels logged last year. However, evidence that price pressures are no longer a phenomenon exclusive to sectors most affected by pandemic-related disruptions — but rather a broad-based trend affecting all sectors — has stoked concerns that inflation is becoming a persistent problem. US president Joe Biden on Tuesday stressed that fighting inflation was his administration’s “top economic challenge” as he voiced support for the Fed’s efforts to tame inflation.The Fed has ramped up its efforts to contain price pressures, implementing its first half-point rate rise in more than two decades this month. Further such increases are expected in June and July, and potentially even September, with the federal funds rate expected to reach 2.7 per cent by the end of the year. The Fed’s reduction of its $9tn balance sheet will also commence in June, the second of two levers the Fed is using to cool down the economy. The key question for investors is whether the US central bank can bring down inflation without causing a recession. John Williams, the president of the New York Fed, said this week the challenge of engineering a soft landing would be difficult but “not insurmountable”. Financial markets have gyrated wildly in recent days, with equity markets registering steep losses and US borrowing cost marching higher. The 10-year Treasury yield now hovers around 3 per cent, roughly double its 1.5 per cent level at the start of the year. More