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Livesquawk - US Briefing - Wednesday 09.06
US Briefing - Wednesday 09.06
Headlines
  • Biden Shifts Infrastructure Talks To New Bipartisan Senate Group
  • US And EU To End For Good Trump’s USD18Bln Tariff Fight
  • US Senate Passes Sweeping Bill To Address China Tech Threat
  • Germany To Extend Aid For Firms Hit By Covid-19 Till End Of Sep.
  • Germany's VDMA Lifts 2021 Engineering Production Forecast
  • Germany Faces EU Backlash A Year After ECB Court Ruling
  • Riksbank’s Ingves: Supply Bottlenecks Not An Inflation Threat
  • ECB To Hold Retreat June 18-20 To Discuss Strategy Review
  • UK, EU Head For Brexit Talks As Sausage Spat Spills Into G-7
  • BoE’s Haldane: May Need To Start Turning Off The Stimulus Tap
  • Japan's Suga: Aim To Vaccinate All Those Who Want By Oct-Nov
  • Chinese May Factory Inflation Soars To 2008 High: Up 9% Y/Y
  • Final Terms For Greece EUR2.5Bln 0.75% 2031 Tap At MS+82
  • Libya’s Waha Oil Output Slips To 130K B/D Due To Pipeline Leak
  • Iran: Most Oil Output To Come Back In 1 Month if Sanctions Ease
  • API Shows Crude Stockpiles Fell By 2.1Mln, Fuel Stocks Rose
  • US Extends Olive Branch To Iran Before Round Of Atomic Talks
  • Airbus Set To Move Ahead With A350 Freighter Within Weeks
  • EU Travel Stocks Gain On US Move To Ease The Travel Warning
  • Shell CEO: Shell To Accelerate Emissions Cut After Court Ruling
Commentary
BoC Set To Leave Policy Unchanged As Economy Reopens

Source: Bank of Canada

Canada’s economy is outperforming the forecast of the country’s central bank, with rate setters saying households and businesses are exhibiting “impressive resilience” despite the pandemic, and the national vaccination programme is ahead of schedule. However, do not expect the Bank of Canada’s monetary policy committee to announce any major tightening measures at the conclusion of its meeting. The bank’s governing council is widely anticipated to keep its benchmark interest rate at 0.25% on Wednesday, and the quantitative easing programme is set to continue at a pace of CAD3bln a week. Policymakers are unlikely to signal a further reduction in the bank’s quantitative easing programme this month.

 

James Knightley of ING said, “We do not expect this policy meeting to deliver any substantial surprise for markets. After shifting to a hawkish bias at the April meeting, the data flow in Canada has on balance been neutral for rate expectations.” The central bank has generally led monetary policy among the major global economies, and further tapering of its quantitative easing programme is forecast for June. The BoC has already enacted two tapers of a billion each, from CAD5bln a week down to CAD3bln currently.

(LiveSquawk – Continue Reading)

US Inflation Expected To Hit Multi-Year High In May

US inflation will tip 13-year highs if May’s annual consumer price index rises in line with forecasts, which see the headline rate hitting a level last seen when oil prices peaked at USD 146 a barrel. Expectations for annual core inflation have prices at their strongest in nearly 20-years. Analysts look for an increase in headline CPI to 4.7% year-on-year versus 4.2% in April. On the month, forecasts are for a 0.4% gain, slowing from 0.8% previously. Annual core CPI is predicted to rise to 3.4% following 3% last month.

 

Experts are split on whether this will be the peak for inflation. Base effects have played a part in keeping prices elevated, but as the economy reopens post the pandemic, upside risks are on the horizon. “Supply chain issues, rising commodity prices, labour market shortages and rising house prices suggest to us inflation could remain more elevated and be more persistent than the Federal Reserve are publicly forecasting,” warned ING Research in a note. “This is a key factor why we think the Fed will raise the interest rate sooner than 2024.”

(LiveSquawk – Continue Reading)

ECB Likely To Stay On Hold, Avoid Taper Talk

Source: European Central Bank Media

The only thing “normal” about this year is that the word is part of another word which sums up the current situation: abnormal. This condition also rings true for Europe’s monetary policy and those who make it. A case in point is the unprecedented EUR 1.85 tln Pandemic Emergency Purchase Programme (PEPP), which keeps chugging along. “Normally,” this is the time of year for European Central Bank officials and staffers to start counting clean socks ahead of their annual sojourn to Sintra, Portugal later this month for the lender’s retreat-cum-banking forum, an event that in the past has spawned some pretty market-shaking commentary from ECB presidents. 

 

But not this year. The Sintra event – normally scheduled in mid-June – is to be held as a virtual conference in September, and central bank watchers may have to wait at least that long for the ECB to begin talking about shifting its policy gears. Few central bank mavens expect the ECB to make waves this week. The European recovery has been fitful at best, inflation in the single-currency area is now hotter than a two-dollar pistol, and the sluggish vaccination programmes on the Continent mean that some countries are still restricting commerce. 

(LiveSquawk – Continue Reading)

BoE’s Haldane: Gangbusters UK Economy May Need Less Support

Source: Bank of England

The UK economy is “going gangbusters” at the moment and the Bank of England may need to consider turning off the monetary stimulus tap to keep inflation in check, according to Chief Economist Andy Haldane. The pound rose. Haldane, who is leaving the role this month, said it was “hard to find anything whose price isn’t going up at the moment” and it was important to stop any temporary blip in inflation from becoming embedded.

 

Speaking in an interview on LBC radio, he added that it was important the U.K. didn’t become too dependent on “monetary medicine.” The pound rose as much as 0.2% after the comments, and was 0.1% higher at $1.4172 as of 8:12 a.m. in London. “It is the case that growth across the U.K. is picking up a real rate of knots, going gangbusters actually the economy just at the moment, and that’s a great thing to see,” he said. There are “pretty punchy pressures on prices” he said, adding “that may mean at some stage, we need to start turning off the tap when it comes to the monetary policy support we’ve been providing.”

(Bloomberg - Continue Reading)

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