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Livesquawk - US Briefing - Wednesday 14.07
US Briefing - Wednesday 14.07
Headlines
  • RTRS: S.Arabia, UAE Reach Compromise On Oil Output Deal
  • Yellen, Powell To Discuss Financial Risks Of Hot Housing Market
  • White House Still Sees Inflation Abating, Can't Exactly Say When
  • US Covid-19 Cases Are Now Surging In Almost Every US State
  • Fitch Ratings Affirms United States At 'AAA'; Outlook Negative
  • Senate Democrats Agree To A USD3.5Tln Tax & Spending Plan
  • CBRT Holds Repo Rate; Pledges Tight Stance Till Inflation Slows
  • German Econ Ministry: Sees 3% CPI In H2, Then Easing In 2022
  • BoE’s Cunliffe: It Is Difficult To The Assess Inflation Outlook
  • UK June CPI Beats: +2.5% Y/Y (est: 2.2%); Core CPI: +2.3% Y/Y
  • RTRS: PBoC Queried Banks On Monday On MLF Loan Demand
  • New Zealand Will End QE In Possible Prelude To A Rate Hike
  • ANZ & ASB Bank Now Expect RBNZ To Raise OCR In August
  • Sydney Lockdown Extended As Outbreak Nears 900 Infections
  • S.Korea Extends Covid Curbs, As New Cases Spike To Record
  • API: Crude Draws 4.1Mln; Gasoline: -1.5Mln; Distillate: +3.7Mln
  • Bank Of America Shares Dip As Q2 Revenue Misses Expectations
  • EBay To Sell Part Of Adevinta Stake To Permira For USD2.25Bln
  • Apple Seeks Up To 20% Increase In New 2021 iPhone Production
  • Global Investors’ Exposure To China Assets Surges To USD800Bln
  • BlackRock Profit Beats Estimates As Assets Reach USD9.49Tln
  • UK CMA Has Cleared AstraZeneca's USD39Bln Buyout Of Alexion
Commentary
Markets Lift Inflation Outlook With UK CPI At Highest In Nearly 3 Years

Source: Bank of England Media

London – The UK’s annual measure of inflation once again outpaced predictions by rising for the fourth consecutive month in June. Headline inflation rose to 2.5% in June, well above the market consensus of 2.2% and last month’s 2.1%. The annual core reading of 2.3% also beat estimates of 2.0%, which was also the mark in May. On the month, CPI was down by a tenth from last month’s 0.5% but ahead of the 0.2% forecast.

 

The Office for National Statistics said the rise was widespread, with upward contributions from food, second-hand cars, clothing and footwear, out-of-home eating and drinking, and petrol. The majority of these goods suffered declines last year.  Partially offsetting the gains were games, toys and hobbies, where prices fell this year but rose a year ago during the throes of the pandemic and stay-at-home orders. HSBC’s Chris Hare said, “Today's significant upside inflation surprise is the second in as many months. Indeed, for headline CPI, the 0.4 percentage points of upside news in June follows a 0.3 percentage points surprise in May. In other words, of the 1.0 percentage points increase in inflation over the past two months, 0.7 percentage points has come as a surprise. Moreover, virtually all that upside news has been driven by core inflation.”

(LiveSquawk - Continue Reading)

China's Surprise RRR Cut Gets Markets Pondering Rate Cuts

China's surprise decision to lower the reserve requirements for its banks last week is leading some market analysts to speculate that a cut in country's benchmark loan prime rate may be next, possibly as early as next week. The People's Bank of China (PBOC) announced the cut in the amount of cash that banks must hold as reserves on Friday, releasing around 1 trillion yuan ($154.43 billion), more than expected. It is effective from July 15.

 

While the majority of market participants believe the RRR cut was meant to stabilise the funding needs of banks and lower their costs to support credit growth, others think a cut in major policy rates would complement this new dovish tilt. The PBOC is likely to deliver another 50-basis point cut in the RRR in the fourth quarter, as the pressure on the economy persists while consumer inflation eases, according to the latest Reuters poll published on Tuesday. Below are some comments from analysts and economists on the outlook for the loan prime rate (LPR) and the medium term lending (MLF) facility rate. The PBOC is expected to make an announcement on maturing MLF loans on Thursday, while the next LPR setting will be on July 20.

(Reuters - Continue Reading)

Yellen, Powell To Discuss Financial Risks Of Hot Housing Mkt

Source: Federal Reserve

Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powell are slated to discuss the hot U.S. housing market and the risks it could pose to the financial system at a meeting with fellow regulators on Friday. The aim of the closed-door session: To make sure the U.S. is not vulnerable to a crisis akin to the one it suffered more than a dozen years ago, when the bursting of a property-price bubble drove top banks to the brink of insolvency and the economy into a deep recession.

 

The meeting of the Financial Stability Oversight Council, or FSOC, that’s headed by Yellen will come on the heels of two days of testimony by Powell to Congress on the Fed’s semi-annual monetary policy report. Friday’s session will be the first time that Yellen’s FSOC will discuss concerns about the housing market in a substantial way, according to people familiar with the matter. The issue was briefly raised in the previous two meetings, held in March and June, then temporarily set aside, they said. The Treasury is increasingly aware of the dangers that a sudden relapse in property prices could pose to the economy after a sharp run-up on the back of a low inventory of homes for sale, according to the people familiar with the matter. But Yellen’s team is confident that any financial stability risks are manageable, the people said.

(Bloomberg - Continue Reading)

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