FirstFT: US inflation cools to 3% as interest rate rises take hold

FirstFT: US inflation cools to 3% as interest rate rises take hold
FirstFT: US inflation cools to 3% as interest rate rises take hold

Obtain free International Economic system updates

Good morning. Immediately’s high story is on US inflation, which eased final month to its slowest price in additional than two years.

US inflation fell sharply to 3 per cent in June, sending the greenback decrease and highlighting the Federal Reserve’s relative success at bearing down on worth pressures.

The improved image in Wednesday’s knowledge stands in sharp distinction to different superior economies, such because the UK the place the Financial institution of England is struggling to manage inflation of 8.7 per cent. China’s economic system, in the meantime, teetered getting ready to deflation in June, with flat annual CPI, including to requires extra stimulus.

The foremost US inventory indices hit 15-month highs; the two-year Treasury yield, which strikes with rate of interest expectations, fell to a two-week low of 4.73 per cent; and the US greenback index, which measures the dollar in opposition to a basket of six currencies, hit its weakest level in 15 months.

The annual enhance within the client worth index slowed from 4 per cent in Might to three per cent in June, the slowest price of inflation since March 2021, in contrast with expectations of three.1 per cent.

“After a punishing stretch of excessive inflation that eroded shoppers’ buying energy, the fever is breaking,” stated Invoice Adams, chief economist at Comerica Financial institution.

Right here’s what I’m conserving tabs on right this moment:

  • Financial knowledge: Month-to-month oil market experiences will probably be launched by the Worldwide Power Company and Opec. France has client worth index and HICP inflation price figures for final month, whereas last June producer worth index knowledge is due from the US.

  • Financial coverage: South Korea makes its rate of interest determination. Economists anticipate the Financial institution of Korea to hold rates at 3.5 per cent for the fourth straight assembly. (Bloomberg)

  • Conferences: The EU-Japan summit begins in Brussels, attended by European Council president Charles Michel, European Fee president Ursula von der Leyen and Japanese prime minister Fumio Kishida.

  • Thailand’s high-stakes vote for PM: Parliament will vote for brand spanking new prime minister. Pita Limjaroenrat, whose progressive Transfer Ahead occasion received large in Might’s basic election, faces various obstacles to grow to be prime minister and supplant the military-backed authorities. (The Guardian)

5 extra high tales

1. Elon Musk has launched xAI, a synthetic intelligence firm aiming to problem the dominance of ChatGPT proprietor OpenAI. The corporate will probably be led by Musk, who has additionally secured 1000’s of GPU processors from Nvidia, that are required to construct giant language fashions that devour huge quantities of content material. Here are more details on Musk’s plans for AI.

2. At Nato’s summit this week, allies have been cautious to emphasize their staunch help for Ukraine within the face of Russia’s invasion. However after Volodymyr Zelenskyy blasted Nato for its “absurd” lack of a transparent timeline for Ukraine’s entry, tensions started spilling into the open. Here’s more on the frustrations between Ukraine and its allies.

3. EY China has refused to pay charges owed to its world headquarters for greater than a yr in a dispute over IT providers. The Chinese language arm says the providers can’t be totally used after Beijing tightened knowledge safety guidelines, in accordance with folks aware of the matter. Read more on the tussle between EY’s global bosses and its semi-independent member firms in China.

4. Japanese regional banks have been accused by the nation’s monetary regulators of “gender-washing” in disclosures to traders because of authorized ambiguity over management roles occupied by girls. Here’s what the Financial Services Agency’s survey revealed about female representation in management at regional banks.

5. North Korea has fired an intercontinental ballistic missile into waters between the Korean peninsula and Japan, days after threatening to shoot down US reconnaissance planes it accused of violating its airspace. Japan’s defence ministry stated the missile flew for about 74 minutes, the longest flight time for any North Korean long-range missile.

The Huge Learn

© FT montage/Lindsay DeDario

4 a long time after Ronald Reagan rejected large-scale US authorities intervention within the economic system, Joe Biden is embracing it wholeheartedly with a raft of subsidies for home producers in strategic sectors, within the hope of making lots of of 1000’s of latest jobs. Will the president’s insurance policies remodel the American economic system in a method that’s sturdy and have a tangible impact that resonates with voters?

We’re additionally studying . . .

Chart of the day

Line chart of Yen per dollar showing Japan's currency rallies on hopes of tweak to yield curve control

The yen strengthened previous ¥140 in opposition to the greenback on Wednesday on bets from foreign money and bond merchants that the Financial institution of Japan might quickly start its pivot away from its ultra-loose financial coverage. The 3.5 per cent rise to ¥139.5 against the dollar in July set the Japanese foreign money on a tentative course for its finest month because the nation’s finance authorities intervened late final yr to prop up the foreign money.

Take a break from the information

Need some recent vogue inspiration for the summer time? FT’s deputy vogue editor Carola Lengthy suggests looking to Ken, the actual type star of the upcoming Barbie film.

Ryan Gosling, as Ken, in a co-ordinated cabana set
Ryan Gosling, as Ken, in a co-ordinated cabana set

Extra contributions by Tee Zhuo and Gordon Smith

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