Won Liquidity Rises as Longer Market Hours Woo Global Traders
South Korea's efforts to globalize its currency are gaining traction, with won trading expanding a year after the nation extended onshore market hours.
The average daily volume of dollar-won trading during the lengthened hours — from 3:30 p.m. to 2:00 a.m. Seoul time — climbed to $4.1 billion in the first 20 days of June, according to data compiled by Bloomberg. That's up from about $2 billion in July 2024, when the new session was introduced.
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Yahoo
28 minutes ago
- Yahoo
Fed Versus Trump on Tariffs Impact Will Soon Be Put to the Test
(Bloomberg) -- It's a widely held belief among economists that President Donald Trump's tariffs will boost inflation notably over the next few months. But muted price increases so far have called that assumption into question, emboldening the White House and opening up divisions at the Federal Reserve. Philadelphia Transit System Votes to Cut Service by 45%, Hike Fares Squeezed by Crowds, the Roads of Central Park Are Being Reimagined Sao Paulo Pushes Out Favela Residents, Drug Users to Revive Its City Center Sprawl Is Still Not the Answer Mapping the Architectural History of New York's Chinatown Anticipation of firmer inflation has kept the US central bank from delivering interest-rate cuts this year as it waits to see what happens. The Trump administration is applying intense pressure on Fed Chair Jerome Powell to bring down borrowing costs, and two Fed governors in recent days have publicly diverged from Powell by asserting a cut could be appropriate as soon as July. A pair of key reports in the coming weeks — the monthly jobs report due Thursday and another on consumer prices due July 15 — will be critical in determining the central bank's next steps. Both are expected to finally begin reflecting the impact of tariffs, but any surprises could change the schedule for rate cuts. 'One of the things that makes it such a difficult situation is that we simply haven't done this sort of experiment in the past,' William English, a professor at the Yale School of Management and former high-ranking Fed economist, said of the tariffs. 'We're outside the range of experience for a modern US economy, and so it's very difficult to be confident about any forecast.' Trump and his allies have escalated attacks on the Fed and Powell in recent weeks, motivated by data showing inflation remained tame through May despite the tariffs put in place. The president has lobbed several insults at Powell, calling him a 'numbskull' and 'truly one of the dumbest, and most destructive, people in Government.' Other Trump administration officials and some congressional Republicans — oftentimes more reticent to weigh in on monetary policy — have joined in as well. Kevin Hassett, director of the White House National Economic Council, said on June 23 that there is 'no reason at all for the Fed not to cut rates right now.' Hassett, who is seen as a possible replacement for Powell when the Fed chair's term expires next year, emphasized data due in the coming weeks: 'I would guess that if they see one more month of data, they're going to really have to concede that they've got the rate way too high,' he said. The debate reflects the delicate situation the Fed is in as it aims to avoid a policy mistake. Should officials cut rates just as tariff-induced price pressures kick in, they may have to resort to more aggressive measures later on. But holding rates at an elevated level to combat inflation that never materializes risks restraining the economy unnecessarily, potentially damaging the labor market in the process. Forecasters expect inflation to accelerate in the coming months. Powell told Congress in testimony last week he expects 'meaningful' price increases to materialize in June, July and August data as the levies work their way through the economy. But he added Fed officials are 'perfectly open to the idea' the impact could be smaller than feared, 'and if so, that'll matter for our policy.' The Bureau of Labor Statistics will publish its report on consumer prices for June on July 15, two weeks before the central bank's next policy meeting. Fed Governors Christopher Waller and Michelle Bowman — both Trump appointees — have broken step with Powell and their other colleagues to raise the possibility of a rate cut next month if the data cooperate. 'I think we've got room to bring it down, and then we can kind of see what happens with inflation,' Waller said in a June 20 CNBC interview, adding the central bank could always bring a halt to rate cuts again if necessary. 'We've been on pause for six months to wait and see, and so far the data has been fine.' Still, investors currently see only about a 20% chance of a July move and are instead betting the next cut will come in September, according to federal funds futures. Tariff Math Benign inflation readings through May suggest companies are finding ways, at least for now, to avoid price hikes despite Trump's tariffs on dozens of US trading partners — and widespread uncertainty over how long the duties will last and the level where they'll ultimately settle. One potential explanation is companies are working through inventories of imports they frontloaded in the first quarter to get ahead of the levies, said Josh Hirt, a senior US economist at Vanguard Group. Hirt's calculations suggest that, on average, importers this year have paid an effective tariff rate lower than what Trump has put in place, largely because so much was brought in before they took effect. Another source of uncertainty Powell discussed in his testimony is just how the costs of the tariffs will be split between exporters, importers, retailers, manufacturers and consumers. 'In the beginning, it will be the importer that pays the tariff, but ultimately it will be spread out among those five,' Powell said, adding that data suggests at least some of the impact will fall on consumers. What Bloomberg Economics Says... 'After a brief lull in April and early May, container traffic from China to the US is rising again, with year-to-date import volumes on pace to exceed normal levels at least through summer. If that pace is sustained, US store shelves should be well-stocked at the holiday season. That likely means less need for firms to pass on tariff costs this year.' — Estelle Ou and Andrej Sokol, economists Before the July 15 inflation report comes equally consequential monthly data on employment, due from the BLS on July 3. So far this year, there's been little indication that tariffs have put a dent in hiring, which has allowed the Fed chair and many of his colleagues to maintain that a solid labor market means there's no rush to cut rates. But as with the inflation data, forecasters have largely maintained that any potential labor-market impact of the trade policy upheaval wouldn't be visible before the release of the June figures. In a Bloomberg survey, economists said they expect the this week's report will show the unemployment rate in June crept up to 4.3%, which would mark the highest level since 2021. Bowman, in a June 23 speech, said Fed officials should 'recognize that downside risks to our employment mandate could soon become more salient, given recent softness in spending and signs of fragility in the labor market.' Monthly consumer spending figures published Friday by the Bureau of Economic Analysis showed a drop in outlays in May as households pulled back on discretionary services like travel and dining, and forecasters warned higher prices in the months ahead would put more pressure on consumption. English, at Yale, said the impact of tariffs will depend on factors which are difficult to measure. But 'the kind of intuition that there's going to be some pass-through of the tariffs to prices just feels right,' he said. 'I am not yet thinking that the basic story is wrong.' 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Yahoo
34 minutes ago
- Yahoo
Stocks Set to Open Higher Amid Trade Progress, U.S. Jobs Data and Powell's Remarks Awaited
September S&P 500 E-Mini futures (ESU25) are up +0.47%, and September Nasdaq 100 E-Mini futures (NQU25) are up +0.70% this morning, pointing to a higher open on Wall Street amid optimism over progress in trade negotiations between the U.S. and key partners. Japan's top trade negotiator, Ryosei Akazawa, extended his stay in the U.S. for further talks, stating that negotiations have reached 'a critical juncture.' Also, Bloomberg reported that India's trade delegation prolonged its stay in Washington to iron out differences as both sides aim to finalize a deal ahead of the July 9th deadline. In addition, Canada withdrew its digital services tax on tech firms in an effort to restart trade negotiations with the U.S. Taiwan also said it has made 'constructive progress' during a second round of trade negotiations with the U.S. Finally, French Finance Minister Eric Lombard stated that the European Union could reach some type of trade deal with the U.S. ahead of the July 9th deadline. This week, investors look ahead to remarks from Federal Reserve Chair Jerome Powell and a raft of U.S. economic data, with a particular focus on the nonfarm payrolls report. In Friday's trading session, Wall Street's major equity averages ended in the green, with the S&P 500 and Nasdaq 100 notching new all-time highs. Nike (NKE) surged over +15% and was the top percentage gainer on the S&P 500 and Dow after the sportswear company posted better-than-expected FQ4 results and said it expects the decline in sales and margins to ease in the current quarter. Also, Boeing (BA) climbed more than +5% after Redburn upgraded the stock to Buy from Neutral with a price target of $275. In addition, Alphabet (GOOGL) rose over +2% after Citizens JMP upgraded the stock to Outperform from Market Perform with a price target of $220. On the bearish side, Palantir Technologies (PLTR) slumped more than -9% and was the top percentage loser on the S&P 500 and Nasdaq 100 after Canada announced a tax on digital business from the U.S. Data from the U.S. Department of Commerce released on Friday showed that the core PCE price index, a key inflation gauge monitored by the Fed, came in at +0.2% m/m and +2.7% y/y in May, stronger than expectations of +0.1% m/m and +2.6% y/y. Also, U.S. May personal spending unexpectedly fell -0.1% m/m, weaker than expectations of +0.1% m/m, and personal income unexpectedly fell -0.4% m/m, weaker than expectations of +0.3% m/m. At the same time, the University of Michigan's U.S. June consumer sentiment index was unexpectedly revised higher to 60.7, stronger than expectations of 60.4. Minneapolis Fed President Neel Kashkari said on Friday that he expects two 25-basis-point rate cuts to be likely this year, with the first possibly coming in September, but cautioned that tariffs could have a lagging effect on inflation and that officials should remain flexible. U.S. rate futures have priced in a 78.8% probability of no rate change and a 21.2% chance of a 25 basis point rate cut at the next FOMC meeting in July. In this holiday-shortened week, the U.S. June Nonfarm Payrolls report will be the main highlight, as signs of a weak labor market could bolster expectations that the Federal Reserve could lower interest rates sooner. The report is released on Thursday this month due to the U.S. Independence Day holiday falling on Friday. Ahead of the key jobs report, investors will monitor JOLTs job openings data for May on Tuesday and ADP private payrolls figures for June on Wednesday for further insights into the health of the U.S. job market. Other noteworthy data releases include the U.S. ISM Manufacturing PMI, the S&P Global Manufacturing PMI, Construction Spending, Average Hourly Earnings, Initial Jobless Claims, Trade Balance, the Unemployment Rate, the S&P Global Composite PMI, the S&P Global Services PMI, Factory Orders, and the ISM Non-Manufacturing PMI. 'The Fed would likely need to see clearer evidence of softness in the form of subdued payrolls growth and a rising unemployment rate to trigger an early move,' ING chief international economist James Knightley said in a note. Market watchers will also be focused on remarks from Fed Chair Jerome Powell, who is set to participate in the European Central Bank's annual forum in Sintra, Portugal, this week. Mr. Powell will speak on a panel alongside his counterparts from the Eurozone, Japan, South Korea, and the U.K. In addition, President Trump's 'One Big Beautiful Bill' will be in the spotlight. Negotiations over Trump's tax-cut bill are ongoing as Republicans work to persuade remaining holdouts to back it for final passage. The president has demanded that Congress send him the bill by July 4th. The House also needs to vote on the latest version of the legislation before it can be sent to the White House for Trump's signature. Meanwhile, the U.S. stock markets will close early at 1 p.m. Eastern Time on Thursday and remain closed on Friday for the Independence Day holiday. Today, investors will focus on the U.S. Chicago PMI, which is set to be released in a couple of hours. Economists, on average, forecast that the Chicago PMI will stand at 42.7 in June, compared to the previous value of 40.5. Also, market participants will be anticipating speeches from Atlanta Fed President Raphael Bostic and Chicago Fed President Austan Goolsbee. In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.254%, down -0.09%. The Euro Stoxx 50 Index is down -0.24% this morning, giving up earlier gains and halting a tentative rally that had been driven by trade optimism. Bank stocks lost ground on Monday, while defense stocks outperformed. Data from the Office for National Statistics released on Monday showed that Britain's economy expanded 0.7% in the first quarter, confirming a preliminary estimate. Separately, data from the Federal Statistical Office showed that Germany's monthly retail sales unexpectedly fell in May, dampening expectations for solid growth in the second quarter for Europe's largest economy. In addition, preliminary data showed that Italy's annual inflation rate rose to 1.7% in June from 1.6% in the previous month. Investors now await preliminary inflation data from Germany due later in the session. Meanwhile, the U.K. government announced on Monday that the trade agreement lowering U.S. tariffs on British cars and aircraft parts has officially taken effect. Also, French Finance Minister Eric Lombard stated that the European Union could reach some type of trade deal with the U.S. ahead of the July 9th deadline. In other news, data from the European Central Bank showed that lending growth across the Eurozone was largely unchanged in May, suggesting that the support from the central bank's series of rate cuts was offset by deteriorating economic sentiment. In corporate news, STMicroelectronics ( rose over +2% after JPMorgan added the chipmaker to its positive catalyst watch. U.K. GDP, Germany's Retail Sales, and Italy's CPI (preliminary) data were released today. U.K. GDP has been reported at +0.7% q/q and +1.3% y/y in the first quarter, in line with expectations. The German May Retail Sales arrived at -1.6% m/m and +1.6% y/y, weaker than expectations of +0.5% m/m and +3.3% y/y. The Italian June CPI came in at +0.2% m/m and +1.7% y/y, compared to expectations of +0.1% m/m and +1.7% y/y. Asian stock markets today settled in the green. China's Shanghai Composite Index (SHCOMP) closed up +0.59%, and Japan's Nikkei 225 Stock Index (NIK) closed up +0.84%. China's Shanghai Composite Index closed higher today, boosted by defense and chip stocks, while investors digested the latest PMI data from the country. Data from the National Bureau of Statistics released on Monday showed that China's manufacturing activity contracted for the third consecutive month in June, albeit at a slower rate, as trade tensions with the U.S. continued to pressure the world's second-largest economy. The reading came on the heels of a series of data indicating that China's economy lost some momentum in May, weighed down by the remaining U.S. tariffs on Chinese goods despite the trade truce. At the same time, an official survey revealed that China's non-manufacturing PMI, covering both service and construction activity, grew to a 3-month high in June. Meanwhile, economists say Chinese policymakers appear content with the economy's performance so far this year. Chinese Premier Li Qiang said last week that economic indicators continued to improve in the second quarter despite external challenges. Also, the People's Bank of China issued a more upbeat assessment of the economy following its latest policy meeting, stating that it is displaying positive momentum and that confidence is improving. However, with deflationary pressures persisting and the labor market under stress, analysts are debating whether officials will introduce new measures to support growth over the next three months. Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said, 'The Politburo meeting later this month will shed light on how the policymakers think about these macro issues.' The Chinese June Manufacturing PMI came in at 49.7, stronger than expectations of 49.6. The Chinese June Non-Manufacturing PMI stood at 50.5, stronger than expectations of 50.3. Japan's Nikkei 225 Stock Index closed higher and hit a more than 11-month high today, tracking Friday's gains on Wall Street. Technology and internet-related stocks outperformed on Monday. At the same time, automobile stocks slumped after U.S. President Donald Trump stated in a Sunday interview that Japan engages in 'unfair' automobile trade with the U.S. Trump said that Japan should boost its imports of U.S. energy resources and other products to help narrow the U.S. trade deficit. Meanwhile, government data released on Monday showed that Japanese factory output rebounded much less than expected in May, as sweeping U.S. tariffs threatened to undermine the country's already fragile economic recovery. Output is expected to weaken in the months ahead as Trump's tariffs weigh on exports and Japanese companies grow more cautious about their capital spending. Japan's top trade negotiator, Ryosei Akazawa, said in a social media post on Monday that both countries have agreed to continue trade talks and that negotiations have reached 'a critical juncture.' Still, many analysts believe it will be difficult for Japan to secure a full exemption from U.S. tariffs. In other news, a private think tank survey revealed on Monday that Japanese households will see no relief from rising living costs, with the number of food items expected to see price hikes in July projected to surge fivefold. Despite persistent inflationary pressures, many analysts anticipate that the Bank of Japan will keep monetary policy steady for the remainder of the year amid tariff concerns. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +5.58% to 24.59. The Japanese May Industrial Production (preliminary) arrived at +0.5% m/m, weaker than expectations of +3.4% m/m. The Japanese May Housing Starts tumbled -34.4% y/y, weaker than expectations of -15.0% y/y. Pre-Market U.S. Stock Movers Juniper Networks (JNPR) climbed over +8% in pre-market trading after the Justice Department settled a lawsuit opposing Hewlett Packard Enterprise's $14 billion acquisition of the company. Oracle (ORCL) rose more than +1% in pre-market trading after Stifel upgraded the stock to Buy from Hold with a price target of $250. Enphase Energy (ENPH) fell over -3% in pre-market trading after the Senate's latest version of the tax-and-spending bill included a provision to phase out tax credits for large-scale wind and solar projects by the end of 2027. You can see more pre-market stock movers here Today's U.S. Earnings Spotlight: Monday - June 30th Progress (PRGS), IGC Pharma (IGC). On the date of publication, Oleksandr Pylypenko did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
38 minutes ago
- Bloomberg
Musk Slams Cuts to EV Credits in Senate Trump Tax Bill
Elon Musk warned that the cuts to electric vehicle and other clean energy credits in the US Senate's latest version of President Donald Trump's multi-trillion dollar tax bill would be 'incredibly destructive' to the country. Jamie Nimmo reports on Bloomberg Television. (Source: Bloomberg)
