💡Quote of the week
“Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go… It may make sense to move rates higher but to do so at a more moderate pace.” - Fed Chair Jerome Powell
Investment news
🏦 🇺🇸 Let’s take a break. U.S. Federal Reserve officials have announced a pause in interest rate hikes but Fed Chair Jerome Powell said more rate increases are likely ahead as the inflation fight “has a long way to go.” (CNBC)
“Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go,” Powell said.
🏦 🇪🇺 Price pressures still strong. European Central Bank raised interest rates by 25 basis points to 3.5%, with ECB Chief Christine Lagarde signaling more rate hikes ahead: “There is no clear evidence that underlying inflation has peaked.” (AP)
“Our future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to our 2% medium-term target and will be kept at those levels for as long as necessary,” Lagarde said.
🇬🇧 📈 Stubborn inflation. U.K. inflation came in hotter than expected in May, as consumer prices increased by an annual 8.7%, unchanged from the previous month. (Reuters)
British inflation, once again, has surpassed that of any other major advanced economy. According to economists surveyed by Reuters, the anticipated annual consumer price inflation rate for May was expected to decline to 8.4%, moving even further from October's 41-year peak of 11.1%.
🇬🇧 🏦 Surprise, surprise! The Bank of England hiked interest rates to 5% in a surprise move, after it said there had been "significant" news suggesting U.K. inflation would take longer to fall. (Reuters)
"There has been significant upside news in recent data that indicates more persistence in the inflation process. Second-round effects in domestic price and wage developments generated by external cost shocks are likely to take longer to unwind than they did to emerge," the BoE’s Monetary Policy Committee said.
🤯 Persistent U.K inflation triggers mortgage crisis for millions. Rising mortgage payments are putting financial pressure on millions of borrowers in Britain, posing a threat to household spending and the overall economy. (Bloomberg)
The income squeeze is eroding earnings, diverting funds that could have been spent at retail outlets, bars, and restaurants, resulting in a dampening effect on an economy expected to grow only 0.2% this year.
🇹🇷 📈 Turkey makes a dramatic U-turn. As part of a dramatic shift in monetary policy, Turkey's central bank raised the country's key interest rate from 8.5% to 15%. The whopping 650 basis point rate rise is Turkey's first since March 2021. (CNBC)
“The Committee decided to begin the monetary tightening process in order to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior,” the central bank, led by newly appointed Governor Hafize Gaye Erkan, said in a statement.
🇩🇪 Germany loses momentum. Germany's economic activity experienced a notable loss of momentum in June, primarily attributed to a slowdown in the services sector and prolonged weakness in the country's factories. (Bloomberg)
Although the private-sector economy managed to grow for the fifth consecutive month, the rate of expansion marked its lowest level since February, as indicated by business surveys conducted by S&P Global.
🇫🇷 Recession is likely? The French economy is expected to have experienced a significant slump in the three months through June, with purchasing manager indexes (an index of the prevailing direction of economic trends in the manufacturing and service sectors) suggesting a contraction of 0.5% compared to the previous quarter. (Bloomberg)
“Even though this alone does not yet represent a recession, speculation that one will occur is likely to increase,” says Norman Liebke, an economist at Hamburg Commercial Bank.
💶 Euro area's economic momentum stalls. The economic momentum in the euro area nearly ground to a halt in June, ending the revival the bloc had shown since its winter downturn. (Bloomberg)
The purchasing managers index, compiled by S&P Global and released on Friday, dropped to a five-month low of 50.3. This figure fell short of analyst expectations, which had predicted a slight decline from May to 52.5.
📸 Image of the week
Opinion
🤔 Greedflation. “It’s firmly in the economic lexicon now. And like Bidenflation, another portmanteau word, it’s a loaded term.” (Bloomberg Opinion)
“If greedflation has a meaning, it’s the notion that companies’ greed to hike margins has added to the rise in consumer prices. And there’s circumstantial evidence for it,” Bloomberg’s John Authers writes.
What else is happening
🛳️ A catastrophic implosion. Titan, a deep-sea submersible, carrying five individuals on a mission to the century-old wreck of the Titanic, has been discovered in fragments following a devastating implosion. This tragic event resulted in the loss of all lives aboard the vessel, bringing an end to a multinational five-day search effort. (Reuters)
On Thursday morning, a robotic diving vehicle deployed from a Canadian ship made a significant discovery. The vehicle located a debris field belonging to the submersible Titan, approximately 1,600 feet (488 meters) away from the bow of the Titanic.
🇷🇺 🇰🇵 Russia has restarted its oil deliveries to North Korea, marking the first such shipment since 2020. This move further strengthens the cooperation between the two nations, which the U.S. alleges includes the transfer of arms from Pyongyang to support Kremlin’s war in Ukraine. (Bloomberg)
According to a recent report by a United Nations sanctions committee, Russia initiated the delivery of refined petroleum products to North Korea in December 2022, a practice that has persisted into 2023.
The data presented indicates that these shipments had previously been suspended around October 2020, but since the resumption, Russia has dispatched approximately 67,000 barrels of oil to North Korea.
And finally…
💥 Prepare for a cosmic spectacle! Astronomers have captured an awe-inspiring event — a tremendously energetic explosion emerging from an ancient galaxy. This explosion, called a gamma-ray burst, appears to be the long-awaited evidence of a star destruction phenomenon, theorized for decades but never witnessed until now. (Reuters)
"Gamma-ray bursts are the most powerful explosions in the universe. They release more energy per unit time than any other known cosmic phenomena," said astrophysicist and study co-author Wen-fai Fong of Northwestern University in Illinois.
See you next week!
