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Bank Indonesia Surprises With Rate Hike to Stem Rupiah Bleeding

  • Indonesia’s central bank hiked its benchmark rate by 25 basis points to 5.50% on Tuesday to stabilize the rupiah.
  • Bank Indonesia also raised its overnight deposit facility rate to 4.50% and lending facility rate to 6.25% by 25 basis points each.
  • Analysts expressed reservations about the rate hike’s effectiveness, citing market worries over fiscal sustainability and capital outflows.

 
U.S. Small-Business Confidence Ticked Down in May

  • U.S. small-business optimism fell 0.6 points to 95.3 in May, pressured by higher fuel prices and weakened hiring plans.
  • Reports of actual and planned price increases rose significantly in May; 36% of owners raised prices, 34% plan increases.
  • The uncertainty index rose 3 points to 91 in May; a net 9% of owners plan to create new jobs, lowest since May 2020.
China’s Strength in Semiconductors, Rare Earths Drives Export Surge

  • China’s exports surged 19.4% year-over-year in May, driven by global artificial intelligence demand and advanced technology sales.
  • Semiconductor exports soared 110% in dollar terms, while outbound shipments to the U.S. surged 35% in May.
  • China’s imports climbed 27% in May, widening its trade surplus to $105.4 billion, but strong exports could intensify trade tensions.
German Industrial Output Rises For First Time Since November Despite War

  • Industrial production in Germany rose 0.4% in April, the first increase since November, as firms stockpiled inventory.
  • New factory orders in Germany dropped 3.8% in April, the first decline since January, signaling damping demand.
  • The European Central Bank is expected to downgrade eurozone growth prospects and raise borrowing costs this week.
U.S. Employment Trends Index Ticked Down in May

  • The Conference Board’s Employment Trends Index, a U.S. labor market gauge, fell to 107.01 in May from an upwardly revised 107.88 in April.
  • The primary drag on the index was a drop in small firms reporting that jobs are “not able to be filled right now.”
  • Despite the May decline, the index is up 2.1 points compared with six months ago, indicating continued labor market resilience.
 

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