Good day. President Biden at the G-7 meeting in Japan aims to impress upon allies that Washington can keep its economic house in order even as the threat of a default by the U.S. government complicates that message. Trips to Papua New Guinea and Australia around the meeting have been scrapped so he could return to Washington to address the impasse over raising the U.S. debt ceiling. The president said on Wednesday that talks regarding the borrowing limit with Republicans have been productive and that he believes a default will be avoided. Treasury Secretary Janet Yellen has warned that absent a deal to raise the borrowing cap, the federal government could run short of funding by two weeks from Thursday. Meanwhile, the tightest job market in generations is transforming the employment prospects for Black Americans in ways that could be more long-lasting than in past economic expansions. Black workers have long been at the bottom of the ladder in terms of wages and job security. But the confluence of strong demand for labor and demographic shifts in the country over the past few years, when many older, white workers retired, has benefited Black Americans.

 Now on to today’s news and analysis.

President Biden will seek to maintain unity among allies in supporting Ukraine and countering China’s economic clout at a summit of the Group of Seven industrialized nations, as the threat of default in the U.S. complicates that message and prompts him to curtail his international travel.

The White House said Biden would depart the G-7 in Hiroshima, Japan, on Sunday and scrap visits to Papua New Guinea and Australia—where he had been scheduled to meet with the leaders of Australia, India and Japan—so he could return to Washington to deal with an impasse over raising the country’s roughly $31.4 trillion borrowing limit. While his aides negotiate with Republicans in Washington, Biden will seek to assuage allies in Japan that the U.S. will avoid a default, which could threaten to undermine the global economy.

• Stock Futures Hover as Investors Eye Debt-Ceiling Talks

• Epstein Assisted Chomsky, Botstein With Financial Transactions

• UBS Faces Tough Choice Over Credit Suisse’s Domestic Business

• Bitcoin Miner Bit Digital Adds Machines in Iceland 

8:30 a.m.: U.S. weekly jobless claims
9:05 a.m.: Fed’s Jefferson speaks at National Association of Insurance Commissioners International Insurance Forum
10 a.m.: U.S. existing-home sales for April; Dallas Fed’s Logan speaks at Texas Bankers Association 138th Annual Convention
11 a.m.: Bank of Canada’s Macklem and Rogers press conference on Financial System Review

8:45 a.m.: New York Fed’s Williams speaks at Federal Reserve Research Conference
9 a.m.: Fed’s Bowman speaks at Texas Bankers Association 138th Annual Convention
11 a.m.: Fed’s Powell in panel discussion with Ben Bernanke at Federal Reserve Research Conference

Eurozone core inflation will take longer to slow than headline inflation, driving further monetary policy tightening over the summer, Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, writes in a note. Core inflation will remain around 5.5% over the summer, before declining to 3.5% by the end of the year, he writes. While there is clear evidence of slowing core goods inflation, services inflation is still rising, which should be enough for two more 25 basis-point interest rate increases by the European Central Bank, next month and in July, according to Vistesen. Any turmoil related to the U.S. debt ceiling could prompt the ECB to ease off tightening, while sticky core inflation could threaten a third rate increase in September, he adds.

—Edward Frankl

• U.S. housing starts rose in April, driven by an increase in multi-family construction, while building permits declined. Starts, a measure of homebuilding, increased 2.2% from March to a seasonally adjusted annual rate of 1.401 million. Economists polled by The Wall Street Journal expected a decrease of 1.4% on month. Starts in April came in 22.3% below the same month a year earlier. Residential permits, which can hint at future home construction, fell 1.5% in April on month, to a seasonally adjusted annual rate of 1.416 million. (Dow Jones Newswires)
• Key U.K. inflation drivers such as labor market tightness, wage growth and services prices are skewed significantly to the upside, showing potential for more persistent inflation, Bank of England Governor Andrew Bailey said at the British Chamber of Commerce annual conference on Wednesday. (DJN)
• Registrations for new cars in the European Union rose 17% in April from a year earlier to reach 803,188 vehicles, the European Automobile Manufacturers’ Association said. Registrations in every EU country rose, with Italy and France topping the field, rising 29% and 22%, respectively. (DJN)
• Signs point to a cooling jobs market in France, despite unemployment staying at a historically low level of 7.1% in the first quarter, ING senior economist Charlotte de Montpellier said in a note, pointing to a slowdown in temporary-contract hiring. (DJN)

This newsletter is compiled by James Christie in San Francisco.

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