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Logan: Fed May Need to Hike Interest Rates This Year to Confront Inflation
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- Dallas Fed President Lorie Logan warned that interest rate hikes may be necessary later this year to tamp down stubborn inflation.
- Logan stated the Federal Reserve’s current interest rate setting no longer constrains rising prices.
- Futures markets now reflect a 55% probability of interest rate increases by year-end, up from 9% a month ago.
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Energy Costs Continue to Feed Inflation, Fed’s Beige Book Shows
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- A Federal Reserve survey found U.S. businesses faced energy-driven price increases and economic uncertainty in the third month of the Iran conflict.
- The survey noted higher-income households remained resilient, while lower-income consumers experienced greater financial strain, reflecting a K-shaped economy.
- Firms reported margin pressures as non-labor input costs rose faster than selling prices, and the business outlook remained highly uncertain.
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ADP Says Private-Sector Hiring Stayed Strong Last Month
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- Private companies added 122,000 jobs in May, according to ADP, indicating a resilient U.S. labor market.
- Hiring was widespread in May, with education and health adding 57,000 jobs, and other sectors also showing gains.
- The ADP report precedes the Labor Department’s official May jobs report, which economists expect to show 80,000 new positions.
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U.S. Services-Sector Activity Continued to Expand in May
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- U.S. services-sector activity grew past expectations in May, with the ISM index at 54.5, up from 53.6 in April.
- The prices index increased to its highest level since August 2022, with diesel, gasoline, and oil frequently mentioned as rising.
- The employment index contracted for the third consecutive month, as companies instituted hiring freezes or did not backfill positions.
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Swiss Inflation Holds Steady Ahead of SNB Meeting
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- Swiss inflation was unchanged at 0.6% in May, equaling its highest level since December 2024, reinforcing expectations for the Swiss National Bank to hold rates.
- SNB Chairman Martin Schlegel said medium-term inflation pressures remained unchanged; investors expect the bank to hold its key rate at 0% through year-end.
- Economist Ankita Amajuri expects SNB to raise inflation forecasts but keep inflation within its 0%-2% target through next year.
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Australia’s Economic Growth Slows
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- Australian economic growth slowed to 0.3% in the first quarter, with annual growth at 2.5%, amid central bank rate hikes and surging fuel prices.
- The Reserve Bank of Australia raised its cash rate to 4.35% in May, its third straight increase, to cool inflation and weigh the Iran conflict’s impact.
- Private business investment rose 6.0% in the quarter, driven by a 16% rise in machinery and equipment for data centers.
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What to Know About the Demise of the Much-Hated ‘PDT’ Trading Rule
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- The “pattern day trader” rule, implemented in 2001, officially ends Thursday, making rapid-fire stock and options trades easier.
- The Financial Industry Regulatory Authority called the rule outdated and eliminated its $25,000 minimum equity requirement.
- Brokerages expect to benefit from increased trading activity, though critics worry about encouraging riskier trades by new investors.
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WSJ Pro Central Banking brings you news and analysis from a global team of reporters and editors at The Wall Street Journal and Dow Jones Newswires. Send your tips, suggestions and feedback to service@dowjones.com. An artificial-intelligence tool created these summaries, which are based on the text of the article and checked by an editor. Read more about how we use artificial intelligence in our journalism.
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