FILE PHOTO: Single family homes being built by KB Homes are shown under construction in San Diego, California, U.S., April 17, 2017. REUTERS/Mike Blake/File Photo
June 18, 2019
WASHINGTON (Reuters) – U.S. homebuilding unexpectedly fell in May, but data for the prior two months was revised higher and building permits increased, suggesting that the housing market was drawing some support from a sharp decline in mortgage rates.
Housing starts dropped 0.9% to a seasonally adjusted annual rate of 1.269 million units last month amid a drop in the construction of single-family housing units, the Commerce Department said on Tuesday.
Data for April was revised up to show homebuilding rising to a pace of 1.281 million units, instead of increasing to a rate of 1.235 million units as previously reported. Housing starts in March were also stronger than initially estimated.
Economists polled by Reuters had forecast housing starts edging up to a pace of 1.239 million units in May. Single-family housing starts fell in the Northeast, the Midwest and West, but rose in the South, where the bulk of homebuilding occurs.
Building permits rose 0.3% to a rate of 1.294 million units in May. It was the second straight monthly increase in permits. Building permits have been weak this year, with much of the decline concentrated in the single-family housing segment. The housing market hit a soft patch last year and has been a drag on economic growth for five straight quarters.
The sector is being constrained by land and labor shortages, which are making it difficult for builders to fully take advantage of lower borrowing costs. As a result, the housing market continues to struggle with tight inventory, leading to sluggish sales growth.
(Reporting By Lucia Mutikani; Editing by Andrea Ricci) ((Lucia.Mutikani@thomsonreuters.com; 1 202 898 8315; Reuters Messaging: firstname.lastname@example.org)
FILE PHOTO: Swedbank sign is seen on the local headquarters building in Tallinn, Estonia March 25, 2019. REUTERS/Ints Kalnins
June 18, 2019
By Esha Vaish
STOCKHOLM (Reuters) – Swedbank has suspended with immediate effect the two most senior executives of its Estonian business, which is being investigated over alleged money laundering.
Sweden’s oldest retail bank has already parted ways with its chief executive and chairman this year after alleged links to a money laundering scandal at Danske Bank, and is being investigated in the United States, Sweden and the Baltics.
The most recent allegations, reported by Swedish state TV in March, said that Swedbank processed gross transactions of up to 20 billion euros a year from high-risk, mostly Russian non-resident clients, through Estonia from 2010 to 2016.
Although Swedbank initially denied the allegations, which first related to between 2007 and 2015, mounting shareholder pressure for transparency led to the bank’s admission in April to failings in combating money laundering and an internal inquiry into compliance with anti-money laundering rules.
Robert Kitt, who has been Estonia CEO since 2015, and Vaiko Tammevali, Estonia CFO since 2014, had both been suspended, Swedbank said in a statement late on Monday.
“(The) decision is a consequence of the ongoing internal investigation,” Charlotte Elsnitz, Swedbank’s head of Baltic Banking, told journalists at a news conference on Tuesday.
Elsnitz declined to give any details about the reason for the suspensions, but said Swedbank remained committed to Estonia, where it is the largest bank with more than 900,000 private and 132,000 business customers.
Kitt and Tammevali, both Estonian, have worked at the bank for more than 15 years. Kitt’s previous jobs include heading the wealth management and corporate banking units, while Tammevali’s included leading the private banking and credit risk units.
“It has been a fantastic journey. Fiercely tense, frantically interesting, with fantastic colleagues and a team. But every race is running out of time and my mandate in Swedbank Estonia as (Head of Unit) ended today,” Estonian media quoted Kitt as saying in a statement posted on Facebook.
Reuters could not immediately independently verify the statement, which was confirmed by a Swedbank spokeswoman, while Kitt did not respond to requests for comment.
Tammevali could not immediately be reached.
Credit Suisse analysts said that the suspensions could help Swedbank in any discussions with authorities.
The Estonian financial regulator declined to comment and said that their investigation with Sweden and other Baltic authorities was ongoing, while Swedbank said it was cooperating fully with authorities.
Swedbank said Olavi Lepp, its chief risk officer, had been named acting CEO of Swedbank Estonia, while Anna Kouts, its head of treasury, would become acting CFO in the Baltic country.
The bank’s shares, which have lost about a third in value since the scandal broke, were down 1.6 percent at 138.35 Swedish crowns at 0930 GMT.
(Reporting by Johannes Hellstrom and Esha Vaish, editing by Deepa Babington/Keith Weir/Alexander Smith)
FILE PHOTO: Office buildings are pictured in the financial district of Frankfurt, Germany, September 15, 2018. REUTERS/Ralph Orlowski/File Photo
June 18, 2019
BERLIN (Reuters) – The mood among German investors deteriorated sharply in June, a survey showed on Tuesday, with the ZEW institute pointing to recent weak economic data and an escalating trade dispute between China and the United States.
ZEW said its monthly survey showed economic sentiment among investors plunged to -21.1 from -2.1 in May. Economists had expected a drop to -5.9.
The June reading was the lowest level since November 2018 and marked the second consecutive monthly drop.
ZEW President Achim Wambach said the steep drop was linked to greater uncertainty about the global economy and a downturn in data on the German economy at the start of the second quarter.
“The intensification of the conflict between the U.S. and China, the increased risk of a military conflict in the Middle East and the higher probability of a no-deal Brexit are all casting a shade on the global economic outlook,” he added.
A separate gauge measuring investors’ assessment of the economy’s current conditions edged down to 7.8 from 8.2 the previous month. Markets had predicted a slightly lower reading of 6.0.
The weaker-than-expected sentiment survey adds to signs that German economic growth will be meager this year and that an expected rebound in 2020 could be less impressive than forecast.
Germany’s influential Ifo institute earlier on Tuesday cut its 2020 growth forecast to 1.7% from 1.8% previously as it warned that a manufacturing recession was starting to spill over into other sectors.
The government expects the economy to grow by 0.5% this year and 1.5% next.
(Reporting by Michael Nienaber; Editing by Michelle Martin)
FILE PHOTO: U.S. dollar banknote is seen in this picture illustration taken May 3, 2018. REUTERS/Dado Ruvic/Illustration
June 18, 2019
By Saikat Chatterjee
LONDON (Reuters) – The dollar weakened against its rivals on Tuesday, heading back toward a recent three-month low before a U.S. central bank meeting gets underway with expectations growing the Fed will signal its first rate cut in a decade.
A CME Fedwatch tool puts the probability of a quarter-point interest rate cut by the Fed at 20%, with a 70% probability of a rate cut at its next meeting in July.
But with so much dovishness already priced into the markets and the dollar having weakened 1% over the past three weeks, some market analysts say the greenback may strengthen if the Fed signals a more neutral stance.
“The majority view among the Fed comments does not suggest any particular appetite for an immediate rate cut, say in June or July,” HSBC strategists said in a note. “The balance of risks favors being long the dollar, not least because positioning is likely a little lighter after the recent sell-off.”
Against a basket of its rivals, the dollar edged 0.1% lower at 97.437 and not far away from a three-month low of 96.46 hit earlier this month.
While hedge funds have pared back some of their long positions on the dollar in recent weeks, overall net positions remain near 2019 highs.
The euro wallowed at the lower end of a recent trading range against the dollar, holding above the $1.12 line, as markets awaited a speech by European Central Bank chief Mario Draghi where he might shed some more light on how policymakers will fight the next economic downturn.
With benchmark interest rates in the eurozone already in negative territory and inflation expectations well below central bank forecasts, financial markets will be closely watching Draghi’s comments.
Elsewhere, sterling held near the $1.2550 line as traders waited for news on the contest for the leadership of the ruling Conservative party.
(Graphic: Major currencies YTD – https://tmsnrt.rs/2ImYoh7)
(Reporting by Saikat Chatterjee; Editing by Andrew Heavens)
FILE PHOTO: A man makes his way in a business district in Tokyo, Japan May 16, 2018. REUTERS/Kim Kyung-Hoon/File Photo
June 18, 2019
By Daniel Leussink
TOKYO (Reuters) – Japan’s government left its assessment of the economy unchanged in June, after revising it down twice in the past three months, even as the escalating U.S.-China trade war threatens to take a heavier toll on global growth.
The risks to the economic outlook could add pressure on the government to boost spending to offset the potential blow from a planned sales tax hike in October.
“Japan’s economy is recovering at a moderate pace, while weakness in exports and industrial production continues,” the government said in the June report released on Tuesday, maintaining its view from last month.
The government downgraded its view for the world’s third-largest economy in March and May.
The June report left unchanged its assessment that exports and output remained weak, as well as its view that capital expenditure was increasing at a moderate pace.
“The weakness in exports was due to China’s economic slowdown and inventory adjustment of information technology-related goods,” an official told a briefing on the report.
But the government upgraded its view on corporate profits for the first time in more than two years, saying they are holding firm at a high level.
It also kept its assessment that domestic demand remained strong enough to offset some of the pain from weaker exports, which would help keep Japan’s recovery intact, with private consumption picking up.
The economy expanded an annualized 2.2% in the first quarter due to robust capital spending, though analysts expect trade tensions to remain a drag on growth.
The government’s plan to raise the sales tax to 10% from 8% in October could also hurt consumption at a time overseas headwinds weigh on exports, some analysts say.
(Reporting by Daniel Leussink; Editing by Kim Coghill)
FILE PHOTO: Italian Economy Minister Giovanni Tria looks on before a joint news conference with Eurogroup President Mario Centeno at the Treasury ministry in Rome, Italy, November 9, 2018. REUTERS/Alessandro Bianchi -/File Photo
June 18, 2019
LONDON (Reuters) – Italy will cut spending to meet its fiscal deficit targets this year and can reach an agreement with the European Commission over its budgetary plans, Economy Minister Giovanni Tria said on Tuesday.
Speaking to bond investors and bankers at a conference in London, Tria sought to reassure the international financial community that Italy would not breach European rules but instead seek to limit its budget by reducing expenditure rather than raising taxes.
“This year we will compensate for the failures of the compliance of (European) fiscal rules (last year). We are going for a deficit of 2.1%. We will do better than the agreement of last year,” he said.
Tria said the main problem for Italy remained low economic growth rather than debt.
(Reporting by Tommy Reggiori Wilkes and Dhara Ranasinghe)
FILE PHOTO: Bank of Japan Governor Haruhiko Kuroda speaks during a group interview at the BOJ headquarters in Tokyo April 10, 2013. REUTERS/Toru Hanai/File Photo
June 18, 2019
By Leika Kihara
TOKYO (Reuters) – Bank of Japan Governor Haruhiko Kuroda said the central bank will “certainly” debate heightening overseas risks at a rate review this week, underscoring concerns among policymakers about the economic fallout of a U.S.-China trade war.
The trade frictions and slowing global demand have cast doubt on the BOJ’s forecast that Japan’s economy will continue to expand moderately, pressuring central bank to deploy additional monetary easing to underpin growth.
“As for recent overseas economic developments, there are strong downside risks regarding the Sino-U.S. trade friction and China’s economy,” Kuroda told parliament on Tuesday.
“We’ll certainly debate such overseas developments” at the upcoming rate review, he said, but added that the BOJ is already keeping monetary policy ultra-loose.
At the two-day meeting kicking off on Wednesday, the BOJ is expected to keep monetary policy steady but signal its readiness to ramp up stimulus if growing overseas risks threaten the economy’s modest expansion.
“The BOJ will guide monetary policy appropriately taking into account the impact overseas economic changes could have on Japan’s economic outlook and the momentum for achieving our inflation target,” Kuroda said.
Under a policy dubbed yield curve control (YCC), the BOJ guides short-term interest rates at -0.1% and the 10-year government bond yield around zero percent in an effort to accelerate inflation to its elusive 2 percent target.
Some analysts say the central bank could be forced to ease more if the U.S. Federal Reserve cut interest rates in coming months and trigger an unwelcome yen rise against the dollar in a blow to Japan’s export-reliant economy.
Many BOJ policymakers are wary of deploying stimulus any time soon, given their dwindling ammunition and the rising cost of prolonged easing such as the damage years of near zero rates are inflicting on financial institution’s profits.
Barclays expect financial markets to start factoring in the chance of additional easing at the BOJ’s July policy meeting.
“We expect the BOJ to keep any actual easing measures on hold for now, instead strengthening its forward guidance” at the July meeting, their analysts wrote in a research note.
(Reporting by Leika Kihara; Editing by Chris Gallagher & Shri Navaratnam)
FILE PHOTO: A pumpjack is seen at sunset outside Scheibenhard, near Strasbourg, France, October 6, 2017. REUTERS/Christian Hartmann
June 18, 2019
By Aaron Sheldrick
TOKYO (Reuters) – Oil prices were falling for a second day on Tuesday, after more signs that global economic growth is being hit by U.S.-China trade tensions, although losses were limited amid tensions in the Middle East after tanker attacks last week.
Brent crude futures were down 16 cents, or 0.3%, at $60.78 a barrel by 0215 GMT. They fell 1.7% in the previous session on concerns about slowing global growth.
U.S. West Texas Intermediate (WTI) crude futures were down 12 cents, or 0.2%, at $51.92. They dropped 1.1% on Monday.
The New York Federal Reserve said on Monday that its gauge of business growth in New York state posted a record fall this month to its weakest level in more than 2-1/2 years, suggesting an abrupt contraction in regional activity.
U.S. business sentiment has sagged as tensions over trade have escalated between China and the United States and on signs of softness in the labor market.
“The (oil) market is in a rut and desperately in need of some robust economic data to get it out of this funk,” said Stephen Innes, managing partner at Vanguard Markets in Bangkok.
Oil prices have fallen around 20% since 2019 highs reached in April, in part due to concerns about the U.S.-China trade war and disappointing economic data.
U.S. President Donald Trump and China’s President Xi Jinping could meet at the G20 summit in Japan later this month. Trump has said he would meet Xi at the event, although China has not confirmed the meeting.
Putting further pressure on oil, the U.S. energy department said on Monday that shale oil output is expected to reach a record in July.
But tensions in the Middle East are likely to keep prices supported, analysts said.
Acting U.S. Defense Secretary Patrick Shanahan announced on Monday the deployment of about 1,000 more troops to the Middle East for what he said were defensive purposes, citing concerns about a threat from Iran.
Fears of a confrontation between Iran and the United States have mounted since last Thursday when two oil tankers were attacked, which Washington has blamed on Tehran. Iran has denied involvement.
(Reporting by Aaron Sheldrick; Editing by Richard Pullin and Joseph Radford)
FILE PHOTO: A woman rides a tricycle carrying a child near a residential compound in Beijing’s Tongzhou district, China, February 25, 2016. REUTERS/Jason Lee/File Photo
June 18, 2019
BEIJING (Reuters) – China’s new home prices rose 0.7% month-on-month in May, picking up the pace slightly from a 0.6% gain the previous month, Reuters calculated from National Bureau of Statistics (NBS) data published on Tuesday.
On a yearly basis, average new home prices in China’s 70 major cities increased 10.7% in May, unchanged from the growth rate in April.
China’s real estate market has shown signs of resurgence in recent months as some smaller cities quietly loosened curbs, and confidence has been lifted by Beijing’s call on banks to beef up lending and lower interest rates.
But a broader economic slowdown means the rebound might not be sustainable, some analysts caution, while official purchase restrictions in most cities are also expected to remain in place.
China’s property investment growth cooled in May and sales saw their biggest decline since October 2017, suggesting the frothy housing market may not be able to cushion the effects of a slumping manufacturing sector and intensifying trade tensions.
(Reporting by Beijing Monitoring Desk; Editing by Shri Navaratnam)
FILE PHOTO: A Sydney businessman walks into the light outside the Reserve Bank of Australia (RBA), February 3, 2015. REUTERS/Jason Reed/File Photo
June 18, 2019
SYDNEY (Reuters) – Australia’s central bank believes it will likely have to cut interest rates further from the current record low of 1.25% in order to push down unemployment and revive growth in wages and inflation.
Minutes of the Reserve Bank of Australia’s (RBA) June policy meeting showed its Board decided cutting rates by a quarter point at that meeting would help speed up the economy, but would not be enough on its own.
“Given the amount of spare capacity in the labor market and the economy more broadly, members agreed that it was more likely than not that a further easing in monetary policy would be appropriate in the period ahead,” the minutes showed.
Financial markets have already priced in another rate cut to 1% by August and a further move to 0.75% by early next year.
The Board also noted that lower rate were not the only policy option available to assist with unemployment, echoing calls by RBA Governor Philip Lowe for government action on infrastructure spending and economic reform.
So far, the newly re-elected government of Prime Minister Scott Morrison has downplayed the need for fiscal stimulus and stuck to plans for returning the budget to surplus in 2019/20.
The Liberal National Coalition won re-election in mid-May, beating the favored Labor Party.
Tuesday’s minutes showed the Board judged lower rates would support the economy by pushing down the value of the Australian dollar. The currency has duly fallen to five-month lows since the RBA’s June 4 meeting.
Lower rates would also reduce debt repayments by households, so freeing up extra cash, while lowering borrowing costs for business, the minutes showed.
The Board acknowledged that cutting rates crimped returns for savers, but felt the overall impact would be to support economic growth.
Members also saw little risk that easing policy would lead to a risky rise in household borrowing or to an unexpectedly strong pick up in inflation.
Indeed, the Board judged that the factors suppressing inflation and wage growth would last for some time given the extent of spare capacity in the labor market.