Signs of a Slowdown in China By Vicky Ge Huang
China's consumption and investment slowed unexpectedly in April despite Beijing's efforts to shore up the economy. Meanwhile, President Biden's clean-energy subsidies are making renewable power a possibility in poorer communities. And U.S. regulators have appointed two separate independent compliance monitors to oversee crypto exchange Binance.
Top News China Consumption and Investment Slow Unexpectedly
China's consumption and investment slowed unexpectedly in April, while industrial output beat expectations as Beijing doubled down on its manufacturing drive to spur growth amid a prolonged property slump and growing trade tensions with the West.
Retail sales, a major gauge of consumption, increased 2.3% in April from a year earlier, down from the 3.1% growth recorded in March and the 4.0% rise expected by economists surveyed by The Wall Street Journal.
U.S. Economy Free Solar for Farmers: Climate Law Gives Rich Incentives
Farmers are capitalizing on a wave of federal tax credits, grants and loans for solar power, electric cars and other cleaner-energy alternatives. The $1 trillion in funding is being made available through the climate law, known as the Inflation Reduction Act.
The generous subsidies are making renewable power a possibility in poorer communities, where the poverty rate is more than double the national average. Such projects can sharply reduce energy bills, but their high upfront costs had until recently put them out of reach for many families and businesses.
Financial Regulation Binance Gets Two Compliance Monitors in Settlements With U.S. Authorities
U.S. regulators have appointed two separate independent compliance monitors to ensure cryptocurrency exchange Binance meets the requirements set forth in its settlements over money-laundering and sanctions violations.
Forward Guidance Tuesday (all times ET)
7 p.m.: Atlanta Fed's Bostic, Boston Fed's Collins, Cleveland Fed's Mester speak at Atlanta Fed conference.
Wednesday (all times ET)
10 a.m.: National Association of Realtors releases U.S. existing-home sales for April.
2 p.m.: Fed releases minutes of April 30-May 1 FOMC meeting.
Research Newly Built Homes Dominate U.S. Single-Family Housing Inventory
One-third of single-family homes for sale in the U.S. in 1Q, or 33.4%, were newly built, just below a record-high 34.5% two years earlier, Redfin says. The portion of housing supply that's newly built is still roughly double pre-pandemic levels. Newly built homes have taken up an outsize portion of inventory since the pandemic homebuying boom sent builders into overdrive. Construction of U.S. homes soared at the start of the pandemic, and the supply of existing homes for sale has dropped. Many would-be sellers are opting to hang onto their low mortgage rate instead of moving and taking on a new one. For new-construction homes, there were 8.3 months of supply on the market nationwide in March, compared with 3.2 months for existing homes. - Chris Wack
Basis Points The death of Iranian President Ebrahim Raisi is unlikely to result in a major shift in economic policy, with the sanctions-damaged economy set to continue to struggle and tensions with Israel and the West likely to endure, Capital Economics economist James Swanston says in a note. Ayatollah Khamenei, the country's Supreme Leader, and various government councils hold significant influence in Iranian politics, weakening the power of any potential president, he says. Poor economic performance, including inflation that ran at 31% in April, will continue, and there is little chance of restarting nuclear-deal negotiations, which was reportedly on the table in 2022. However, the sympathetic international reaction to Raisi's death highlights improved relations with the Gulf, cutting the risk of oil disruption should the conflict between Iran and Israel escalate, he adds. - Edward Frankl The U.S. investment-grade spreads are unlikely to widen by more than 20 basis points from the current levels as the outlook on the IG sector is positive, Bank of America Global Research analysts said in a note. U.S. IG credit issuers have reduced their debt piles over the last two years, corporate earnings growth is strong and the risk of a recession has declined, boosting the IG sector, BofA says. "Assuming a low probability of spread widening beyond 110bps creates a relatively attractive distribution of IG excess returns for the remainder of the year." - Miriam Mukuru The Reserve Bank of Australia has warned that risks around the inflation outlook have risen , while uncertainty around the economy's trajectory more broadly remains highly elevated. Minutes of the central bank's May 6 to May 7 policy meeting showed that while it said there were increased risks that inflation will stay higher for longer than expected, the policy-setting board decided to keep interest rates on hold to avoid "excessive fine-tuning" of policy settings. - James Glynn About Us
WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com[].
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
05-21-24 0715ET
