Inflation Strikes the Biden Voter and Trump Voter Differently By Vicky Ge Huang

Republicans are a lot more worried about inflation than Democrats, maybe because the places many of them live have actually experienced larger price increases. Meanwhile, is the yield curve really that great at predicting recessions? And the Securities and Exchange Commission approved the first U.S. exchange-traded funds holding ether, the largest cryptocurrency behind bitcoin, in an about-face that surprised the crypto community.

Top News Trump Voters Don't Just Expect Higher Inflation-They Get It Too

Republicans right now think inflation is a much bigger problem than Democrats do, and a lot of that is just politics. But here's another possibility: Many of the places Republicans live indeed have had significantly higher inflation than Democratic enclaves.

In new research , economists Carola Binder, Rupal Kamdar and Jane Ryngaert examined Labor Department inflation figures for U.S. metropolitan areas, and compared them with voting data. Their finding: Metro areas with more Republicans and independent voters tended to have higher inflation in 2022 than places where Democrats live.

U.S. Economy Wall Street's Favorite Recession Indicator Is in a Slump of Its Own

One of Wall Street's favorite recession indicators looks broken.

An anomaly known as an inverted yield curve , in which yields on short-term Treasurys exceed those of longer-term government debt, has long been taken as a nearly surefire signal that an economic pullback looms. In each of the previous eight U.S. downturns, that has happened before the economy sputtered. There haven't been any false alarms.

Financial Regulation SEC Widens Accessibility of Crypto Investing With Approval of ETFs for Ether

The SEC approved the first U.S. exchange-traded funds holding ether, the largest cryptocurrency behind bitcoin, in an about-face that surprised the crypto community.

The new funds, known as spot ether ETFs because they buy and sell the digital currency itself, will allow mainstream investors to buy and sell ether as easily as stocks or mutual funds. Ether is the in-house token on the Ethereum blockchain, an open software platform for developers to build and operate crypto applications, much like iOS or Android.

Forward Guidance Wednesday (all times ET)

2 p.m.: Fed releases beige book

Thursday (all times ET)

8:30 a.m.: U.S. GDP second estimate for first quarter

8:30 a.m.: U.S. advance economic indicators for April

Research Goldman Sachs Economists Tweak Rate Cut Predictions

Goldman Sachs is moving its forecast for the Fed's first rate cut back one meeting, from July to September. The economists note that recent comments from Fed officials suggested a July cut would likely require not just better inflation numbers but also meaningful signs of softness in the activity or labor market data, "but after the stronger May PMIs and lower jobless claims, this does not look like the most likely outcome," the economists say. They add that they continue to expect one cut per quarter or every other meeting - meaning the second cut would now come in December. The shift in timing does not change Goldman's expectation of two cuts in total in 2024. - Patrick Sheridan

Basis Points New orders for durable goods in April increased 0.7%, following a revised 0.8% rise in March. Economists polled by The Wall Street Journal were expecting a 1% decrease in the April reading. Excluding transportation, new orders increased 0.4% last month, and excluding defense, new orders were virtually unchanged. The stronger-than-expected performance of durable goods in April comes after price pressures were reignited by purchasing managers index data Thursday suggesting U.S. economic activity was growing at its fastest clip in more than two years. - Patrick Sheridan The U.S. House of Representatives Agriculture Committee passed its version of a farm spending bill last week, but the legislation still has a long way to go before becoming law. Zippy Duvall of the American Farm Bureau Federation said in a statement following the passage, "We applaud the bipartisan vote after 13 hours of rigorous debate, but know that tight margins in both chambers and a crowded congressional calendar will present challenges in the next legislative steps." The bill isn't expected to hit the House floor until September. - Kirk Maltais Annual U.K. shop-price inflation eased further in May for the 13th consecutive month, helped by slowing food inflation, according to a report published Tuesday. Price inflation at U.K. stores eased to 0.6% on year in May from 0.8% in April, below the three-month average rate of 0.9%, the report by NielsenIQ and the British Retail Consortium showed. This is the lowest level since November 2021. - Michael Susin Australian retail sales remained weak in April , highlighting the plight of consumers in the face of elevated interest rates and rising costs, while signaling a sluggish economy for some time yet. Retail turnover rose 0.1% in April, the Australian Bureau of Statistics said Tuesday. Economists had expected a rise of 0.3% for the month. - James Glynn The Reserve Bank of New Zealand has confirmed it will apply new restrictions on mortgage lending in a bid to reduce potential financial instability risks stemming from high household debt and rising home prices. The debt-to-income settings, which will apply from July 1, will allow banks to lend up to 20% of residential loans to owner occupiers with DTI ratios of over six and to investors with a DTI ratio of over seven, the central bank said on Tuesday. - 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 V icky Ge Huang in New York. Send your tips, suggestions and feedback to v icky.huang@wsj.com[].

This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

05-28-24 0715ET