US ECONOMY & POLITICS

U.S. Inflation Is Highest in 13 Years as Prices Surge 5%  – Wall Street Journal, 6/10/2021

• U.S. consumer prices continued to climb strongly in May, surging 5% from a year ago to reach the highest annual inflation rate in nearly 13 years.
• The Labor Department said May’s increase in consumer inflation was the largest since August 2008.
• The jump followed a 4.2% rise for the year ended in April.
• The core-price index, which excludes the often-volatile categories of food and energy, rose 3.8% in May from a year before—the largest increase for that reading since June 1992.
• On a month-to-month basis, overall prices rose a seasonally adjusted 0.6% and core prices rose 0.7%.
• Prices for used cars and trucks leapt 7.3% from the previous month, driving one-third of the rise in the overall index.
• The indexes for furniture, airline fares and apparel also rose sharply in May.

U.S. Jobless Claims Fall to Another Pandemic Low – Wall Street Journal, 6/10/2021

• Jobless claims declined to a pandemic low last week, a sign companies are hesitant to lay off employees as the U.S. economy quickly recovers.
• Unemployment claims fell to 376,000 last week from 385,000 a week earlier, the Labor Department said Thursday, bringing claims to the lowest level since the pandemic hit last spring.
• In the week ended May 22, 15.3 million Americans received unemployment benefits through regular state aid and federal emergency programs put in place in response to the pandemic.
• Half of U.S. states plan to end participation in federal supplemental unemployment benefits before the program expires in early September.
• Four of those states end participation this week, accounting for 470,000 of the 3.8 million people who will lose benefits early, according to forecasting firm Oxford Economics.

New Talks on Infrastructure Face Old Problem: How to Pay for It – Wall Street Journal, 6/10/2021

• The focus of infrastructure talks shifted Wednesday to a bipartisan group of senators after an initial round of White House discussions broke down, but negotiators face the same hurdles on how to pay for any major new spending package.
• Discussions intensified among a group of centrist-leaning Senate Republicans and Democrats trying to strike a deal that could spend up to $900 billion over five years, according to people familiar with the talks.
• Sen. Mitt Romney (R., Utah), who is part of the GOP wing of the bipartisan group, said there were eight or nine Republican senators involved in developing the new proposal, which he said wouldn’t include any tax increases.
• So far the bipartisan group has declined to specify how it would pay for an infrastructure proposal.
• Senate Majority Leader Chuck Schumer (D., N.Y.) indicated on Tuesday that Democrats were preparing to move forward with at least part of an infrastructure package through a process tied to the budget that would allow legislation to pass with just Democratic support.
• But some Democrats, most prominently Sen. Joe Manchin (D., W.Va.), have said they don’t want to push through legislation on party lines, at least not until all efforts at reaching a bipartisan deal have been exhausted.

Biden’s China Policy Is Emerging—and It Looks a Lot Like Trump’s – Wall Street Journal, 6/10/2021

• President Biden’s policy toward China came into sharper focus over the past week, with initiatives that suggest the president plans to retain his predecessor’s tough stance toward Beijing, despite differences in execution.
• Administration officials acknowledge that, overall, the recent steps build on actions taken by Mr. Trump. In the case of the investment blacklist and the orders affecting TikTok and other apps, they say, the Biden White House is aiming to make the measures more enforceable.
• The White House sees its China policy as resting on three pillars: strengthening the U.S. economy and democracy, rebuilding ties with allies that frayed under Mr. Trump, and defining areas of confrontation and cooperation with China.
• The third is a work in progress, the senior official said, adding that it has “taken the most time to develop.”
• Still, the administration has started to define those areas—and one is Taiwan.

U.S. Stresses Taiwan Trade-Relationship Priority in First Talks – Bloomberg, 6/10/2021

• The U.S. and Taiwan’s trade chiefs held discussions Thursday, with U.S. Trade Representative Katherine Tai emphasizing the importance of Washington’s trade and investment relationship with Taipei.
• In the virtual meeting with her Taiwanese counterpart, John Deng, Tai expressed the U.S.’s interest in working together on issues of common concern in multilateral organizations, the Office of the U.S. Trade Representative said in an emailed statement.
• Taiwan’s easing limits on imports of U.S. meat containing an additive showed the government’s determination to promote globalization and deepen bilateral economic and trade ties with the U.S., Taiwan’s Office of Trade Negotiations said in a statement.
• China opposes any official contact between the U.S. and Taiwan, which it regards as part of its territory.
• Any negotiations or discussions will inevitably be linked with U.S.-China relations, and could increase the tensions between the two.

Biden, Johnson to Meet Ahead of G-7 Summit in U.S.-U.K. Relations Test – Wall Street Journal, 6/10/2021

• President Biden and British Prime Minister Boris Johnson will meet in person for the first time Thursday, in a test of U.S.-U.K. relations amid the coronavirus pandemic, Brexit and growing tensions over Northern Ireland.
• The two leaders are expected to announce a wide-ranging “Atlantic Charter” aimed at solidifying trans-Atlantic relations.
• The charter, a riff on the joint statement made by then-Prime Minister Winston Churchill and President Franklin D. Roosevelt in 1941 when they set out their post-World War II vision, will focus on pandemic recovery, climate change, trade and security.
• The countries have also set up a task force aimed at reopening U.K.-U.S. travel, though the exact timeline for doing so hasn’t been established.
• Northern Ireland is likely to be at the top of this week’s agenda, amid a dispute between the U.K. and the European Union over a complex arrangement to manage trade and preserve peace there after Brexit.

EUROPE & WORLD

ECB Set to Fall Behind Fed in Phasing Out Stimulus – Wall Street Journal, 6/10/2021

• The European Central Bank said it would keep its aggressive monetary stimulus in place despite mounting evidence of a vigorous economic recovery and rising inflation in the eurozone as the Covid-19 pandemic recedes.
• The ECB said in a statement that it would keep its key interest rate at minus 0.5% and continue to buy eurozone debt under an emergency €1.85 trillion bond-buying program, equivalent to $2.2 trillion, through at least March 2022.
• It said it would buy those bonds at a “significantly higher pace” than during the first months of this year, repeating a pledge made in March.
• Whereas some Fed officials say they are getting ready to think about paring central bank stimulus ahead of a policy meeting on June 15-16, ECB policy makers have signaled recently that they aren’t yet ready to follow suit.

Accelerating Oil Demand Will Shrink Global Glut, OPEC Says – Wall Street Journal, 6/10/2021

• The rebound in global oil demand is set to accelerate in the second half of 2021 as the world continues to burn through the supply glut it accrued last year, the Organization of the Petroleum Exporting Countries said Thursday.
• In its monthly market report, OPEC highlighted data showing that the crude inventories of the world’s developed countries had slipped to around 34 million barrels above the average level for 2015-19.
• Rising consumption of transportation fuels like gasoline mean oil demand will increase to 99 million barrels a day in the second half of 2021, a 5% increase on its level in the first six months of the year, OPEC said.
• Demand in the fourth quarter is expected to be 99.82 million barrels a day, just 150,000 barrels below 2019’s pre-pandemic average.

China Passes Law to Counter Foreign Sanctions – Wall Street Journal, 6/10/2021

• China enacted a new law aimed at countering foreign sanctions, in response to U.S. and European efforts to pressure Beijing on issues spanning human rights, trade and technology.
• Senior members of China’s legislature approved the “anti-foreign-sanctions law” on Thursday, state media said, following an expedited process that skipped public consultation and involved lawmakers reviewing the bill twice instead of the usual three times.
• Chinese academics and state media have described the law as a timely addition to Beijing’s legal tool kit for resisting Western coercion, by establishing mechanisms for retaliating against foreign sanctions and mitigating their impact on Chinese entities and individuals.
• State media said Chinese leader Xi Jinping has signed the law, which takes effect when published. The full text hadn’t been released as of Thursday evening Beijing time.

Japan’s wholesale prices rise at fastest pace in 13 years on commodities surge – Reuters, 6/10/2021

• Japan’s wholesale prices rose at their fastest annual pace in 13 years reflecting higher commodity costs, data showed on Thursday, a sign global inflationary pressures are pinching firms already struggling amid the coronavirus pandemic.
• The corporate goods price index (CGPI), which measures the prices companies charge each other for their goods, rose 4.9% in May from a year earlier, Bank of Japan data showed on Thursday, more than a median market forecast for a 4.5% increase.
• It followed a 3.8% gain in April and was the biggest annual increase since September 2008, when a global spike in food and raw material costs pushed up a range of prices in Japan.
• Core consumer prices – the key benchmark the BOJ looks at in setting monetary policy – fell 0.1% in April from a year, marking the ninth consecutive month of decline.
• With companies seen slow in passing on the higher costs on to households, the uptick in wholesale inflation is unlikely to prod the Bank of Japan into withdrawing its massive stimulus any time soon, analysts say.

Toshiba, Japan Officials Teamed Up Against Foreign Shareholders, Report Finds – Wall Street Journal, 6/10/2021

• Toshiba worked closely with Japanese government officials to block foreign-based shareholders from exercising their rights, using inappropriate threats and language such as “beat them up,” a company-commissioned report found.
• The report harked back to the days when Japan Inc. was a popular term to describe the perceived tight linkage between big business and government in blocking foreign influence in Japan.
• Toshiba management sought to prevent the commissioning of the report, which was written by three Japanese law firms, but shareholders voted in March to go ahead with it.
• The report covered the months leading up to a shareholder vote on July 31, 2020, in which Toshiba’s then-chief executive, Nobuaki Kurumatani, narrowly kept his job and beat back efforts by foreign-based shareholders including Singapore-based Effissimo Capital Management to put their own candidates on the board.

Factmonster – TODAY in HISTORY

• Wagner’s opera, Tristan and Isolde, premiered in Munich. (1865)
• The Six-Day War between Israel and Syria, Egypt, and Jordan ended. (1967)
• Ontario, Canada issued the first full same-sex marriage licenses in North America. (2003)