US ECONOMY & POLITICS

Bipartisan Infrastructure Bill Could Lose Gas-Tax Rise, Senator Says – Wall Street Journal, 6/21/2021

• A proposed infrastructure spending plan may be hammered out without a measure raising the gasoline tax, a key Republican lawmaker said Sunday, suggesting the removal of an obstacle to a nearly $1 trillion infrastructure plan pushed by a bipartisan group of lawmakers.
• Sen. Rob Portman (R., Ohio), one of the lead Republicans in the group, said a higher gasoline tax may not be in the final package, citing opposition from the Biden administration.
• According to a draft version of the plan, $579 billion of the money would represent new funding above expected baseline levels.
• Continued over eight years, the plan would dedicate $1.2 trillion to roads and bridges, broadband and water projects, among other forms of infrastructure.
• During a previous round of negotiations with a group of Senate Republicans, Mr. Biden said he wanted to see at least $1 trillion in spending above baseline levels, still well above the $579 billion in new spending the bipartisan group is discussing.

Fed officials: Faster bond taper could keep options open on rate hike – Reuters, 6/21/2021

• Two regional Federal Reserve officials said Monday that a faster withdrawal from the central bank’s bond purchase program could give it more leeway in deciding when to raise interest rates.
• The discussion of how fast to end the Fed’s $120 billion monthly bond purchase program is only just beginning, but should keep in mind how it affects the debate that will follow it over interest rates.
• “Creating optionality for the committee will be really useful and that will be part of the taper debate as we think about how much signaling we are doing about future rate policy,” St. Louis Fed president James Bullard said.
• Dallas Federal Reserve president Robert Kaplan noted the central bank’s new strategic framework does not mention bond purchases, and “moderating that sooner than later” might give the Fed more flexibility over the rate discussion.

EUROPE & WORLD

Iran’s New Hard-Line President Poised for Pivotal Role in Nuclear Talks – Wall Street Journal, 6/21/2021

• When Iranian diplomats resume talks with Western officials to revive a battered nuclear deal, one name will stand out on the list of individuals Tehran wants removed from the U.S. sanctions list: Ebrahim Raisi, Iran’s president-elect.
• The 60-year-old hard-line judge, who won Friday’s presidential election in Iran, was sanctioned two years ago by the Trump administration for his close ties to Iranian Supreme Leader Ali Khamenei. As Iran’s president-elect, Mr. Raisi has emerged in a pivotal role that could determine the fate of the 2015 multination accord.
• Mr. Raisi, as a high-ranking judiciary official, is accused of overseeing violent crackdowns on protesters in 2009 and 2019 and the arrests of activists, lawyers and journalists. Mr. Raisi hasn’t commented publicly on the allegations.
• Mr. Raisi’s political ascent has alarmed Iran’s regional adversary Israel, a close U.S. ally. Israeli Prime Minister Naftali Bennett during his new government’s first cabinet meeting Sunday said the election of Mr. Raisi should serve as “a signal for the global powers to wake up” before returning to the Iran nuclear agreement.
• “What is clear to all of us is that a regime of hangmen must not possess weapons of mass destruction,” Mr. Bennett said.

Germany Raises Net Borrowing Next Year to 99.7 Billion Euros – Bloomberg, 6/21/2021

• German Finance Minister Olaf Scholz is targeting 99.7 billion euros ($114 billion) in additional borrowing next year to bolster the country’s recovery from the coronavirus pandemic.
• The projected new debt represents a 22% increase from the 81.5 billion euros foreseen in an earlier federal budget plan, according to two senior government officials, who asked not to be identified in line with protocol.
• The borrowing would take the total for this year and next to more than 340 billion euros.
• The officials said that Germany plans to invest around 51 billion euros a year through 2025. They noted that there was a potential budget gap of 6.2 billion euros in 2025.

Chinese Junk Bonds Flash Warning Signs – Wall Street Journal, 6/21/2021

• Yields on Chinese junk bonds have jumped to levels last hit during the tail end of last year’s market turbulence, signaling growing investor concern about defaults.
• Last week, the yield on an ICE BofA index of Chinese junk bonds in dollars topped 10% for the first time since May 2020.
• It closed Friday at 9.93%.
• In contrast, the equivalent index for global sub-investment grade debt ended the week at 4.57%. That was only 0.04 percentage point off a trough hit three days earlier, which was the lowest yield in a data set that goes back to 1997. Bond yields move inversely to prices.
• The divergence means that Chinese junk bonds yield 5.36 percentage points over the global index. Apart from a brief period in March 2020, this spread, or gap, hasn’t been above that level since early 2012, ICE BofA data shows.

Tokyo Olympics to Allow Spectators at Summer Games – Wall Street Journal, 6/21/2021

• The Summer Olympics in Tokyo will include up to 10,000 Japanese spectators at each event, organizers said, despite advice by leading doctors that the Games would be safer without crowds.
• Monday’s decision clears up the final major uncertainty about the Games ahead of the opening ceremony on July 23.
• Officials said in March that foreign spectators wouldn’t be permitted to travel to Japan to attend the Olympics.
• Guidelines released by the International Olympic Committee and Tokyo organizers said venues could be filled up to 50% capacity, with a maximum of 10,000 spectators at each event.
• Plans could change if infections in Japan rise sharply, they said.

Hong Kong’s Apple Daily Considers Closing Unless Government Releases Funds – Wall Street Journal, 6/21/2021

• The publisher of the popular pro-democracy Apple Daily newspaper said it may cease publishing after authorities froze its assets and charged senior executives including its top editor under the national-security law.
• Its closure would herald the biggest blow to press freedom in the city since Beijing imposed a national-security law in June 2020 to crush dissent in the Chinese territory. Apple Daily and its jailed founder, Jimmy Lai, have been frequent targets for the city’s authorities.
• Board members of Next Digital, the newspaper’s publisher, met on Monday and set a Friday deadline to decide whether to close down operations, Apple Daily reported.
• The board voted to request that the government release portions of its assets so that it can pay its employees.

Europe’s Wizz Air expects to fully recover from pandemic next year – Reuters, 6/21/2021

• European budget carrier Wizz Air expects to fully recover from the coronavirus crisis as travel demand rebounds from the pandemic, its chief executive said on Monday.
• Speaking at the virtual Paris Air Forum, Jozsef Varadi repeated recent comments that the Hungary-based airline would fly more seats this summer than it was flying two years ago before the pandemic struck.
• “From my perspective, 2022 should be a fairly robust year in terms of delivering not just the volume of traffic but also the financial performance attached to it,” he said.
• Speaking alongside Varadi, Air France-KLM CEO Ben Smith said he had been pleasantly surprised at the demand among travelers visiting friends and family.
• “We are hoping to run about 60-65% of capacity this summer.”

Factmonster – TODAY in HISTORY

• The U.S. Constitution went into effect when New Hampshire became the 9th state to ratify it. (1788)
• John Hinckley was found not guilty by reason of insanity for the attempted murder of President Ronald Reagan. (1982)
• The U.S. Supreme Court decided that burning the U.S. flag was protected under the First Amendment. (1989)
• The WNBA made its debut. (1997)