Senate Wrangles Over Trump’s ‘one Big Beautiful Bill’ to Continue

Source: Reuters

World stocks have roared back to record high

Dollar is down more than 10% this year

S&P 500 and Nasdaq have seen big falls whereas Chinese and European shares have soared this year

Source: Reuters

The European Central Bank unveiled tweaks to how it uses monetary policy to steer the economy, reflecting on the recent spike in inflation and anticipating that such shocks are likely to occur more often in the future.

Under the updated strategy, published Monday as officials gather for their annual retreat in Sintra, Portugal, the ECB:

• Confirms its symmetric 2% inflation target over the medium term.
• Will use an appropriately forceful or persistent policy response to large, sustained deviations of inflation from the target in either direction.
• Will keep all tools in its toolkit, with their choice, design and implementation to enable an agile response to new shocks.
• Their use at any time will continue to be subject to a comprehensive proportionality assessment.
• Sees structural shifts like geopolitical and economic fragmentation, and the increasing use of artificial intelligence, making the inflation environment more uncertain.
• Will take into account risks and uncertainty in the outlook for inflation and the economy, including through the appropriate use of scenarios and sensitivity analyses.

“This assessment was a valuable opportunity to challenge our thinking, check our policy toolkit and fine-tune our strategy,” President Christine Lagarde said in a statement. “It provides us with an even stronger basis to conduct monetary policy and fulfil our mandate of price stability in an increasingly uncertain environment.”

The exercise — kicked off last summer — focused on poring over the results of the central bank’s last review, which ended four years ago. It sought to draw lessons from the unprecedented surge of inflation in 2021 and 2022, which caught the ECB off guard and sparked criticism that officials acted too late in raising interest rates.

The 2021 review – the first in almost two decades – was shaped by the pre-Covid experience of very low consumer-price growth and was quickly put to the test with inflation peaking at a double-digit record, following the pandemic and the war in Ukraine. The ECB started hiking rates in July 2022, when consumer prices were already rising in excess of 8%.

At the same time, the ECB aims to equip itself better for an environment that looks set to serve up more frequent and disruptive economic shocks due to factors such as de-globalisation, decarbonisation and demography. US President Donald Trump’s erratic policies, in particular on trade, served as a reminder of how quickly the outlook can change.

In the US, the Federal Reserve is also re-evaluating how it sets and communicates monetary policy amid criticism that its 2020 framework of “flexible average inflation targeting” contributed to underestimating the severity of the following inflation burst and the slowness in raising rates.

The ECB said the next assessment of its strategy is likely to take place in 2030.

Source: Theedgemarkets

source : cnbc

U.S. stocks are adding to their records on Monday as Wall Street nears the finish of a second straight winning month.

The S&P 500 was 0.2% higher in early trading, its first trading after completing its stunning rebound from a springtime sell-off of roughly 20%. The Dow Jones Industrial Average was up 142 points, or 0.3%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.2% higher.

Stocks got a boost after Canada said it’s rescinding a planned tax on U.S. technology firms and resuming talks on trade with the United States. On Friday, U.S. President Donald Trump had said he was suspending talks with Canada because of his anger with the tax, which he called “a direct and blatant attack on our country.”

One of the main reasons U.S. stocks came back so quickly from its springtime swoon has been hope that Trump will reach deals with other countries to lower his stiff proposed tariffs. Otherwise, the fear is that the trade wars could stifle the economy and send inflation higher.

The United States is charging a 10% baseline tax on all imported goods, along with higher rates for Chinese goods and other import taxes on steel and autos. But many of Trump’s additional, announced tariffs are currently on pause. They’re scheduled to kick back into effect in a little more than a week.

In an interview with Fox News Channel’s “Sunday Morning Futures,” Trump said his administration will notify countries that the trade penalties will take effect unless there are deals with the United States. Letters will start going out “pretty soon” before the approaching deadline, he said.

On Wall Street, GMS’ stock jumped 11.3% after the supplier of specialty building products said it agreed to sell itself to a Home Depot subsidiary in a deal that would pay $110.00 per share in cash. That would give it a total value of roughly $5.5 billion, including debt.

Less than two weeks ago, another company, QXO, said it was offering to buy GMS for $95.20 per share in cash. After the announcement of the Home Depot bid, QXO’s stock rose 2%, and Home Depot’s stock was flat.

Hewlett Packard Enterprise rallied 12% and Juniper Networks climbed 8.4% after saying they had reached an agreement with the U.S. Department of Justice that could clear the way for their merger go through, subject to court approval. HPE is trying to buy Juniper in a $14 billion deal.

In the bond market, Treasury yields were easing a bit ahead of some major economic reports later in the week. The highlight will be Thursday’s jobs report. It’s often the most anticipated economic data of each month, and it will come a day earlier than usual this upcoming month because of the Fourth of July holiday.

The job market has remained relatively steady recently, even in the face of tariffs, but hiring has slowed. Economists expect Thursday’s data to show another slowdown in overall hiring, down to 115,000 jobs in June from 139,000 in May.

Such data has kept the Federal Reserve on hold this year when it comes to interest rates. Fed Chair Jerome Powell has said repeatedly that it’s waiting for more data to show how tariffs will affect the economy and inflation before resuming its cuts to interest rates. That’s because lower rates can fan inflation higher, along with giving the economy a boost.

Trump, meanwhile, has been pushing for more cuts to rates and for them to happen soon. Two of his appointees to the Fed have said recently they could consider cutting rates as soon as the Fed’s next meeting in less than a month.

The yield on the 10-year Treasury eased to 4.26% from 4.29% late Friday.

In stock markets abroad, indexes dipped modestly in Europe following a more mixed finish in Asia.

Stocks fell 0.9% in Hong Kong but rose 0.6% in Shanghai after China reported its factory activity improved slightly in June after Beijing and Washington agreed in May to postpone imposing higher tariffs on each others’ exports, though manufacturing remained in contraction.

Source: BNN BIoomberg

source : kitco