- This weekly wrapper brings you the latest stories from the world of economics and finance.
- Top economy stories: crypto assets shed $800 billion in market value in one month; US inflation higher than expected in April; French economy set to grow just 0.2% this quarter.
1. Top global economy news stories
The 10-year Treasury yield has hit 3% for the first time since 2018. It comes as prices for Treasurys, municipal debt, and corporate bonds have fallen as a result of the Federal Reserve moves to tackle inflation, reports the Wall Street Journal.
The European Central Bank will start raising rates gradually this summer, ECB member and Bank of France head Francois Villeroy de Galhau told France Inter radio on 11 May. It was a sentiment echoed by ECB President Christine Lagarde later the same day.
Emerging market debt and equity portfolios saw foreign investor outflows for a second straight month in April, data from the Institute of International Finance showed on Tuesday, building on record outflows from China in the first quarter.
Federal Reserve Governor Christopher Waller said on Tuesday it is time to 'hit it' on raising interest rates to deal with inflation that is too high and a labour market, with nearly two open jobs for every job seeker, that is 'out of whack'. "It's time to raise rates now when the economy can take it," Waller told the Economic Club of Minnesota. "Front-load it, get it done, and then we can judge how the economy is proceeding later, and if we have to do more, we're going to do more."
Fewer than a fifth of actively managed emerging market equity funds have cut their exposure to Russian stocks to zero, data from Copley Fund Research shows, with a number of funds unable to sell out.
China's producer price index rose 8% from a year earlier in April, compared to 8.3% in March. Consumer price growth rose to 2.1% from 1.5% in March.
New Zealand will fully reopen its borders two months early, from 11:59pm on 31 July, in an effort to kick-start demand for its spring and summer tourist seasons.
The Bank of France has said that the French economy will only grow 0.2% in the second quarter.
2. Crypto assets shed $800 billion in market value in one month
Crypto assets lost nearly $800 billion in market value in the month to 10 May, touching a low of $1.4 trillion on that date, according to data site CoinMarketCap. Reuters reports that the end of easy monetary policy is diminishing appetite for risk assets.
Bitcoin, which makes up nearly 40% of the crypto market, hit a 10-month low earlier on 10 May, before rebounding to $31,450, just six days after touching $40,000. It was more than 54% below its 10 November all-time high of $69,000.
Digital asset prices have slumped, mirroring a plunge in equities on fears of aggressive interest rate hikes across the globe to stave off decades-high inflation. The tech-heavy Nasdaq was down 28% from its November 2021 record high.
Total crypto market value was at $2.2 trillion on 2 April, well off of its all-time peak of $2.9 trillion in early November, according to CoinMarketCap.
"Bitcoin remains highly correlated to the broader economic conditions, which suggest the road ahead may unfortunately be a rocky one, at least for the time being," blockchain data provider Glassnode said in a note.
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3. US inflation higher than forecast in April
US consumer prices rose by more than forecast in April. The core consumer price index, which doesn't include food or energy, rose 0.6% from a month earlier and 6.2% from April 2021. A Bloomberg survey of economists had estimated a median projection of 0.4%.
The wider CPI rose 0.3% from the previous month and 8.3% on a year-on-year basis. This suggests a slight cooling, reports Bloomberg. However, fuel prices remain high, with the latest data showing gasoline is at $4.404 a gallon, with diesel at $5.553.
Bureau of Labor Statistics data suggests that, in major cities, inflation is highest in Phoenix, Atlanta and Miami.
Economics research to read this week
A new World Bank report shows that the war in Ukraine will cause world trade to drop 1%.
IMF research suggests the world is better positioned to deal with oil price shocks than in the 1970s.
How does the productivity of different types of workers vary across countries? A VoxEU column explores.
New research looks at the impact of the pandemic on global trade suggesting "the pandemic broke the old trade patterns".
What is the World Economic Forum doing to ensure that trade benefits people and the planet?
COVID-19 has shocked global markets already strained by trade tensions. With trade and investment undergoing rapid change, businesses and governments need to ensure strategies for open and resilient markets.
The World Economic Forum’s Platform for Shaping the Future of Trade and Investment informs business and policy action towards dynamic, inclusive and sustainable trade and investment – which drives growth and development. It aims to facilitate the flow of goods, services and investments, ensure open and stable commerce, support sustainable and equitable value chains and grow cross-border digital business.
- The Forum has piloted sustainable investment facilitation in Cambodia, Ghana and Kenya to help tackle shortfalls in sustainable foreign direct investment and boost capital for development.
- The Global Alliance for Trade Facilitation is a public-private partnership making cross-border trade simpler, faster and more cost-effective. To date, it has contributed to the implementation of a significant global trade agreement that could reduce trade costs by up to 18% and is delivering 28 trade facilitation projects in 30 countries in Latin America, Africa and Asia.
Contact us for more information on how to get involved.