Global Government Bonds Face Period of Temporary Calm

Global Government Bonds Face Period of Temporary Calm By Vicky Ge Huang

Global governments appear to project a less volatile interest-rate outlook, signaling a temporary period of calm in the bond market. Meanwhile, an annual survey from the Fed shows that Americans, hit by inflation, are feeling worse financially, especially parents. And crypto companies are spending big on this year's elections as they fight for survival amid a regulatory crackdown.

Top News Global Government Bonds Face Period of Temporary Calm

Meaningful rises or falls in global government bond yields look unlikely in the near term as interest rates have peaked but persistent inflation means rate cuts will likely be slow, analysts said.

Money market forwards price in 42 basis points of rate cuts by the Federal Reserve, 65 basis points by the European Central Bank and 55 basis points by the Bank of England for this year, according to Refinitiv.

U.S. Economy Americans, Hit By Inflation, Are Feeling Worse Financially-Especially Parents

The share of U.S. adults who said they were doing OK financially fell last year, underscoring one of the key hurdles to President Biden's re-election hopes .

The Federal Reserve said Tuesday that 72% of respondents to its annual survey of financial well-being said they were "doing at least OK" in 2023. That was down from 73% the prior year and 78% in 2021, when households were flush with cash from pandemic stimulus checks.

How Has Inflation Hit Your Finances? 10 People Get Candid. Financial Regulation The Crypto Industry Is Trying to Elect Political Allies. The Stakes Couldn't Be Higher.

Crypto companies are fighting for survival after a regulatory crackdown. Their latest strategy: spending big on this year's elections .

The industry has amassed a formidable war chest and is working to elect politicians it sees as allies and defeat those who are critical. A trio of super political-action committees has together raised more than $85 million, one of the largest amounts among PACs engaged in the 2024 elections.

Forward Guidance Wednesday (all times ET)

10 a.m.: National Association of Realtors releases U.S. existing-home sales for April.

2 p.m.: Fed releases minutes of April 30-May 1 FOMC meeting.

Thursday (all times ET)

10 a.m.: U.S. new-home sales for April

Research A Trump Presidency Could Prove Positive for European Defense Stocks

A hypothetical Donald Trump victory in the U.S. presidential elections later this year raises the probability that Washington will scale back or stop military aid to Ukraine, putting pressure on Europe to compensate for the shortfall, Berenberg analysts write in a research note. "A Trump presidency would likely be positive for European defense stocks," they say, since it could lead to a significant acceleration in European defense spending. The U.S. has committed some EUR91 billion in military support to Ukraine, more than the roughly EUR74 billion committed by Europe, the analysts note. - Mauro Orru

Basis Points Canada's 1Q GDP report at month's end relative to potential growth looks set to influence the timing of the country's first interest rate cut, marking the last major indicator before the June 5 policy meeting, says S&P Global Market Intelligence director of Canadian economics Arlene Kish. Kish, who sees a 50% chance of a cut in June, notes April was the second month running where core inflation was within the bounds of the Bank of Canada's 1%-3% target range and the first when all the bank's preferred core measures were below 3%. Yet while there was some relief as food inflation cools, housing-related pressure persists, keeping services inflation at high levels relative to goods inflation, Kish says. - Robb Stewart The market reaction to U.K. inflation data on Wednesday could be restricted to limited initial knee-jerk moves, as the next batch of inflation data on June 19 will be more important, coming a day before the Bank of England's rate decision, Vantage market analyst Jamie Dutta says in a note. Markets will also focus on two labor-market reports due ahead of the BOE's June decision, he says. U.K. annual headline inflation is expected to drop to 2.1% in April, from 3.2% in March, according to the consensus in a WSJ poll, pushed lower by a drop in households' energy-bill cap, bringing it closer to the BOE's 2% target. Services inflation could remain elevated, however, Dutta says. - Miriam Mukuru Indonesia's central bank stood pat at its May policy meeting , as widely expected as it keeps an eye on rupiah stability and inflation against a backdrop of macroeconomic challenges. - Kimberley Kao The U.K.'s inflation rate neared the Bank of England's 2% target in April , opening the way for a rate cut in the coming months, although prices of services continued to rise at a pace that will concern policymakers. - Ed Frankl Japan's 10-year government bond yield climbed to 1.0% for the first time in 11 years , propelled by growing expectations that the country's central bank may take further tightening steps in the coming months. - Kosaku Narioka Japan's exports rose for a fifth consecutive month in April, driven by cars and chip-making equipment, but missed expectations amid softer demand in some major trading partners, including China. - Yang Jie and Fabiana Negrin Ochoa The Reserve Bank of New Zealand signaled that interest rates might need to remain restrictive for longer than expected due to stubborn inflation, delivering a hawkish shock to money markets. - 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 Vicky Ge Huang in New York. Send your tips, suggestions and feedback to [e-mail][].

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

(END) Dow Jones Newswires

05-22-24 0718ET