Daily Outlook: US consumer prices soared again in June, aggravate inflationary pressures

US consumer prices soared again in June, surpassing all economists’ expectations:

In June, US consumer prices recorded the largest increase since 2008, surpassing the expectations of all economists surveyed, indicating that rising costs caused by the economic restart continue to aggravate inflationary pressures. According to data released by the US Department of Labor on Tuesday, the consumer price index jumped 0.9% month-on-month in June and 5.4% year-on-year. Excluding the volatile food and energy components, the so-called core CPI rose 0.9% month-on-month, and the year-on-year increase reached 4.5%, the largest increase since November 1991.

President of the Federal Reserve Bank of San Francisco: Rising inflation is only a temporary phenomenon, and debt reduction may start at the end of the year:

Mary Daly, President of the Federal Reserve Bank of San Francisco, believes that the largest increase in CPI since 2008 is likely to be a temporary impact of the rapid economic recovery from the epidemic crisis. Daly said that she is “optimistic” about the performance of the economy entering the fall, and believes that it is appropriate for the Fed to start discussing reducing the scale of monthly asset purchases. The start of the reduction may occur at the end of this year or early next year.

Fed Barkin: rising wages are increasing inflationary pressures:

Richmond Federal Reserve Bank President Thomas Barkin said that rising wages for low-income workers in the United States are exacerbating inflationary pressures. He also added that by September, it should be clearer whether these changes will last longer.

The White House is reported to have issued a warning to US companies that operating risks in Hong Kong have increased:

As Washington seeks to increase pressure on China on the Hong Kong issue, according to three people familiar with the matter, the United States will issue a warning to US companies this week of rising risks in operating in Hong Kong. Two of the people familiar with the matter confirmed that the warning risk would include the Chinese government’s ability to obtain data stored by foreign companies in Hong Kong. The British “Financial Times” first reported the matter. People familiar with the matter also said that this warning will be issued in the form of a “business consulting” announcement.

Goldman Sachs’ investment banking revenue surged in the second quarter, helping to offset the decline in its trading business:

Goldman Sachs Group’s investment bankers matched mergers and acquisitions at an alarming rate in the second quarter, alleviating the impact of the slowdown in financial market transactions after the epidemic, and helping to push the bank’s earnings to exceed analyst expectations. M&A advisory revenue surged 83%, driving Goldman Sachs’ investment banking division to achieve 36% revenue growth in the second quarter, exceeding analyst expectations. The business also helped offset the drag on financial market trading activity from the crazy speed of a year ago.

The International Energy Agency warned that unless OPEC+ increases supply, the oil market will become tight:

The International Energy Agency (IEA) warned that unless the OPEC+ alliance resolves the deadlock and agrees to increase production, the global oil market will “significantly tighten.” Due to the stalemate between Saudi Arabia and the UAE, OPEC+ is expected to maintain its production level next month, even if it emerges from the pandemic and peaks in summer driving demand, leading to a rebound in fuel demand. In its monthly report, the IEA stated that the organization’s deadlock may cause “increase in supply shortages” and “high fuel prices may trigger inflation and undermine the fragile economic recovery”.

Iran’s nuclear negotiations are expected to resume after the new Iranian president takes office in August:

Nuclear negotiations between world powers and Iran may not resume until the new Iranian president takes office in August, which means that the possibility of resuming the agreement reached on Wednesday six years ago and opening Iran’s oil exports is slim. Two people familiar with the matter who requested anonymity due to diplomatic rules said that the seventh round of the Vienna negotiations is expected to be held in mid-August. Another European diplomatic attaché who asked not to be named also said that Iran is expected to wait until Ibrahim Leahy is sworn in as president early next month before resuming negotiations.

US Secretary of Commerce: US chip production is insufficient or threatens national security:

US Secretary of Commerce Gina Raimondo said, “If we don’t start producing more semiconductors in the United States, there will be national security risks, and obviously there are economic risks.” The Biden administration proposed to provide $52 billion in research and development funding for semiconductors, a move that was supported by both parties in Congress. Raimondo said at a summit hosted by the National Artificial Intelligence Committee, “If it is what keeps me awake at night, it is the possibility that the bill has not been passed in Congress, or that it has not been passed fast enough.”