6 June 2019 FT — Articles to Read

6 June 2019


Question: What are prisoners paid in prison?


US-China tariff war will knock 0.5% off global growth, says IMF – Pg. 1

–          …the IMF sees a 0.5% hit to growth – or about $455bn…

–          …private sector in the US had added the fewest jobs in more than nine years, with employers outside the agricultural sector adding just 27,000 positions last month, badly missing expectations

–          …Wall Street rallied for a second day on expectations that the bad news would force the Federal Reserve to cut rates two or three times this year to keep the economy on track

–          Federal funds futures data suggest the odds of at least three quarter-point reductions in the Fed’s benchmark rate this year were at about 63% yesterday, from 53% a day earlier.  Just a month ago, the implied probability of such a scenario was, in effect, nil


Activity in the Eurozone holds up but retail sales fall – Pg. 2

–          …the measure of overall economic activity has remained below 52 throughout this year, compared with its average of 54.6 average last yeaer

–          Oxford Economics forecasts a 0.3% expansion in the second quarter, for the region…


Australian growth hit as shoppers hold back – Pg. 3

–          Australia’s economy is growing at its slowest pace in almost a decade as consumers rein in spending, raising concerns over how long the country can sustain its record run of almost 28 years without recession

–          …growth in household consumption – which makes up almost 60% of the economy – dropped to 1.8% in the year to March, down from 2% three months earlier

–          The economy grew 1.8% over the same period, down from 2.3% – a very weak performance for a country with one of the developed world’s highest rates of population growth

–          “Falling house prices are also having a ‘wealth effect’, whereby households are reluctant to spend on big-ticket items as the value of their main asset falls

–          House prices in Sydney and Melbourne have fallen 12% in the year to the end of May.  This marks the end of a five-year expansion in which prices in Sydney rose 70% and the household debt-to-income ratio increased to above 200% – the fourth highest in the OECD group of mostly wealth nations

–          The need to boost wages – growing at historically low levels of 2.3% – and household disposable income to address stubbornly low inflation prompted the Reserve Bank of Australia to cut interest rates to a record low of 1.25% this week, …said further rate cuts were likely but insisted the outlook had not deteriorated and economic growth would pick up this year


Fears rise of China banks collapse – Pg. 11

–          A $647bn blind spot in financial reporting by Chinese regional banks has fueled investor concerns that more of the country’s lenders face collapse or government bailouts such as the state takeover of Baoshang Bank


BoE calls ‘last orders’ for Libor and urges banks to adopt alternatives – Pg. 19

–          …sticking to the plan that the rate will be retired at the end of 2021

–          …it was now “last orders” for the interest rate and that banks must stop adding to their post-2021 Libor exposures

–          Regulators have demanded that banks stop using the Libor benchmark enmeshed in bonds, loans, mortgages and derivatives by 2022 as they seek to put the rate-rigging scandals behind them

–          Alternative interest rate benchmarks, such as Sonia in the UK, are calculated based on actual transactions rather than banks’ submissions and se are trickier to meddle with


Answer: $0.86 to $3.45/hour