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Charting Global Economy: US Income Growth Primes Spending Pump – BNN

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(Bloomberg) — U.S. consumer spending, personal income and business investment gathered pace at the start of the year, helped in part by government spending that’s dwarfing the price tag of such support in European countries.

In Japan, excess household savings have the potential of propelling spending once pandemic-related uncertainty begins to lift in earnest.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

U.S.

Personal incomes soared in January as Americans received another round of pandemic-relief checks, helping to re-charge the economy with the strongest spending advance in seven months.

Businesses are also spending. Shipments of non-defense capital goods minus aircraft, a figure used to calculate equipment investment in the government’s gross domestic product report, jumped in January.

Europe

The European Central Bank’s balance sheet has expanded more under 15 months of Christine Lagarde’s presidency than it did during Mario Draghi’s eight-year term.

While the U.S. rushes toward a blockbuster fiscal stimulus package to accelerate its recovery from the coronavirus crisis, much of Europe is pootling along in the slow lane. JPMorgan Chase & Co. estimates the “fiscal thrust” — the boost from discretionary government spending minus the drag of expiring tax breaks and support measures — will add 1.8% to U.S. output this year. For the euro zone, it’ll subtract 0.1%.

Millennial Londoners are leaving the capital for good as Covid-19 changes lifestyles and working patterns. Almost one in four of those age 18-44 surveyed by the Future Strategy Club said that they had permanently moved away due to the pandemic, rising to 30% of 25-34 year olds.

Asia

Japanese households are sitting on an unusually large pile of savings that could fuel spending once uncertainty from the Covid crisis starts to abate.

Emerging Markets

After an epic collapse last year, oil prices have tripled since April, raising inflationary pressures in emerging markets. Some central banks will have to respond, but analysis by Bloomberg Economics finds that most economies will be spared: Still, Brazil and Nigeria could increase borrowing costs to stem the oil-fueled price gains, while India, Mexico and Turkey face a higher likelihood of delayed rate cuts.

Thousands of striking truck drivers in Myanmar protesting the military coup have slowed delivery of imports, trapping cargo containers at ports and prompting at least one international shipping line to halt new orders.

World

After a drop in January amid high infection rates and stricter containment measures, economic activity in major economies has picked up in February, according to Bloomberg Economics gauges that integrate data such as mobility, energy consumption and public transport usage. Still, it remains some way below end-2020 levels in a number of countries.

The Philippines, Thailand, Mexico, Spain and Italy faced the biggest net losses in the world when airports and hotels closed because of the coronavirus, according to calculations by Bloomberg Economics of the world’s largest 40 economies. That means those countries can look forward to the biggest recouped gains when the Covid crisis finally ends.

Government borrowing from markets in the world’s richest economies surged by a record 60% in 2020, with an increasing reliance on short-term funding that intensifies refinancing risks, the Organization for Economic Cooperation and Development said.

©2021 Bloomberg L.P.

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Economy

Canadian dollar moves to extend weekly win streak as oil rebounds

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Canadian dollar

The Canadian dollar strengthened against its U.S. counterpart on Friday and was on track for its seventh straight weekly gain as oil prices rose and domestic data added to evidence of robust economic growth in the first quarter.

Canadian factory sales rose 3.5% in March from February, led by the motor vehicle, petroleum and coal, and food product industries, while wholesale trade was up 2.8%, Statistics Canada said.

The price of oil, one of Canada‘s major exports, reversed some of the previous day’s sharp losses as stock markets strengthened, though gains were capped by the coronavirus situation in major oil consumer India and the restart of a fuel pipeline in the United States.

U.S. crude prices rose 1.2% to $64.61 a barrel, while the Canadian dollar was trading 0.6% higher at 1.2093 to the greenback, or 82.69 U.S. cents, moving back in reach of Wednesday’s 6-year peak at 1.2042.

For the week, the loonie was on track to gain 0.3%. It has climbed more than 5% since the start of the year, the biggest gain among G10 currencies, supported by surging commodity prices and a shift last month to a more hawkish stance by the Bank of Canada.

Still, BoC Governor Tiff Macklem said on Thursday if the currency continues to rise, it could create headwinds for exports and business investment as well as affecting monetary policy.

The U.S. dollar fell against a basket of major currencies, pressured by a recovery in risk appetite across markets after Federal Reserve officials helped calm concerns about a quick policy tightening in response to accelerating U.S. inflation.

Canadian government bond yields were lower across much of a flatter curve, with the 10-year down 2 basis points at 1.549%. On Thursday, it touched its highest intraday in eight weeks at 1.624%.

 

(Reporting by Fergal Smith; Editing by Nick Zieminski)

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Toronto Stock Exchange rises 1.21% to 19,366.69

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Toronto Stock Exchange

* The Toronto Stock Exchange‘s TSX rises 1.21 percent to 19,366.69

* Leading the index were SNC-Lavalin Group Inc <SNC.TO​>, up 16.0%, Village Farms International Inc​, up 9.8%, and Denison Mines Corp​, higher by 9.4%.

* Lagging shares were Aurora Cannabis Inc​​, down 7.2%, Centerra Gold Inc​, down 3.8%, and Canadian National Railway Co​, lower by 3.7%.

* On the TSX 194 issues rose and 35 fell as a 5.5-to-1 ratio favored advancers. There were 25 new highs and no new lows, with total volume of 225.7 million shares.

* The most heavily traded shares by volume were Enbridge Inc, Manulife Financial Corp and Cenovus Energy Inc.

* The TSX’s energy group rose 3.32 points, or 2.7%, while the financials sector climbed 4.80 points, or 1.3%.

* West Texas Intermediate crude futures rose 2.65%, or $1.69, to $65.51 a barrel. Brent crude  rose 2.68%, or $1.8, to $68.85 [O/R]

* The TSX is up 11.1% for the year.

This summary was machine generated May 14 at 21:03 GMT.

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Economy

U.S., Mexico, Canada to hold ‘robust’ talks on trade deal

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The United States, Mexico and Canada will next week hold their first formal talks on their continental trade deal, with particular focus on labor and environmental obligations, the U.S. government said on Friday.

Trade ministers from the three nations are set to meet virtually on Monday and Tuesday to discuss the U.S.-Mexico-Canada (USMCA) deal, which took effect in July 2020.

“The ministers will receive updates about work already underway to advance cooperation … and will hold robust discussions about USMCA’s landmark labor and environmental obligations,” the office of U.S. Trade Representative Katherine Tai said in a statement.

The United States is also reviewing tariffs which may be leading to inflation in the country, economic adviser Cecilia Rouse told reporters at the White House on Friday, a move that could affect hundreds of billions of dollars in trade.

The United States, testing provisions in the new deal aimed at strengthening Mexican unions, this week asked Mexico to investigate alleged abuses at a General Motors Co factory.

(Reporting by David Ljunggren; Editing by Hugh Lawson and Jonathan Oatis)

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