Economy

Charting the Global Economy: Commodities Fuel Yet More Inflation – BNN

Published

3 years ago

March 5, 2022

(Bloomberg) — Russia’s invasion of Ukraine has sparked a feverish run-up in the prices of just about every commodity — from oil to grains to metals — that will inflict even more financial pain on consumers already struggling with rampant inflation.

Global food prices hit a record last month and consumer price indexes across major economies are on the rise. That’s bad news for households everywhere as wage growth largely lags inflation, underscored by the latest U.S. hourly earnings figures that missed all estimates.

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

World

The Bloomberg Commodity Spot Index rallied more than 9% this week as Russia’s invasion of Ukraine roiled markets, with foodstuffs soaring, metals setting records, and oil in the throes of the biggest crisis for decades.

Supply chains that rattled the global economy through the pandemic are unleashing another shock as efforts to choke off trade with Russia strain resources ranging from fertilizer needed for crops and palladium for car-making, to oil that’s used to produce almost everything.

U.S. President Joe Biden is taking on the concentrated market power of ocean shipping companies, although officials at the agency overseeing the industry indicated they lack both the jurisdiction and, for now, any evidence of wrongdoing. The Federal Maritime Commission will join with the Department of Justice in a new initiative announced Feb. 28, to push for competition in ocean freight transportation.

Importers from London to Warsaw will soon face higher shipping costs, longer delays and an obstacle course of sanctions to navigate as Russia’s widening assault on Ukraine complicates the movement of cargo between Europe and Asia.

Global food prices jumped to a record last month, just as Russia’s invasion of Ukraine started causing chaos in crop trade that’ll likely get worse.

U.S.

U.S. hiring boomed in February while wage growth slowed, showing a robust labor market that likely keeps the Federal Reserve on track to raise interest rates this month and offering some respite from strong inflationary pressures.

The hottest inflation in four decades has prompted some employers to open the spigot on pay, but plenty still won’t budge — leaving workers in the lurch with a pay cut. Nearly 1 in 4 executives said they’re not making any changes to pay in response to inflation, according to a poll by Gartner Inc., an increase from the 18% who said so in December.

Europe

The Bank of Russia raised its key interest rate to 20% — the highest in almost two decades — in a bid to shield the economy from the impact of sweeping Western sanctions that include penalties on the regulator itself. Belarus and Hungary also hiked, while Ukraine delayed its rate decision, which was scheduled for Thursday.

Euro-zone inflation quickened to an all-time high, outstripping expectations as Russia’s invasion of Ukraine threatens to send energy costs soaring at an even faster pace. Consumer prices jumped 5.8% from a year ago in February, up from 5.1% the previous month and more than forecast.

Asia

Washington is expected to lean on major Chinese companies to join U.S.-led sanctions against Russia, aiming to cripple the country’s ability to buy key technologies and components. China is Russia’s biggest supplier of electronics, accounting for a third of its semiconductor imports and more than half of its computers and smartphones.

Japan’s factory output fell for a second straight month in January as supply shortages continued to hurt manufacturers, adding to concern that the economy could shrink this quarter as omicron restrictions weigh on activity and the Russian invasion of Ukraine clouds the outlook.

Emerging Markets

What can the world’s biggest buyer of wheat do when supplies from mainstay providers Russia and Ukraine are choked by war? For Egypt, it could mean pressing ahead on a delicate venture: raising the price of subsidized loaves for the first time in four decades.

Brazil’s economy exited recession at the end of 2021, lifted by higher raw material prices and services that provided some relief to a country afflicted by soaring inflation and interest rates going into an election year.

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Economy

Liberals announce expansion to mortgage eligibility, draft rights for renters, buyers

Published

5 hours ago

September 16, 2024

Anne Joseph

OTTAWA – Finance Minister Chrystia Freeland says the government is making some changes to mortgage rules to help more Canadians to purchase their first home.

She says the changes will come into force in December and better reflect the housing market.

The price cap for insured mortgages will be boosted for the first time since 2012, moving to $1.5 million from $1 million, to allow more people to qualify for a mortgage with less than a 20 per cent down payment.

The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.

On Aug. 1 eligibility for the 30-year amortization was changed to include first-time buyers purchasing a newly-built home.

Justice Minister Arif Virani is also releasing drafts for a bill of rights for renters as well as one for homebuyers, both of which the government promised five months ago.

Virani says the government intends to work with provinces to prevent practices like renovictions, where landowners evict tenants and make minimal renovations and then seek higher rents.

The government touts today’s announced measures as the “boldest mortgage reforms in decades,” and it comes after a year of criticism over high housing costs.

The Liberals have been slumping in the polls for months, including among younger adults who say not being able to afford a house is one of their key concerns.

This report by The Canadian Press was first published Sept. 16, 2024.

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Economy

Statistics Canada says manufacturing sales up 1.4% in July at $71B

Published

6 hours ago

September 16, 2024

Anne Joseph

OTTAWA – Statistics Canada says manufacturing sales rose 1.4 per cent to $71 billion in July, helped by higher sales in the petroleum and coal and chemical product subsectors.

The increase followed a 1.7 per cent decrease in June.

The agency says sales in the petroleum and coal product subsector gained 6.7 per cent to total $8.6 billion in July as most refineries sold more, helped by higher prices and demand.

Chemical product sales rose 5.3 per cent to $5.6 billion in July, boosted by increased sales of pharmaceutical and medicine products.

Sales of wood products fell 4.8 per cent for the month to $2.9 billion, the lowest level since May 2023.

In constant dollar terms, overall manufacturing sales rose 0.9 per cent in July.

This report by The Canadian Press was first published Sept. 16, 2024.

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Economy

S&P/TSX gains almost 100 points, U.S. markets also higher ahead of rate decision

Published

3 days ago

September 13, 2024

Anne Joseph

TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.

“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.

In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.

The S&P/TSX composite index closed up 93.51 points at 23,568.65.

While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.

Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.

But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.

Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.

“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.

“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.

A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.

It would also be “counter to what they’ve signaled,” he said.

More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.

“That’s going to be more important than the size of the cut itself,” he said.

In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.

“Here, the labour situation is worse than what we see in the United States,” he said.

The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.

The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.

The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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