Fed Minutes Show Most Officials Favored Quarter-Point Rate Rise Stronger economic conditions have boosted investors’ expectations for higher rates this year

(…) a few officials favored or would have also agreed to support a half-point increase.

(…) “A number of participants observed that a policy stance that proved to be insufficiently restrictive could halt recent progress in moderating inflationary pressures,” said the minutes of the Jan. 31-Feb. 1 meeting, released Wednesday. (…)

But the minutes suggest a high bar for the Fed to resume half-point rate rises, analysts said Wednesday. (…)

• Via Bloomberg:

(…) “Participants observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to 2%, which was likely to take some time,” according to the minutes of the Jan. 31-Feb. 1 gathering released in Washington on Wednesday. (…)

“Participants generally noted that upside risks to the inflation outlook remained a key factor shaping the policy outlook, and that maintaining a restrictive policy stance until inflation is clearly on a path toward 2% is appropriate from a risk-management perspective,” the minutes said. (…)

Following the release of the minutes, swaps traders kept steady their conviction that the Fed will keep pushing rates higher, with the market indicating that 25 basis-point hikes are likely coming at the March, May and June meetings. Investors lifted expectations for where rates will peak to around 5.36%. (…)

But the FOMC met before employment, CPI, PPI and retail sales data changed the picture.

• January data may overstate the strengths, but the Fed is far from done

The big repricing in financial markets started with a very strong US employment report for January, which sent interest rate expectations towards the sky. Most US data releases for January have been strong, even suggesting that instead of heading towards a recession, US growth might actually be accelerating.

We would refrain from making overly strong conclusions based on only one month of data. For example, the payrolls report is very volatile from month to month, and we know January was an exceptionally warm month. More data are thus needed to draw firmer conclusions. That said, the message we do take from the US January data releases is that despite the weak state of many leading indicators, the US economy is not on the verge of another recession at this point, underlying inflation is not quickly coming down to be in line with the Fed’s target and the case for the Fed to continue to hike rates remains strong.

Financial conditions simply remain too easy compared to the Fed’s attempts to cool the labour market and constrain inflation pressures. Instead of tightening, the higher equity prices, the fall in long rates from their highs last year and the narrower credit spreads mean that financial conditions have eased from their peaks last year, not tightened further.

Given the resilience of the economy to higher rates, we now think short rates will have to rise rather to around 6% than around 5%. Though the risk of 50bp hikes has risen, we think the Fed will prefer to stay on the course of 25bp rate hikes and continue on that path until the September meeting when the target for the fed funds rate will hit 5.75% to 6%.

Our new rate forecast is clearly above current market pricing, and we do not expect the market to quickly price in our rate path. It is quite normal for market pricing to lag in a rate hiking cycle (and in a cutting cycle as well), and the priced-in peak in rates usually moves higher gradually as the central bank hikes rates. This has certainly been the case in this cycle, but it has also been seen many times in previous rate hiking cycles.

January in the US was exceptionally warm, which may have boosted US data releases …

… but financial conditions remain much too easy to rein in inflation (…)

But estimates of financial conditions vary considerably:

NY Fed’s John Williams yesterday:

“At the end of the day our job is clear,” Williams said Wednesday at a conference held at the New York Fed. “Our job is to make sure that we restore price stability which is truly the foundation of a strong economy.” (…)

Williams said strong demand in the US economy continues to exceed supply, pointing to persistent price pressures in the services sector, excluding food, energy and shelter. He also said continued demand for goods, as well as ongoing supply-chain issues in the global economy, may keep prices from falling as quickly as some have expected. (Bloomberg)

The Fed’s staff yesterday released a paper linking the recent jump in inflation to the sharp increase in goods consumption after the government flooded Americans with Covid dollars.

The COVID-19 pandemic has led to a large, abrupt, and unprecedented increase in the demand for goods relative to services in the United States, interrupting a secular decline in the share of spending on goods. A popular narrative is that this sudden reallocation of demand has strained supply chains, leading to bottlenecks and labor shortages in a number of key sectors, thus contributing to a buildup of inflationary forces. (…)

The share of consumption expenditures on goods rose from 31 percent in the last quarter of 2019 to more than 35 percent by the middle of 2021, and has remained high thereafter. Personal Consumption Expenditures inflation reached almost six percent by the end of 2021, primarily driven by a surge in goods inflation, while services inflation has been more muted. Finally, employment collapsed and rebounded, remaining significantly below the pre-pandemic trend by the end of the sample, driven by a decline in labor market participation. (…)

We find that the demand reallocation shock is able to explain a large portion—3.5 percentage points—of the increase in U.S. inflation post-pandemic. (…)

We then examine the two supply shocks. The first, sectoral productivity shocks, is motivated by the increase in the dispersion of sector-level variables shown in Figure 2. Additionally, some sectors, such as the metals or oil industry, have experienced both significant declines in production and increases in prices, which cannot be explained by demand reallocation alone.

To account for this, we measure the evolution of total factor productivity at the industry level between 2019:Q4 and 2021:Q4, and feed the estimated shocks into our multi-sector model. We find that sectoral productivity shocks dramatically improve the model’s cross-sectional fit, but dampen aggregate inflation, as aggregate productivity rose above trend over this period.

The second shock we consider is a reduction in aggregate labor supply, motivated by the prolonged decline in employment shown in Figure 1. We estimate the magnitude of this shock and find that it explains approximately two-thirds of the post-pandemic decline in employment. However, its effect on inflation is relatively limited: on its own, it would only increase inflation by around 1.5 percentage points, which is less than half the impact of the demand reallocation shock.

When we consider the effect of all three shocks simultaneously, the estimated model can explain the majority of the rise in U.S. inflation between the end of 2019 and the end of 2021, largely driven by the demand reallocation shock. The model also explains a large proportion of the cross-sectional dynamics of prices and quantities: both the demand reallocation shock and the sectoral productivity shocks are important for this finding. The labor supply shock is important for explaining the persistent decline in aggregate employment, but plays a smaller role in explaining aggregate inflation and no role in accounting for the model’s cross-sectional fit. (…)

Tuesday, I posted this chart showing how profit margins, which were “normalizing” after their post GFC spike, jumped along with prices in 2021-22:

Simply stated, the U.S. government’s wide open money spigot during Covid induced a “sudden reallocation of demand”, responsible for 3.5% inflation, at the same time that Covid suddenly reduced the supply of labor, responsible for 1.5% inflation. Higher productivity has contributed to “dampen aggregate inflation” but, in reality, it mainly boosted corporate margins by 50%. Sustainable?

(Societe Generale)

Somebody could build a case for higher corporate income taxes…

While on goods demand:

You may recall the news last week of a blockbuster 3% surge in January’s retail sales, which rippled across global markets. But that report actually showed retailers had $121 billion less in January sales than they did in December — a 16% drop.

The difference is a result of the seasonal adjustment process that is applied to most major data — and right now, it may be sending misleading signals about how the economy is doing at the start of 2023.

A series of hot reads on growth and inflation have sent markets reeling this month. But at least part of that heat appears to come from shifts in seasonal patterns, making this winter’s numbers look gaudier than they are.

There’s little doubt that the economy has gained momentum so far this year, but it’s less clear how much of that is real.

If 2020-21’s pandemic supply shortages caused people to start their holiday shopping earlier than usual, the seasonal adjustment would exaggerate the strength of October’s retail sales number and depress November and December.

It would also make January’s figures look much stronger than the reality, because the falloff in spending from December to January would be less pronounced than seasonal models predict.

That looks to be exactly what happened in last week’s retail data, which after seasonal adjustments was negative in November and December, and then sharply positive in January.

Weather can compound seasonal distortions. In a normal January, frigid temperatures and snowstorms disrupt economic activity in large parts of the country. Seasonal adjustments account for that.

But this has been an uncommonly warm winter, which means seasonal adjustments increase reported activity above and beyond the true underlying trend.

A San Francisco Fed model that adjusts reported jobs numbers for weather effects found the nation would have added around 390,000 jobs in January — not the 517,000 the Labor Department reported — had it not been a warm winter.

“Right now, it’s difficult to ascertain whether COVID-induced consumer behavior changes and business practices are altering seasonal data adjustments, or if the real underlying economic activity is as strong as some recent economic indicators suggest,” said Doug Duncan, chief economist at Fannie Mae. (Axios)

INTO THIN AIR

U.S. Stock Market Climbs to Risky Heights (Morgan Stanley’s Mike Wilson)

Jon Krakauer’s book “Into Thin Air” chronicles one of the deadliest years on Mount Everest, when 12 mountaineers died trying to reach the summit without proper regard for the risks. Everest’s peak is 3,000 feet above the start of the “death zone,” the altitude at which oxygen pressure is insufficient to sustain human life for an extended period. Many fatalities in high-altitude mountaineering occur in the death zone, either directly through loss of vital functions, or indirectly from bad decisions made under stress.

This is a good analogy for where equity investors find themselves today, and where they’ve been many times over the past decade. Either by choice or out of necessity, investors have followed stock prices to dizzying heights as liquidity (the market equivalent of bottled oxygen) allows them to keep climbing. But the oxygen eventually runs out and those who ignore the risks get hurt. Developments over the last few months show how the market got here, and what could be coming next.

This most recent ascent began in October from a much safer place of lower valuations: a price/earnings ratio of 15x, compared to today’s 18.6x, and an equity risk premium of 270 basis points above U.S. Treasuries, compared to today’s 155. The ascent was based on a reasonable narrative that China’s long-awaited reopening was finally about to begin and could provide an offset to the slowing U.S. economy. As a result, this rally was led by more economically sensitive stocks like global industrials, financials and China equities, and it made sense to go along for that stage of the climb.

By December, however, the air started to get thin again with the P/E back to 18x and the equity risk premium down to 225 basis points—indicating that it was time to head back to base camp, by positioning portfolios more defensively.

With the turn of the new year, many investors decided to make another summit attempt, taking an even more dangerous route with the most speculative stocks leading the way. This time, the narrative was that the Fed was finally going to pause its rate hikes at its early February meeting, and even begin cutting rates by the second half of the year as inflation continued to decline.

It was like a shot of oxygen. Investors began to move more quickly and energetically, talking more confidently about a soft landing for the U.S. economy. As stock prices have reached even higher levels, there is now talk of a “no landing” scenario, in which the U.S. economy never slows down. These are the tricks that the death zone plays — we have now reached a P/E ratio and equity risk premium that put us in the thinnest air of the entire liquidity-driven secular bull market that began back in 2009.

Meanwhile, interest rates are likely to keep increasing, with inflation turning back up and a Fed pause now off the table. In fact, additional rate hikes have been priced into market expectations, with the terminal rate expected to reach 5.25%.

Bottom line: The bear market rally that began in October from reasonable prices and low expectations has gone too far, based on an anticipated Fed pause and pivot that aren’t coming anytime soon. Moreover, despite the economic improvements indicated by a strong labor market and resilient consumer spending, the earnings recession has a long way to go.

As the Fed is tightening, financial conditions are continuing to loosen thanks to the liquidity provided by other central banks, China’s reopening and a weaker U.S. dollar. Since October, the global money supply has increased by a staggering $6 trillion, providing the supplemental oxygen investors need to survive in the death zone, and tricking them into thinking they are safer than they really are.

As famous mountaineer Ed Viesturs once said, “getting to the summit is optional, getting down is mandatory.”

Crypto Still Draws Investors Hoping to Strike It Rich

And now the AI craze as ADG relates:

Meanwhile, the recent frenzy surrounding artificial intelligence has duly made its way to the cryptocurrency realm. CoinDesk reports today that “nefarious market participants are attempting to cash in on the ongoing ChatGPT craze in tech circles by issuing fake tokens branded after the AI chatbot despite having no official association with the tool.”  Nearly 200 such freshly issued coins are circulating on decentralized exchanges such as Uniswap, digital data firm DEXTools finds.

To wit: one ducat issued on the Ethereum network, which sports some 300 unique holders and $185,000 in trading volumes over the past 24 hours, has rallied some 300% since Sunday to push its market value north of $300 million. “Trading volumes on such fake tokens – and scams in some cases – are a glimpse of the crypto punting dream being alive and well,” CoinDesk concludes.

FLASH PMIs

US private sector gathers momentum amid softer contraction in demand

The upturn is being driven by the services sector, which in part reflects unseasonably warm weather, and although the manufacturing survey data are showing signs of improvement, the factory sector remains in contraction and focused on inventory reduction.

The headline Flash US PMI Composite Output Index registered 50.2 in February, up sharply from 46.8 in January. The latest reading was the highest for eight months and signalled broadly unchanged output on the month across the private sector. Service sector firms registered a fractional uptick in business activity while manufacturers reported a slower decrease in output.

Cost pressures softened in February, following an acceleration in January. The rate of input price inflation was the second-slowest since October 2020 as manufacturers and service providers both registered softer upticks in cost burdens. Despite reports of raw material and component price pressures easing, hikes in wages reportedly drove costs higher and kept inflation at an historically elevated rate. Although input costs rose at a softer pace, February data signalled a sharper rise in output charges across the private sector. The pace of increase in selling prices was the quickest since last October and steep overall. Firms reportedly passed through hikes in costs to their clients. A faster rise in output prices was seen at both manufacturing and service sector firms. Employment remained buoyant midway through the first quarter, with the rate of job creation accelerating to the fastest since September 2022. Greater workforce numbers were linked to efforts to work through backlogs and anticipations of greater demand in the coming months. Jobs growth accelerated in both manufacturing and services. The S&P Global Flash US Services Business Activity Index posted 50.5 in February, up from 46.8 in January, and signalled the first expansion in service sector output since June 2022. The pace of growth was only marginal, however, as some firms continued to highlight customer hesitancy following hikes in interest rates and inflation. As such, new business at service providers fell further midway through the first quarter. The pace of decline was, however, the slowest in the current five-month sequence of contraction and only slight overall. New export orders weighed on total new sales, as firms highlighted challenging demand conditions in key export markets. The rate of service sector input cost inflation remained historically elevated in February, despite easing to the second-weakest since October 2020. Anecdotal evidence stated that wage pressures were the main driver behind higher cost burdens. Firms continued to seek to pass on greater input costs to customers through hikes in output charges. The rise in selling prices was the quickest for four months and strong overall. The level of outstanding business fell only fractionally in February, as firms noted some signs of improving demand. This, in part, supported a faster rise in employment. The rate of job creation was the steepest since September 2022, albeit only modest overall. Other contributing factors included anticipated rises in new business and ongoing efforts to fill open vacancies. Service sector optimism regarding the year-ahead outlook for activity increased for the second month running. The level of positive sentiment was the strongest since May 2022, as firms hoped that new sales initiatives and new product offerings would spur demand. The S&P Global Flash US Manufacturing PMI posted 47.8 in February, up from 46.9 at the start of the year. The latest index reading signalled a further deterioration in manufacturing performance, albeit one that was the softest in the current four-month sequence of decline. The downturn in the health of the goods-producing sector was modest overall. Manufacturers registered a fourth successive monthly decline in production during February. That said, the pace of contraction was the slowest seen over this sequence. The marginal fall in output stemmed from weak client demand, as new orders decreased sharply. Some companies noted that sufficient stocks at customers and high inflation dampened demand conditions. Alongside reports of subdued domestic demand, latest survey data showed new export orders continued to decrease on the month. The solid decline in foreign client demand was linked to inflationary pressures in key export markets. Reports of less marked hikes in raw material costs led to a softer uptick in input prices during February. The rise in cost burdens was among the slowest in two-and-a-half years. Nonetheless, manufacturing firms recorded a steeper rise in selling prices. Although slower than those seen in 2022, the rate of charge inflation was the fastest for three months as firms sought to pass on higher costs to customers. A combination of subdued demand conditions and prior stockpiling led to a further fall in input buying in February. The drop in purchasing activity was the slowest for five months, but still strong overall. Meanwhile, stocks of purchases and finished goods contracted again, albeit at slower rates. Lower buying activity also contributed towards an improvement in vendor performance. Suppliers’ delivery times were reduced to the greatest extent since May 2009 amid weak demand for inputs and fewer logistics issues. At the same time, firms were able to increase their workforce numbers at a modest rate in February. Employment rose at the fastest pace since last September. Firms reduced their backlogs of work solidly, albeit at the slowest pace since October 2022. Finally, the level of business confidence was broadly in line with that seen in January and robust overall. The degree of optimism in the year-ahead outlook for output was also similar to the long-run series average and linked to hopes of an uptick in client demand.

Eurozone growth accelerates to nine-month high in February

The seasonally adjusted S&P Global ‘flash’ Eurozone PMI® Composite Output Index, based on approximately 85% of usual survey responses, rose for a fourth successive month in February, climbing to 52.3 from 50.3 in January to indicate the strongest expansion of business activity since last May.

February’s upturn was led by the service sector, where business activity rose for a second consecutive month, the index up from 50.8 to 53.0 to register the strongest expansion since last June. Manufacturers meanwhile eked out a modest gain in production, the factory output index up from 48.9 to 50.4 to signal the first increase in production since last May.

A key change in the services sector was the revival of growth in financial services activity, albeit with real estate remaining in decline, as well as resurgent tourism & recreation and media activity. Transportation broadly stabilised after seven months of decline, industrial services gained momentum and IT services enjoyed a surge in activity.

On the manufacturing side, chemical & plastics and basic resources remained the main areas of weakness while food & drink, household goods and industrial goods manufacturing showed further signs of recovery. Auto making likewise continued to pull out of the slump seen last year.

Within the euro area, both France and Germany returned to growth for the first times since last October and last June respectively. The composite PMI for France rose from 49.1 to 51.6, albeit with growth confined to the service sector. The composite PMI for Germany meanwhile edged up from 49.9 to 51.1 reflecting a second successive monthly rise in service sector activity and the first expansion of manufacturing output since last May.

However, it was the rest of the eurozone as a whole that reported the strongest performance, the composite index up from 51.4 to a nine-month high of 53.9 thanks to broad-based growth of manufacturing and services.

The acceleration of growth of output across the eurozone as a whole was fueled by the first, yet modest, rise in new orders since last May, which was in turn driven by the steepest increase in demand for services for nine months and the shallowest – though still marked – drop in new orders for goods over the same period.

The increase in output was also supported by firms once again eating into their backlogs of orders, notably in the manufacturing sector. The latest overall decline in backlogs was the smallest seen for six months, however, the shallower rate of decline in part reflecting the recent improvement in new business inflows.

In manufacturing, the renewed growth of output was also often linked to improved supply chains, with average supplier delivery times shortening for the first time since January 2020, and to the greatest degree since May 2009. An especially marked improvement in supplier performance was recorded in Germany, where a survey record shortening of lead times was reported.

Improved supplier performance was commonly linked to fewer supply chain shortages which, in addition to facilitating higher output, helped take pressure off industrial input prices, which rose only modestly in February and at the slowest rate since September 2020. Softer manufacturing cost inflation also often reflected weak demand for inputs, with purchasing by factories dropping sharply again in February as firms remained focused on inventory reduction.

In contrast, service sector firms reported a further steep rise in average input costs, the rate of inflation of which edged higher in February to remain among the steepest recorded over the history of the survey, albeit down from last year’s peaks.

Average prices charged for goods and services meanwhile continued to rise sharply, increasing at solid rates in both manufacturing and services as firms sought to pass higher costs on to customers, including in many cases greater staff costs. However, in both cases the rate of increase moderated compared to January – with manufacturing output price inflation notably down to a two-year low – to register the softest overall increase in prices charged for goods and services since October 2021.

While the return to growth of new orders also encouraged further hiring, with employment rising across both manufacturing and services in February, the rate of job creation edged down from January’s three-month high and continued to run well below rates seen this time last year. Slower jobs growth in part reflected labour supply shortages but was also often linked to uncertainty about the outlook.

Optimism about the year ahead nudged higher in February, rising to a one-year high, though was merely in line with the survey’s long-run average. Future sentiment has nevertheless improved considerably in both manufacturing and services since late last year, attributed by survey respondents to fewer concerns over the possibility of a deep recession, reduced worries around energy supply and prices, as well as signs of a peaking of inflation and improved customer enquiries.

Japan: Stronger service sector growth contrasts with deeper manufacturing downturn

The headline au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index™ (PMI)® dropped to 47.4 in February from a final reading of 48.9 in January, signalling a solid deterioration in the health of the sector, and one that was the sharpest for two-and-a-half years. The decline in business conditions mainly reflected steeper reductions in output and new orders, which both fell to the greatest extents since July 2020. More positively, cost and supply pressures showed further signs of easing and manufacturers continued to raise their staffing levels slightly, extending the current sequence of job creation to 23 months.

The au Jibun Bank Flash Japan Services Business Activity Index signalled sustained growth in the service sector during February, rising to 53.6 from a final reading of 52.3 in January. Services activity has now increased in each of the past six months, with the latest solid expansion the fastest since June last year as the most recent wave of the COVID-19 pandemic subsided.

New order growth also quickened, while new business from abroad increased slightly. Employment ticked down for the second month running. The combination of stronger new order inflows and falling staffing levels meant that outstanding business accumulated to the greatest degree since the survey began in September 2007. Meanwhile, rates of both input cost and output price inflation quickened from the start of the year. Higher fuel and wage costs were widely mentioned by respondents.

  

U.S. Home Sales Fall for 12th Straight Month Sales of previously owned homes dropped 0.7% in January to slowest level since October 2010

Sales of previously owned homes, which make up most of the housing market, fell 0.7% in January from the prior month to a seasonally adjusted annual rate of 4 million, the slowest since October 2010, the National Association of Realtors said Tuesday. January sales fell 36.9% from a year earlier.

January’s decline marked the longest streak of back-to-back monthly declines on record in figures going back to 1999, NAR said. (…)

The average rate on a 30-year fixed mortgage rose to 6.32% last week, the biggest one-week increase in four months. (…)

The national median existing-home price rose 1.3% in January from a year earlier to $359,000, NAR said, the smallest annual price gain since February 2012. Prices fell month-over-month for the seventh straight month after reaching a record high of $413,800 in June. [That’s -13.3%]. (…)

Nationally, there were 980,000 homes for sale or under contract at the end of January, up 2.1% from December and up 15.3% from January 2022, NAR said. At the current sales pace, there was a 2.9-month supply of homes on the market at the end of January.

The typical home sold in January was on the market for 33 days, up from 26 days from the prior month, NAR said.

The share of first-time buyers in the market was 31% in January, up from 27% a year earlier. About 29% of January existing-home sales were purchased in cash, up from 27% in the same month a year ago, NAR said. (…)

(CalculatedRisk)

Canada: Core Inflation Moderates Further

Headline CPI inflation rose 0.3% MoM and declined 0.4pp to +5.9% YoY in January. Core CPI: +0.1% MoM after +0.3% in December, +4.9% YoY in January from +5.3% in December. The average of the BoC-preferred CPI-trim and CPI-median: +5.05% YoY.

On a three-month average basis, both BoC-preferred CPI-trim and CPI-median core measures are at +3.5% and falling towards the target range.

Core goods inflation moderated to -0.1% MoM (vs +0.4% in December). Durable goods inflation: -1.1% vs. flat.

Services inflation declined to +0.2% in January (vs +0.3% in December).

(NBF)

China: Road congestion surged as the country reopened.

Source: Barclays Research via The Daily Shot)

Walmart, Home Depot Give Cautious Outlook as Shoppers Spend More on Basics Home Depot’s pandemic-fueled growth stalls, while Walmart’s sales lifted by low-margin groceries

(…) “Customers are still spending money,” said Walmart Chief Executive Doug McMillon. “It’s obviously not as clear to us what the back half of the year looks like.”

Walmart said U.S. comparable sales, those from stores and digital channels operating for at least 12 months, rose 8.3% in the quarter ended Jan. 27, compared with the same period a year earlier. That beat analyst expectations of 4.9% growth, according to estimates from FactSet. (…)

December was the largest sales volume month in the retailer’s history, the company said. Sales of some nonfood items fell in the latest quarter, as shoppers gave priority to spending on everyday needs. Elevated prices also boosted sales by dollar amount. (…)

The company’s U.S. inventory fell 2.6% in the quarter, but is still elevated in some categories such as apparel, said Walmart U.S. Chief Executive John Furner on a call with analysts Tuesday.

The retailer said it expects U.S. comparable sales to increase by between 2% and 2.5% for the full year, excluding fuel sales. (…)

On Tuesday, Home Depot set a cautious tone. Sales for the most-recent quarter fell slightly after years of pandemic-fueled growth. The home-improvement retailer said sales for the current year would be flat. (…)

BTW: Walmart’s U.S. e-commerce sales rose 17% last quarter from a year earlier. Sales at all non-store retailers were up 8.1% YoY for the 3 months ended in January.

Investors increase bets on ECB lifting rates to all-time high Buoyant service sector and wages fuel expectations of further rises in eurozone borrowing costs

China’s Xi Jinping Plans Russia Visit as Putin Wages War in Ukraine Chinese leader is expected to use Moscow trip to push for multiparty peace talks

Chinese leader Xi Jinping is preparing to visit Moscow for a summit with Russia’s president in the coming months, according to people familiar with the plan, as Vladimir Putin wages war in Ukraine and portrays himself as a standard-bearer against a U.S.-led global order.

Beijing says it wants to play a more active role aimed at ending the conflict, and the people familiar with Mr. Xi’s trip plans said a meeting with Mr. Putin would be part of a push for multiparty peace talks and allow China to reiterate its calls that nuclear weapons not be used. (…)

Mr. Xi could visit in April or in early May, they said, when Russia celebrates its World War II victory over Germany, an event that the Kremlin last year used to liken Ukraine’s elected leaders to Nazis. (…)