Payroll employment rises by 372,000 in June; unemployment rate remains at 3.6%

• Total nonfarm payroll employment rose by 372,000 in June, in line with the average monthly gain over the prior 3 months (+383,000).
• The change in total nonfarm payroll employment for April was revised down by 68,000, from +436,000 to +368,000, and the change for May was revised down by 6,000, from +390,000 to +384,000. With
  these revisions, employment in April and May combined is 74,000 lower than previously reported.
• Private-sector employment has recovered the net job losses due to the pandemic and is 140,000 higher than in February 2020, while government employment is 664,000 lower.
• Over the past 12 months, average hourly earnings have increased by 5.1 percent.

This chart shows unemployment claims with the scale set to reflect levels between 2014 and 2019. The horizontal line is the average for that period. The low in claims was in March; they are up 36% since.

Two Fed Officials Endorse Another 0.75-Point Rate Increase The central bank could debate whether to shift to more traditional quarter-point rate rises in November, Fed’s Christopher Waller says.

(…) “Inflation is just too high and doesn’t seem to be coming down,” said Fed governor Christopher Waller during a webinar on Thursday. “We need to move to a much more restrictive setting in terms of interest rates…and we need to do that as quickly as possible.”

Mr. Waller said he was “definitely in support of doing another” 0.75 percentage point, or 75 basis point, rate rise in July.

St. Louis Fed President James Bullard also told reporters after a presentation in Little Rock, Ark., that “it would make a lot of sense to go with 75 [basis points] at this juncture” in order to raise rates to around 3.5% by the end of this year. (…)

Mr. Waller said he expects the Fed would need to raise rates by a half percentage point at the central bank’s following gathering in mid-September, which would put rates closer to levels designed to deliberately slow the economy. After that, he said the central bank could debate at its November meeting whether to shift to more traditional quarter-percentage-point rate increases. (…)

Mr. Waller said market jitters about a recession are overblown but acknowledged the central bank would need to accept higher risks of a downturn in order to wring inflation out of the economy. He said he thought it was possible that slowing the economy for around a year “may be sufficient to get inflation back down without causing a real severe recession.” (…)

Monthly increases in the Fed’s preferred inflation gauge, excluding food and energy prices, have slowed in recent months, but Mr. Waller said the recent pace of inflation is still too high. “That’s not acceptable to say, ‘Oh, let’s just keep it where it’s at,’” he said.

Readings on monthly core inflation need to reach levels consistent with 2.5% or 3% annualized rates by the beginning of next year to “really think about backing off on interest rate hikes,” said Mr. Waller. “Right now, it doesn’t look like that’s going to happen.” (…)

“That’s the whole thing we know about expectations: Once they become un-anchored, you’ve lost,” he said. “I never want to get to the point where these things keep creeping up. We’ve got to chop this off now.”

Mr. Waller, a strong transitorist last year, is totally behind Powell leaving employment on the back burner until the inflation dragon is killed. So much so that he has policy anchored until November. So much for the “data dependent” Fed. Read what Waller said on May 13, 2021:

An outcomes-based policy stance means that we must see inflation before we adjust policy—we will not adjust based on forecasts of unacceptably high inflation as we did in the past. Call this the “Doubting Thomas” approach to monetary policy—we will believe it when we see it.

We asked to see it, and lo and behold, we are now starting to see inflation exceeding our inflation target. But the critical question is: for how long? Although inflation is starting to exceed our 2 percent target, in my view, this development is largely due to a set of transitory factors that are occurring all at once.

Right when they started to see inflation exceed their target, they still forecasted that it was transitory.

The US Industrial Complex Is Starting to Buckle From High Power Costs Surging bills are forcing companies to scale back industrial operations, threatening a greater drag on the economy.

(…) On June 22, 600 workers at the second-largest aluminum mill in America, accounting for 20% of US supply, learned they were losing their jobs because the plant can’t afford an electricity tab that’s tripled in a matter of months. Century Aluminum Co. says it’ll idle the Hawesville, Kentucky, mill for as long as a year, taking out the biggest of its three US sites. A shutdown like this can take a month as workers carefully swirl the molten metal into storage so it doesn’t solidify in pipes and vessels and turn the entire facility into a useless brick. Restarting takes another six to nine months. For this reason, owners don’t halt operations unless they’ve exhausted all other options. (…)

At least two steel mills have begun suspending some operations to cut energy costs, according to one industry executive, who asked not to be identified because the information isn’t public. In May, a group of factories across the US Midwest warned federal energy regulators that some were on the verge of closing for the summer or longer because of what they described as “unjust and unreasonable” electricity costs. They asked to be wholly absolved of some power fees—a request that, if granted, would be unprecedented. (…)

This summer, electricity rates for industrial customers are set to hit their highest levels ever, based on US government forecasts. Because US plants and factories depend on both electricity and gas, this could very well be the moment the rug’s pulled out from under American industry.

Manufacturing overtime hours have already declined for three straight months, the longest downward stretch since 2015, and a measure of US manufacturing activity weakened in June to a two-year low as new orders contracted. A week after Century’s announcement, the nation’s largest aluminum producer Alcoa Corp. said it’s closing a third of its production at a mill in Indiana because of “operational challenges.” (…)

Manufacturing isn’t the bellwether of the US economy it once was. The plants that 70 years ago employed more than a third of the nation’s labor force now account for about 8% of nonfarm workers. An industrial downturn on its own won’t tip us into a recession, but it could if combined with weakness in other sectors. (…)

“I don’t see any scenario, absent explosions at US LNG facilities’’ that trap supplies at home, in which gas prices are headed lower in the long term.

• One signal that America’s demand for goods is cooling: The cost of shipping is receding quickly, Axios’ Kate Marino writes.

Data: Freightos; Chart: Axios Visuals

Food Price Drop Offers Limited Relief to Squeezed Shoppers

Global food prices dropped from a near record amid prospects for fresh supplies and fears about a recession, potentially offering some respite to strained households. A UN index of world food costs slipped 2.3% last month, the third decline in a row, but the index is still up 15% this year.

1st Look at Local Housing Markets in June Sales Down Sharply

(…) I’m tracking about 35 local housing markets in the US. Some of the 35 markets are states, and some are metropolitan areas.

(…) for these markets, inventory was up almost 50% from May to June.

Inventory in these markets were down 28% YoY in February, down 4% YoY in March, up 10% YoY in April, and up 44% YoY in May, and are now up 83% YoY! So, this is a significant change from earlier this year. This is another step towards a more balanced market, but inventory levels are still historically low. (…)

RBC Is First Bank to Predict Canada Headed For Recession in 2023

(…) “Though higher rates will technically push Canada toward a contraction, the Bank of Canada now has little choice but to act,” according to the report, which was written by economists Nathan Janzen and Claire Fan. “Inflation has been too strong for too long and is starting to creep into longer-run business and consumer expectations.” (…)

Still, the recession in Canada will likely be moderate and short-lived by historical standards and will be reversed once inflation settles enough for central banks to lower rates, RBC said.

The Canadian economy is expected to contract by an annualized 0.5% pace in the second and third quarters of 2023, according to the new forecasts. Growth will average 0.8% next year, down from 3.7% this year. (…)

Canada will also feel the spillover from slowing global growth. The US unemployment rate is expected to climb and emerging markets will struggle with higher food and energy prices and borrowing costs, acting as a drag on Canadian exports. (…)

NDR’s Global Recession Probability Model has never been this high without a global recession (except in 1985). Actually, every time (ex-1985) it got this high, we were already in recession.

• From Princeton Energy Advisors LLC
• The University of Michigan Index of Consumer Sentiment hit a new low in June, 50.0, revised down from 50.2 for the prior read for the month.
• The US has always been in recession at these levels.
• The Atlanta Federal Reserve Bank is forecasting Q2 GDP at -1.9%; IHS Markit is forecasting -1.5% for Q2; Goldman Sachs is still in positive territory, but down more by more than half to 0.7% for Q2
• Given that Q1 GDP was -1.5%, the plain vanilla interpretation would see the US in recession starting in Q1 2022.

Still making history:

The commodity collapse – only seen this 3 times in 90 years

BCOM is “well” below the 200 day moving average and RSI is at levels not seen in “forever”. Most people have been bullish this entire space, and have not had the time to keep up with the stop losses. If a bounce is due we leave to you to decide, but as DB notes; rolling 20 day change in BCOM is pointing for the “3rd largest fall in 90 years”. The hard lesson of “managing” big draw downs is being learnt by a lot of people at the moment (chart 3).

Refinitiv

DB

To the rescue?

China Considers $220 Billion Stimulus With Unprecedented Bond Sales

China’s Ministry of Finance is considering allowing local governments to sell 1.5 trillion yuan ($220 billion) of special bonds in the second half of this year, an unprecedented acceleration of infrastructure funding aimed at shoring up the country’s beleaguered economy.

The bond sales would be brought forward from next year’s quota, according to people familiar with the discussions, who asked not to be identified because they aren’t authorized to speak publicly. It would mark the first time the issuance has been fast-tracked in this way, underscoring growing concerns in Beijing over the dire state of the world’s second-largest economy. (…)

The funding would add to 1.1 trillion yuan in new support for infrastructure announced over the past few weeks, as President Xi Jinping’s government tries to get the economy back on track toward achieving its annual growth target of around 5.5%. (…)

• China developers face $13bn wall of dollar bond payments in second half
• Developer fundraising in bond markets is starting to pick up.

Gavekal Research via The Daily Shot

Historic Cascade of Defaults Is Coming for Emerging Markets Number of developing nations trading distressed has doubled, with El Salvador, Ghana, Egypt, Tunisia and Pakistan appearing particularly vulnerable.

• Peru lifted its key rate to 6% as inflation is running at a 25-year high.

BofA Says Recession Fears Prompt Investors to Dump Stocks Again

Investors are hoarding cash and hiding in US Treasuries as they dump equities amid fears that the US economy is headed for a recession.

Nearly $63 billion flowed into cash in the week through July 6, while global equity funds had redemptions of $4.6 billion, according to Bank of America Corp. note citing EPFR Global data. US stock funds still saw their second week of additions, while global bonds had their biggest inflows in 14 weeks at $2.4 billion thanks to the buying of Treasuries and government debt, Bank of America said. (…)

Bank of America and Morgan Stanley strategists have warned that the slowdown in global economic growth could be worse than expected, adding pressure on the S&P 500 Index in the second half. Rate hike concerns are also back on the table with two of the Federal Reserve’s most hawkish policy makers backing another 75-basis points hike this month.

Hartnett said the S&P 500 was likely to be range-bound at 3,800-4,200 this summer rather than seeing a continued rebound. “Bear markets end with a recession or an event that causes Fed to reverse policy; we say bear market in summer hiatus, and bear ain’t over and Big Low has yet to be reached,” the strategist wrote. (…)

• The anatomy of the SPX bear

How is the current bear market developing compared to history? Food for thought via TS Lombard: “Current bear is close to the average trough of the “minor” ones (<12 months in duration). It is, however, still a long way away from the “major” bears (>12 months in duration).

Only two of the past 13 bear markets were not associated with a recession. The average drawdown for those was 28%, compared with 43% for the recession bears. The current 20% drawdown is short of both.”

So are we bottoming out? “Two past bear markets had drawdowns of 20-22% – in 1957 and 1966; and only in the case of the former was there a recession. But with no sign of Fed easing, data bottoming out or market capitulation, a bottom does not seem close.”

• Desperately Seeking The Low

• Relative fund flows between defensive and cyclical sectors have been extreme.

Source: SPDR Americas Research, @mattbartolini

• S&P 500 Large Cap Index – 13/34–Week EMA Trend

Beijing Scraps China’s First Vaccine Mandate in Abrupt Reversal

(…) pushback from the public was swift, with some residents taking to Chinese social media to call the requirement an illegal limitation on their freedom and question how effective the vaccines are against the highly contagious and immune-evasive omicron variant.

“The reversal shows the power of public opinions,” Hu Xijin, former editor-in-chief at the Communist Party-backed Global Times and an influential commentator, said on his official Weibo account. “The Chinese society is dominated by government. They timely backed up in the face of a public pushback. That means they accept the public’s view of the vaccine mandate as illegal.” (…)

Inflation Fears Drove Larger Fed Rate Increase in June Officials want to lift interest rates to levels that would slow economic growth; ‘an even more restrictive stance’ is possible if inflation doesn’t ease

“Participants concurred that the economic outlook warranted moving to a restrictive stance of policy, and they recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist,” the minutes said.

“They recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist,” the minutes said. (…)

As a result, the minutes also revealed officials’ growing acceptance that fighting inflation might lead to higher risks of a recession, but they saw that as “a cost they’re willing to pay,” said Michael Feroli, chief U.S. economist at JPMorgan Chase. (…)

The minutes showed an unusual level of agreement among the 18 officials who participate in the policy-setting meetings: All but one supported the 0.75-point increase. (…) All the officials at the meeting projected the rate would need to rise at least to 3% this year, and most expected rates would need to rise to between 3.5% and 4.5% next year. (…)

“Many participants judged that a significant risk now facing the committee was that elevated inflation could become entrenched if the public began to question the resolve of the committee to adjust the stance of policy as warranted,” the minutes said. (…)

The minutes provided little detail around what might prompt the central bank to slow down its current pace of rate increases except to note that by raising rates faster now, officials might have more flexibility later. That language fanned hopes on Wall Street that the central bank would slow or even pause rate increases later this year. (…)

Hiring Demand Remained Strong in May Employers posted 11.3 million job openings in May, the Labor Department said, a sign the job market remained unusually tight

The Labor Department on Wednesday said there were a seasonally adjusted 11.3 million job openings in May, a decline from an upwardly revised 11.7 million the prior month [initially 11.4M]. That marked the second straight month of a decrease from a record high number of openings reached in March, but it was nearly double the 5.95 million people who were unemployed but looking for work in May.

The number of times workers quit their jobs fell slightly to 4.3 million from the prior month, while the number of layoffs and discharges rose to 1.4 million in May from 1.2 million the prior month. (…)

The Labor Department will release its June employment numbers on Friday; economists surveyed by The Wall Street Journal think employers created 250,000 jobs last month and the unemployment rate held at 3.6%. (…)

BTW, of the 415k decreases in private openings, 196k (47%) were in services and 208k (50%) in manufacturing.

This chart plots openings in 3 services sectors that account for half of current job openings. Openings in Accommodations and Food Services are down 22% YtD and the other two sectors have crested.

This is up to May. Read on:

U.S. SERVICES PMIs

S&P Global: New orders decline for first time since July 2020

US service providers saw new orders decrease midway through the year, according to the latest PMI™ data, with sustained price pressures and economic uncertainty hitting demand. The decline in new business was the first in almost two years and contributed to a slowdown in growth of activity. Meanwhile, business confidence regarding the year ahead outlook dropped to a 21-month low. On a more positive note, employment continued to increase sharply.

A further substantial rise in input prices was recorded in June, although inflation did ease from May’s survey peak. Rising wages played a key role in higher input costs, with increased fuel charges also widely mentioned. Firms often passed on higher costs to their customers, but efforts to stimulate demand led to a further slowdown in charge inflation.

The seasonally adjusted final S&P Global US Services PMI Business Activity Index registered 52.7 in June, remaining above the 50.0 no-change mark and thereby signalling a further increase in business activity. A recent spell of new order growth amid a lack of pandemic disruption supported continued output expansion. That said, the index dropped for the third month running and was down from 53.4 in May, pointing to the weakest rise in activity since January.

Some firms highlighted the negative impact of inflationary pressures on business activity, and this was also the case with regards to new orders, which decreased for the first time since July 2020. Economic uncertainty was also a factor leading new business to fall, according to respondents.

Alongside a decline in total new business was a renewed contraction in new export orders, which decreased at a solid pace. The reduction ended a seven-month sequence of growth.

Steep price pressures were recorded again in June. The rate of input cost inflation slowed from May’s survey record, but was still among the fastest since the series began in October 2009. Higher wages were one of the main drivers of rising input costs in the latest survey period, with increasing fuel prices also widely mentioned. Some 56% of respondents Index signalled a rise in input costs over the month.

The passing on of higher input costs to customers resulted in a further marked increase in selling prices in the US service sector. That said, the rate of inflation slowed sharply for the second month running and was the softest since last September. Some panellists reported trying to price competitively to attempt to stimulate new business in a weakening demand environment.

Service providers continued to raise their staffing levels rapidly, with firms hiring to support growth of activity and fill previously vacant positions. The sharp increase in employment was recorded despite some reports of difficulties finding suitable staff.

The combination of rising staffing levels and falling new orders meant that companies were able to deplete their backlogs of work in June. The drop in outstanding business was the first in two years and represented a marked turnaround from the record accumulation seen as recently as March.

Concerns around customer demand, in some cases linked to inflationary pressures and rising interest rates, led to a sharp drop in confidence regarding activity over the coming year. Sentiment was the lowest since September 2020. Those companies continuing to predict growth of activity mentioned rising workforce numbers, the start of new projects and hopes for an improvement in new orders.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence:

“June saw signs of a broad-based weakening of the economy with demand now falling in both the manufacturing and service sectors. While the survey data point to a stalling of GDP at the end of the second quarter, a downshifting in the forward-looking new orders index and drop in companies’ future output expectations hints at falling economic activity as we head through the summer.

“Demand for goods and services from households is showing signs of moderating substantially due to the rising cost of living. Meanwhile, tighter financial conditions are starting to hit, and it was notable that the service sector slowdown was led by a steep drop in financial services activity.

“Meanwhile there was welcome news in terms of a marked easing in upward price pressures, but it’s clear that price growth remains elevated despite coming off recent peaks, all of which points to a bout of stagflation in the near term.”

• ISM Services

Services PMI                                     New Orders

Employment                                        Prices

WHAT RESPONDENTS ARE SAYING

• “Supply chain and supplier reliability continues to improve for most of our key food and packaging needs. Equipment still (experiencing) typical long delays. Staffing employment challenges have resurfaced, and costs have dramatically increased on core needs, led by soybean oil products. Rise in diesel fuel affecting almost everything.” [Accommodation & Food Services]
  

• “(Interest) rate increases have slowed sales but have not helped with supply challenges yet.” [Construction]
  

• “While activity dropped 2 percent from the previous month, activity volume was 47 percent higher compared to May 2021.” [Educational Services]
  

• “It seems like everyone is jumping on the bandwagon (of) raising prices under the guise of inflation, cost of energy and shortages. Costs on even software renewals have gone up between 5 and 10 percent. This is getting out of control, and we need to be diligent in researching the cause of rising prices on every transaction.” [Public Administration]
  

• “The shutdowns in China due to the zero-COVID policy have adversely impacted our supply chain.” [Health Care & Social Assistance]
  

• “Demand has softened across consumer product lines, channels and brands over the last year, to levels below those forecast earlier this year. Adjusting all outlooks down for the rest of year. The (Shanghai) omicron slowdown had an impact, but activity is slowly coming back.” [Information]
  

• “Energy services sector demand and activity remains strong.” [Mining]
  

• “Consumers are shifting purchases away from our discretionary products to essentials. Inflation is definitely taking a bite from our sales, and mall traffic is far below the norm, potentially due to inflation, a need for more disposable income on essentials and less willingness to drive to malls. E-commerce sales will be going up again.” [Retail Trade]
  

• “Despite higher inflation and energy costs, demand and business activity continue to be at record highs, with little sign of a slowdown.” [Utilities]
  

• “Business continues to stay steady amid rising interest rates, a lack of labor, inflation, transportation problems and high gas/diesel prices. Outlook is measured due to economic headwinds.” [Wholesale Trade]

The weakening trend in new manufacturing orders is now joined by declines in services, taking composite new orders below 50, something that has not happened this cycle except right after the arrival of Covid-19.

This slower demand is having an impact on input prices which is having an impact on selling prices:

The slower growth of costs fed through to weaker selling price inflation in all sectors bar technology. The steepest slowdown in the rate of inflation was seen in financial services, linked to greater discounting amid the recent slowing of demand amid rising interest rates. The most elevated rates of inflation were meanwhile seen for basic materials and consumer goods, the latter in part reflecting higher food prices.

The concern is, however, that with the economy already stalled according to the June survey, an imminent economic contraction seems plausible, especially given the weakness of forward-looking indicators such as survey’s new orders and business expectations indices. The former is already signalling a downturn in demand and the latter has dropped to the lowest since September 2020.

This is happening globally. I created this illustrated story from recent S&P Global’s charts and comments:

June saw worldwide input cost inflation in the service sector exceed that of manufacturing for a second month, reversing the trend of manufacturing-led inflation seen throughout much of the prior post-pandemic period. Although rates of increase moderated in both sectors at the end of the second quarter, in both cases rates of increase remained among the fastest seen in the survey history.

Meanwhile the number of companies reporting items to have risen in price has also fallen in recent months, dropping in June to the lowest since December 2020 (see chart 7).

Supply shortages generally remain significantly above long-run averages and, in the case of semiconductors, even worsened in June, but appear to have moderated for a wide array of key inputs, including general electrical components, chemicals, timber, packaging, steel, aluminium and even food.

The easing in supply chain delays is associated with a cooling of demand growth in manufacturing, which is in turn linked to slower than anticipated sales to customers in many cases, but also reflects a growing trend of firms moving away from safety stock building towards destocking, designed to cut costs in the face of an economic slowdown.

The impact of fewer supply delays and weakened manufacturing demand on industrial prices is further illustrated by chart 10 and explored in more detail in our recent analysis of the global manufacturing sector. The current situation appears to be one of persistent – albeit moderating – supply shortages providing the main support to prices, offsetting to some extent the drag from weakened demand.

As for wage growth, labour markets remain tight and there have been rising incidences around the world of upward wage negotiating power linked to strikes. However, even these labour market pressures could soon moderate if global demand for goods and services continues to falter. As chart 13 shows, it would be unusual for hiring to remain at current levels in the face of the weakening of demand seen in recent months (read more in our global overview here).

To summarize, demand is slowing across the board and across the world while inventories are elevated following the frantic buying of the past year. Supply channels are improving while commodity prices are declining. This is slowing input costs inflation. Add rising discounting to sustain demand and liquidate excess inventories and you get slower selling prices inflation.

Dropping new orders and reduced growth expectations are about to impact employment which will then help ease wage pressures.

Such increasingly plausible narrative has not reached FOMC members yet.

Roaring US Rental Market Shows Early Signs of Slowing Down

After surging 11.4% over the past 12 months, the median national rent for a one-bedroom apartment rose just 0.5% in June compared to a month earlier, while the median two-bedroom rent fell 2.9%, according to data from rental marketplace Zumper. (…)

Rents typically peak during the summer months, but surging inflation and talk of a recession are causing Americans to tighten their belts and reconsider their living arrangements, whether it’s moving in with roommates or sacrificing on space and location. Rising mortgage rates are also forcing some home sellers to slash their listing prices, creating “pockets of opportunity for renters who’ve been looking to buy a home for years” and likely contributing to the drop for two-bedroom apartments, Zumper said. (…)

Toronto Home Sales Plunge 41%; Prices Drop for Fourth Month

The average price of a home in the country’s largest city fell 3% in June to C$1.14 million (about $875,000) on a seasonally-adjusted basis, bringing the total decline to more than 11% since February, according to data released Wednesday by the Toronto Regional Real Estate Board.

Fewer than 6,500 homes were sold during the month, down nearly 5% from the previous month — and 41% lower than a year ago. (…)

The number of homes for sale in Toronto soared 43% in June from the same month last year, to more than 16,000, while properties are now staying on the market an average of seven days longer, the report shows. (…)

A separate report Tuesday showed Vancouver, long Canada’s most-expensive housing market, register a 2% drop in its benchmark home price in June.

• Toronto Office Vacancies Rise to a Record on Recession Fears The rate rose to 11.9% as nearly half a million square feet of space that became available downtown in Canada’s financial capital failed to find a tenant, according to a report Wednesday by commercial brokerage CBRE.

Companies Plan Additional Cuts to Office Space Amid Looming Downturn Finance executives are analyzing data on workers’ office usage and the economic outlook to gauge another round of real-estate reductions

(…) Vacancies have increased across the U.S. over the past year. About 17.5% of office space across the country wasn’t leased or was leased but available for sublease at the end of the second quarter, up from 16.5% a year earlier and 13.2% five years earlier, commercial real-estate firm Cushman & Wakefield PLC said.

Occupancy rates also remain below prepandemic levels. During the week ended June 29, the average occupancy rate in 10 major U.S. metro areas was 44% down from over 95% before the pandemic began, according to Kastle Systems, which operates security systems in U.S. office buildings. Kastle tracks how many people are entering buildings based on anonymized data from its swipe-entry systems. (…)

About 52% of companies expect to shrink their office space over the next three years, up from 44% a year earlier, a recent CBRE survey among 185 businesses with U.S. offices found. That’s compared with 39% that intend to expand, up from 29% a year earlier, and 9% that foresee no change, down from 27% a year earlier. (…)

Euro Area Retail Sales Remain Weak

(…) In May total retail sales volume in the euro area rose by 0.2% following a 1.4% drop in April and a 0.5% increase in March. Over three months, the retail volume is declining at a 2.8% annual rate; that’s an improvement from the six-month growth rate of -4.4% but still a deterioration from a 0.2% decline over 12 months.

Two months into the second quarter (quarter-to-date), retail sales are falling at a 3.7% annualized pace. (…)

Over three months the German retail sales volume is falling at a 12% annual rate (…). In the quarter-to-date, German volumes are down at a 17.6% annual rate (…).

US, Allies Discuss Capping Russian Oil at $40-$60 a Barrel to Cut War Financing

(…) At the summit in Germany on June 28 leaders agreed to explore options to cap prices by banning insurance and transportation services needed to ship Russian crude and petroleum products unless the oil is purchased below an agreed price. (…)

The range spans from what is believed to be Russia’s marginal cost of production and the price of its oil before the Feb. 24 invasion of Ukraine, the people said. The Biden administration considers a cap of $40 to be too low, two of the people said. The aim is to cut Moscow’s revenue for its war in Ukraine but the risk is that poorly executed measures would lead to a spike in oil prices. (…)

  In Voyager Bankruptcy, Crypto Trader Alameda Is Creditor, Shareholder and Borrower Alameda Research provided emergency credit lines to the now-bankrupt crypto lender, in which it owned a minority stake. Bankruptcy filings show Alameda was also a customer.

(…) Alameda “seems to be wearing every possible hat in Voyager’s bankruptcy,” as a creditor, shareholder and borrower, said Georgetown Law professor Adam Levitin. “There is a general phenomenon of a lot of recycled capital within crypto, and this is an example of that.” (…)

Mr. Bankman-Fried’s other company, the cryptocurrency exchange FTX, has backstopped another crypto lender, BlockFi, to stave off the crypto equivalent of a bank run. (…)

Many of Voyager’s own investments as a crypto lender were in the form of loans to other crypto companies. (…)

Beijing Rolls Out China’s First Ever Covid Vaccine Mandate

(…) The city will require live performances, entertainment venues such as movie theaters, museums and gyms, as well as training and tutoring locations, to restrict entry to people who are vaccinated, Li Ang, deputy director at the Beijing Municipal Health Commission, told reporters at a briefing Wednesday.

The requirement will also apply to medical staff, people working in community service operations, home furnishing operators, express delivery providers and conference attendees. They’ll need to have received a booster shot to continue as normal, Li said. There will be exemptions for people who don’t qualify for vaccination. (…)

Beijing’s elderly vaccination rate is above 80%, while Shanghai lags behind at 70%. Nearly 90% of the country’s total 1.4 billion population are fully vaccinated with homegrown shots.