China: Housing boom spreads to smaller cities, posing dilemma
China’s property boom is shifting from Beijing and Shanghai as government measures to curb the market haven’t kept prices from rising in secondary cities. New home prices rose in 67 of 70 cities in May led by smaller centers as developers hold off price cuts, even as existing home prices cool following higher interest rates and down-payment requirements. Efforts to rein in property prices have been focused on the nation’s largest urban areas, leaving less affluent cities such as Urumqi in the northwest and northeastern Dandong with surging home values as developers increased building there. That raises challenges for a government that last week escalated its fight against inflation by raising bank reserve requirements for the ninth time since October. (Bloomberg)
France: Business confidence unexpectedly rose for the first time in three months in June as demand for manufactured goods increased at home and abroad. An index of sentiment among factory executives climbed to 109 from a revised 106 in May, national statistics institute Insee said in an emailed statement from Paris. (Source: Bloomberg)
Taiwan: Unemployment rate unexpectedly climbed from the lowest level in more than two years last month. The seasonally adjusted rate rose to 4.41% in May from 4.35% in April, the statistics bureau said in Taipei. That's the first advance since August 2009. (Source: Bloomberg)
EU: Greece vote turns spotlight back on German-ECB ‘Cage Match’
The Greek Parliament’s vote of confidence in Prime Minister George Papandreou shifts the spotlight back to Germany and the European Central Bank as key to Greece’s quest for further international financial aid. Lawmakers in Athens supported Papandreou in a 155-143 vote after the prime minister shuffled his Cabinet and sought the chamber’s approval. The vote may bolster Greece’s chances of securing a EUR12bn (USD17bn) loan payment, which hinges on support from European leaders and on Greece’s ability to push through UER78bn in additional budget cuts next week. The Frankfurt-based central bank and German Chancellor Angela Merkel’s government have clashed over the role of private creditors in the Greek rescue, with the ECB resisting Germany’s calls to require investor participation. (Bloomberg)
US: Bernanke sees small impact on US banks of a Greek default
Federal Reserve Chairman Ben S. Bernanke said a default by Greece would have little impact on US banks, which aren’t “significantly exposed” to European nations struggling to meet debt payments. “We have asked the banks to essentially do stress tests and ask, looking at all their positions, all their hedges, what would the effect on their capital be if Greece defaulted,” Bernanke said to reporters yesterday. “The answer is that the effects are very small.” Bernanke and Fed Governor Daniel Tarullo have led sweeping changes in the central bank’s approach to supervision, establishing the Large Institution Supervision Coordinating Committee. Bernanke said the Fed has also kept “a close eye” on money-market mutual funds, which hold dollar liabilities issued by European banks to fund their holdings of dollar assets. (Bloomberg)
US: Fed to maintain record stimulus after ending bond purchases
Federal Reserve officials decided to keep the central bank’s balance sheet at a record to spur the slowing economy after completing USD600bn of bond purchases this month. “The economic recovery appears to be proceeding at a moderate pace, though somewhat more slowly than the committee had expected,” Fed Chairman Ben S. Bernanke said yesterday. Bernanke and his colleagues on the panel cut their growth forecasts for this year and next and raised their estimates for the unemployment rate, driving stocks lower. (Bloomberg)
U.K: Bank of England officials voted 7-2 to keep interest rates on hold this month as some of the majority saw a risk more bond purchases may be needed because of potential downside risks to growth and inflation. Chief Economist Spencer Dale and Martin Weale continued a push for a quarter-point increase in the benchmark rate. Governor Mervyn King and the other six members of the Monetary Policy Committee, including Ben Broadbent, voted for no change. Adam Posen kept up a call for more bond purchases. (Source: Bloomberg)
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