Fed's Barr: Lowering Liquidity Rules is Wrong Objective
Federal Reserve Governor Michael Barr asserted that reducing bank liquidity requirements to shrink the Fed's balance sheet is a wrong objective. He warned such proposals would undermine bank resilience, impede money market functioning, and threaten financial stability.
Barr noted that the 2023 bank stresses suggest liquidity requirements should increase, not decrease. He argued that allowing less liquidity could force banks to rely on Fed facilities during crises, potentially expanding the Fed's market footprint.
He emphasized that the Fed's balance sheet size is the wrong measure of its market influence. The focus, he stated, should be on effective monetary policy implementation, which the current regime has successfully achieved for years.
Federal Reserve Governor Michael Barr asserted that reducing bank liquidity requirements to shrink the Fed's balance sheet is a wrong objective. He warned such proposals would undermine bank resilience, impede money market functioning, and threaten financial stability.
Barr noted that the 2023 bank stresses suggest liquidity requirements should increase, not decrease. He argued that allowing less liquidity could force banks to rely on Fed facilities during crises, potentially expanding the Fed's market footprint.
He emphasized that the Fed's balance sheet size is the wrong measure of its market influence. The focus, he stated, should be on effective monetary policy implementation, which the current regime has successfully achieved for years.
New Zealand Home Prices Slip as Living Costs Bite
New Zealand's home prices decreased in April, marking the first clear sign that rising living costs are significantly impacting buyer sentiment. Median house prices fell 0.5% from March and 0.6% year-on-year, with national sales also declining.
The Real Estate Institute of New Zealand noted that buyers remain active but are more measured due to pressures from fuel, food, and insurance costs. The housing market, which previously hoped for interest rate cuts, now faces the possibility of hikes as inflation (3.1% in Q1) remains above the central bank's 1-3% target.
The RBNZ, having held its cash rate at 2.25% since December, has signaled decisive action if inflation intensifies. Markets now anticipate a 50% chance of a 0.25% rate hike this month, with further increases possible by year-end.
New Zealand's home prices decreased in April, marking the first clear sign that rising living costs are significantly impacting buyer sentiment. Median house prices fell 0.5% from March and 0.6% year-on-year, with national sales also declining.
The Real Estate Institute of New Zealand noted that buyers remain active but are more measured due to pressures from fuel, food, and insurance costs. The housing market, which previously hoped for interest rate cuts, now faces the possibility of hikes as inflation (3.1% in Q1) remains above the central bank's 1-3% target.
The RBNZ, having held its cash rate at 2.25% since December, has signaled decisive action if inflation intensifies. Markets now anticipate a 50% chance of a 0.25% rate hike this month, with further increases possible by year-end.
Yen's Brief Surges Spark Intervention Talk
The Japanese yen has recently displayed a pattern of sudden, short-lived gains against the dollar. This has led market participants to speculate that Japanese authorities may be conducting discreet, smaller operations to limit the currency's weakness.
Examples include a 0.5% jump on Thursday and a similar rise on Tuesday, both quickly reversing. A 0.2% climb on May 8 also reversed. These momentary surges, occurring at various times, suggest Tokyo's concern over yen depreciation.
While definitive proof is lacking, and unlike past interventions, there are no public warnings or clear BOJ signals, the potential for official action adds risk to betting against the yen.
The Japanese yen has recently displayed a pattern of sudden, short-lived gains against the dollar. This has led market participants to speculate that Japanese authorities may be conducting discreet, smaller operations to limit the currency's weakness.
Examples include a 0.5% jump on Thursday and a similar rise on Tuesday, both quickly reversing. A 0.2% climb on May 8 also reversed. These momentary surges, occurring at various times, suggest Tokyo's concern over yen depreciation.
While definitive proof is lacking, and unlike past interventions, there are no public warnings or clear BOJ signals, the potential for official action adds risk to betting against the yen.
Bitcoin Suisse Expands Global Reach with Bermuda Licenses
Bitcoin Suisse (International) Ltd., an affiliate, secured a Class F digital asset business license and Class B investment business registration from the Bermuda Monetary Authority (BMA).
This pre-operational approval enables Bitcoin Suisse to provide regulated digital asset management and investment advisory services to professional and institutional clients beyond Switzerland. It signifies a major stride in the group's international expansion, aiming to establish a global wealth management platform.
Group CEO Andrej Majcen emphasized the need for crypto expertise coupled with traditional financial standards for institutional investors. Bermuda's robust regulatory framework supports this expansion, enhancing Bitcoin Suisse's global footprint.
Bitcoin Suisse (International) Ltd., an affiliate, secured a Class F digital asset business license and Class B investment business registration from the Bermuda Monetary Authority (BMA).
This pre-operational approval enables Bitcoin Suisse to provide regulated digital asset management and investment advisory services to professional and institutional clients beyond Switzerland. It signifies a major stride in the group's international expansion, aiming to establish a global wealth management platform.
Group CEO Andrej Majcen emphasized the need for crypto expertise coupled with traditional financial standards for institutional investors. Bermuda's robust regulatory framework supports this expansion, enhancing Bitcoin Suisse's global footprint.
Hong Kong's Economy Grows 5.9% in Q1
Hong Kong's economy expanded by a robust 5.9% in the first quarter year-on-year, driven by strong exports and rising private consumption.
This represents a notable acceleration from the 4.0% growth seen in Q4 2025 and 3.1% in Q1 last year. Seasonally adjusted, the economy grew 2.9% from January to March, up from 1.0% in the preceding quarter.
Hong Kong's economy expanded by a robust 5.9% in the first quarter year-on-year, driven by strong exports and rising private consumption.
This represents a notable acceleration from the 4.0% growth seen in Q4 2025 and 3.1% in Q1 last year. Seasonally adjusted, the economy grew 2.9% from January to March, up from 1.0% in the preceding quarter.
US April Budget Surplus Shrinks to $215 Billion
The U.S. government posted a $215 billion budget surplus in April, down 17% ($43 billion) from $258 billion a year prior. This decrease stems from larger tax refunds and rising outlays, including higher interest costs.
Individual refunds surged 17% to $101 billion, boosted by new tax breaks. Corporate tax receipts fell 8% to $89 billion, while corporate refunds doubled. Overall receipts were down 2% to $837 billion, and outlays rose 5% to $622 billion.
The fiscal year-to-date deficit for the first seven months decreased 9% to $954 billion. Receipts climbed 7% to $3.320 trillion, with outlays up 3% to $4.274 trillion.
The U.S. government posted a $215 billion budget surplus in April, down 17% ($43 billion) from $258 billion a year prior. This decrease stems from larger tax refunds and rising outlays, including higher interest costs.
Individual refunds surged 17% to $101 billion, boosted by new tax breaks. Corporate tax receipts fell 8% to $89 billion, while corporate refunds doubled. Overall receipts were down 2% to $837 billion, and outlays rose 5% to $622 billion.
The fiscal year-to-date deficit for the first seven months decreased 9% to $954 billion. Receipts climbed 7% to $3.320 trillion, with outlays up 3% to $4.274 trillion.
Euronext Wheat Surges 4% on 54-Year US Crop Low
Euronext wheat futures climbed, tracking gains in Chicago after the USDA projected the smallest U.S. wheat crop since 1972. This forecast, driven by drought in the U.S. Plains, saw September milling wheat settle 4% higher at 216.50 euros/ton, posting a second consecutive day of gains.
The USDA’s 2026/27 forecast and global wheat stock estimates both fell below average projections, citing reduced output. Chicago wheat surged over 6%, while Kansas wheat jumped by its daily limit. Rising oil prices, amid stalled U.S.-Iran peace talks threatening energy and fertilizer supplies, also provided support to grain markets.
Euronext wheat futures climbed, tracking gains in Chicago after the USDA projected the smallest U.S. wheat crop since 1972. This forecast, driven by drought in the U.S. Plains, saw September milling wheat settle 4% higher at 216.50 euros/ton, posting a second consecutive day of gains.
The USDA’s 2026/27 forecast and global wheat stock estimates both fell below average projections, citing reduced output. Chicago wheat surged over 6%, while Kansas wheat jumped by its daily limit. Rising oil prices, amid stalled U.S.-Iran peace talks threatening energy and fertilizer supplies, also provided support to grain markets.
Goolsbee Disappointed by Latest Inflation Data
Chicago Fed President Austan Goolsbee voiced "unexpected disappointment" over the latest consumer inflation report, specifically citing accelerating services inflation. He views this as evidence of "broader price pressures."
Goolsbee stated inflation is "going the wrong way," noting this isn't solely due to oil or tariffs. He expressed nervousness about services inflation, stressing it must "at least stop growing and hopefully start going back down," as it's not oil-related.
Chicago Fed President Austan Goolsbee voiced "unexpected disappointment" over the latest consumer inflation report, specifically citing accelerating services inflation. He views this as evidence of "broader price pressures."
Goolsbee stated inflation is "going the wrong way," noting this isn't solely due to oil or tariffs. He expressed nervousness about services inflation, stressing it must "at least stop growing and hopefully start going back down," as it's not oil-related.
Investment Funds Trim Wheat Holdings on Euronext
Investment funds significantly reduced their net long positions in Euronext milling wheat futures and options for the week ending May 7. Non-commercial participants cut their net long exposure from 71,271 to 54,898 contracts.
Commercial traders also lowered their net short positions, moving from 59,533 to 55,735 contracts.
In rapeseed futures, non-commercial players sharply decreased their net longs from 60,789 to 17,813 contracts. Commercial participants made a notable shift, moving from a net short of 66,806 to a net long of 3,587 contracts.
Investment funds significantly reduced their net long positions in Euronext milling wheat futures and options for the week ending May 7. Non-commercial participants cut their net long exposure from 71,271 to 54,898 contracts.
Commercial traders also lowered their net short positions, moving from 59,533 to 55,735 contracts.
In rapeseed futures, non-commercial players sharply decreased their net longs from 60,789 to 17,813 contracts. Commercial participants made a notable shift, moving from a net short of 66,806 to a net long of 3,587 contracts.
New Fed Head, Trump's China Deal, & AI's Growing Market Influence
This week's market focus: Trump's forced China visit, sparked by tariff reversals, is redrawing global IT market lines. Leaders set terms for US AI tech sales to China and strict autonomous weapon controls, impacting global trade flows.
Kevin Warsh's appointment as Fed head, a unique __pro-crypto__ advocate, signals long-term legalization despite his high-interest policies curbing risky assets. Meanwhile, the CLARITY Act debate intensifies as banks battle stablecoin rewards, fearing crypto platforms will drain traditional deposits.
AI demonstrated its power as a chatbot recovered a user's 5 BTC wallet after 11 years by fixing a password bug, raising "AI hack" concerns. This underscores AI's analytical strength but also the inherent risk of uploading encrypted keys.
This week's market focus: Trump's forced China visit, sparked by tariff reversals, is redrawing global IT market lines. Leaders set terms for US AI tech sales to China and strict autonomous weapon controls, impacting global trade flows.
Kevin Warsh's appointment as Fed head, a unique __pro-crypto__ advocate, signals long-term legalization despite his high-interest policies curbing risky assets. Meanwhile, the CLARITY Act debate intensifies as banks battle stablecoin rewards, fearing crypto platforms will drain traditional deposits.
AI demonstrated its power as a chatbot recovered a user's 5 BTC wallet after 11 years by fixing a password bug, raising "AI hack" concerns. This underscores AI's analytical strength but also the inherent risk of uploading encrypted keys.
S&P 500 Futures Dip After Stronger-Than-Expected April PPI
S&P 500 futures slipped into negative territory today after April producer price data exceeded expectations, reinforcing beliefs that the Federal Reserve will maintain current interest rates. The Producer Price Index (PPI) surged to 6% annually, surpassing the 4.9% forecast. Monthly, it jumped 1.4% against a 0.5% estimate.
Core PPI, excluding volatile food and energy components, also came in higher than predicted: 5.2% annually (vs. 4.3% estimated) and 1% monthly (vs. 0.3% estimated). Dow E-minis dipped 0.54%, S&P 500 E-minis lost 0.05%, while Nasdaq 100 E-minis saw a 0.43% gain.
S&P 500 futures slipped into negative territory today after April producer price data exceeded expectations, reinforcing beliefs that the Federal Reserve will maintain current interest rates. The Producer Price Index (PPI) surged to 6% annually, surpassing the 4.9% forecast. Monthly, it jumped 1.4% against a 0.5% estimate.
Core PPI, excluding volatile food and energy components, also came in higher than predicted: 5.2% annually (vs. 4.3% estimated) and 1% monthly (vs. 0.3% estimated). Dow E-minis dipped 0.54%, S&P 500 E-minis lost 0.05%, while Nasdaq 100 E-minis saw a 0.43% gain.
China's Tariffs on US Energy & Agri Goods Ahead of Key Summit
President Trump's upcoming Beijing visit for talks with Xi Jinping aims to address potential energy and agriculture deals, though trade remains heavily impacted by China's existing tariffs.
Current Chinese duties on US imports include: Crude oil at 20%, LNG at 25%, and propane/ethane at 11%. Coal faces significant tariffs, ranging from 28% to 31%. In agriculture, soybeans are taxed at 13%. Beef imports incur duties from 22% to a steep 77% if quota levels are surpassed, a measure supporting China's domestic cattle industry. These levies combine product-specific, retaliatory, and general import charges.
President Trump's upcoming Beijing visit for talks with Xi Jinping aims to address potential energy and agriculture deals, though trade remains heavily impacted by China's existing tariffs.
Current Chinese duties on US imports include: Crude oil at 20%, LNG at 25%, and propane/ethane at 11%. Coal faces significant tariffs, ranging from 28% to 31%. In agriculture, soybeans are taxed at 13%. Beef imports incur duties from 22% to a steep 77% if quota levels are surpassed, a measure supporting China's domestic cattle industry. These levies combine product-specific, retaliatory, and general import charges.
Italy's April Inflation Revised Down to 2.8% Annually
Italy's consumer prices in April rose less than initially estimated. Revised data shows the EU-harmonised consumer price index increased 1.6% month-on-month and 2.8% year-on-year. This is a downward revision from preliminary figures of 1.7% monthly and 2.9% annually.
Despite the downward revision, the 2.8% annual rate for April marks an acceleration from March's 1.6%. The main domestic price index also saw an annual increase of 2.7%, up from 1.7% in March. Core inflation, excluding fresh food and energy, eased to 1.6% year-on-year on the HICP index, down from 1.8% the previous month.
Italy's consumer prices in April rose less than initially estimated. Revised data shows the EU-harmonised consumer price index increased 1.6% month-on-month and 2.8% year-on-year. This is a downward revision from preliminary figures of 1.7% monthly and 2.9% annually.
Despite the downward revision, the 2.8% annual rate for April marks an acceleration from March's 1.6%. The main domestic price index also saw an annual increase of 2.7%, up from 1.7% in March. Core inflation, excluding fresh food and energy, eased to 1.6% year-on-year on the HICP index, down from 1.8% the previous month.