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UK Inflation Exceeds 2% In May

UK consumer price inflation exceeded the central bank’s target in May, data released by the Office for National Statistics showed on Wednesday.

Consumer price inflation accelerated to 2.1 percent in May from 1.5 percent in April. This was above economists’ forecast of 1.8 percent and the Bank of England’s target of 2 percent.

Excluding volatile energy, food, alcoholic beverages and tobacco prices, core inflation rose to 2 percent in May from 1.3 percent in April. The rate was forecast to rise to 1.5 percent.

The monthly growth in consumer prices held steady at 0.6 percent, while it was forecast to ease to 0.3 percent.

Another report from the ONS showed that output price inflation came in at 4.6 percent versus 4.0 percent in April and economists’ forecast of 4.5 percent.

At the same time, input price inflation increased to 10.7 percent from 10.0 percent in April. This was the highest rate since September 2011 and above the expected rate of 10.6 percent.

Month-on-month, output prices gained 0.5 percent, slightly faster than the 0.4 percent rise seen in April. At the same time, input price growth slowed marginally to 1.1 percent from 1.2 percent.

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(Australia) Westpac Leading Index Signals Above Trend Growth

Australia’s economy is set to log a more sustainable above trend growth through the remainder of 2021 and 2022, according to Westpac report, released Wednesday.

The six-month annualized growth rate in the Westpac-Melbourne Institute Leading Index, slowed to 1.47 percent in May from 2.86 percent in April.

Over the second half of 2021, Westpac expects that annualised pace to slow further to 4.5 percent, while the next year growth is forecast at a more normal but still healthy 3.2 percent.

The second half growth forecast is still well above trend but more in line with the six month annualized growth rate of 1.47 percent which the leading index has printed for May.

The index growth rate has moderated to 1.47 percent in May from just under 5 percent six months ago.

Two components account for most of the move, namely US industrial production and total hours worked. Both saw extremely strong ‘reopening rebounds’ as COVID restrictions were eased late last year.

Other components showed a more mixed performances over the six month period. On the plus side, commodity prices continued to surge. Most other components tended to follow the wider them of normalising growth.

Bill Evans, chief economist at Westpac said, given the improved pulse of the economic data in 2021, as signaled by the Leading Index, it seems unlikely that the central bank would expect to have to wait until 2025 before it achieves the objectives necessary to justify the first cash rate increase since November 2010.

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E.U. Economics Preview: Germany Industrial Output, Economic Confidence Due

Industrial production and economic confidence from Germany are due on Tuesday, headlining a light day for the European economic news.

At 2.00 am ET, Destatis is scheduled to issue Germany’s industrial production data for April. Economists forecast output to grow 0.5 percent on month, slower than the 2.5 percent increase in March.

At 2.45 am ET, foreign trade and current account figures are due from France.

At 3.00 am ET, industrial production from Hungary and retail sales from the Czech Republic are due. Economists forecast retail sales to grow 11.3 percent annually in April following a 6.6 percent rise in March.

Half an hour later, Statistics Sweden publishes industrial production and new orders data.

At 4.00 am ET, Italy’s Istat releases retail sales for April. Sales had decreased 0.1 percent on month in March.

At 5.00 am ET, Germany ZEW economic confidence survey results are due. The economic confidence index is forecast to rise to 86.0 in June from 84.4 in May.

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The FBI recovered a huge chunk of the Colonial Pipeline ransom

  • The DOJ seized $2.3 million of the ransom that Colonial Pipeline paid to hacking group Darkside.
  • The FBI tracked the payments to a bitcoin wallet, for which it happened to have the password.
  • This let the FBI legally seize the money and cut off Darkside’s access to its ransom money.

The Department of Justice announced Monday that it had recovered a majority of the ransom paid by Colonial Pipeline to hackers who shut down its operations last month and caused massive fuel shortages and price hikes.

The DOJ said that it had recovered $2.3 million worth of bitcoin out of the $4.4 million ransom that Colonial had paid to Darkside, the group behind the hack.

How did the government pull it off?

The FBI had what was effectively the password to a bitcoin wallet that Darkside had sent the ransom money to, allowing the FBI to simply seize the funds, according to the DOJ.

‘Following the money’

Despite cybercriminals’ increasingly sophisticated use of technology to commit crimes, the DOJ said it used a time-tested approach to recover Colonial’s ransom payment.

“Following the money remains one of the most basic, yet powerful tools we have,” Deputy Attorney General Lisa Monaco said in the DOJ’s press release.

Colonial was hacked by Darkside on May 7, and alerted the FBI that same day, according to the DOJ.

On May 8, with its operations knocked offline and amid an emerging gas crisis, Colonial opted to pay the ransom (much to the chagrin of government crimefighters who were simultaneously trying to shut down the hack).

Colonial told the FBI that Darkside had instructed it to send 75 bitcoin, worth about $4.3 million at the time, according to an affadavit from an FBI special agent involved in the investigation.

The FBI agent then used a blockchain explorer – software that lets users search a blockchain, like bitcoin, to determine the amount and destination of transactions – to figure out that Darkside had tried to launder the money through various bitcoin addresses (similar to bank accounts), according to the affadavit.

Eventually, through the blockchain explorer, the FBI agent was able to track 63.7 bitcoin to a single address that had received an influx of payments on May 27.

Fortunately for the FBI, according to the agent’s affadavit, the agency had the private key (effectively the password) for that very address.

Bitcoin addresses rely on a two-key encryption system to keep transactions secure: one public and one private. The public key is shared openly so anybody can send money to that address. But once the sender has encrypted their payment with the recipient’s public key, only the recipient’s private key can decrypt and gain access to that money.

That’s why private keys are meant to be closely held secrets, stored in a secure place. As of January, $140 billion in bitcoin – around 20% of existing bitcoin – were held in wallets where people had forgotten or lost their private keys.

In Darkside’s case, the FBI managed to gain access to its public key, and after getting a seizure warrant from a federal court, the agency used the key to access Darkside’s address and swipe 63.7 bitcoin, or around $2.3 million.

The FBI didn’t say how it had managed to obtain the key, but said it sent a warning to other potential ransomware hackers.

“Ransom payments are the fuel that propels the digital extortion engine, and today’s announcement demonstrates that the United States will use all available tools to make these attacks more costly and less profitable for criminal enterprises,” Monaco said in the release.

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Australia Business Conditions At Record High: NAB

Australia’s business conditions rose to a record high in May, while business sentiment weakened moderately from the previous month, survey results from National Australia Bank showed on Tuesday.

The business conditions index climbed to 37 in May from 32 in the prior month. Meanwhile, the business confidence indicator came in at 20 in May, down from a record high of 23 in the previous month.

The survey showed that the employment, profitability and trading sub-components all reset last month’s highs – with trading conditions at exceptional levels. Forward orders also remained at a record level.

The survey measure of reported capex rose further suggesting that the strong rise over 2021 is more than just a rebound from disruptions to activity and uncertainty during 2020. Overall, this was another very strong read for the business sector – and forward indicators point to ongoing strength in the near-term, NAB Group Chief Economist, Alan Oster, said. This is a pleasing result coming after last week’s national accounts which showed that the economy has now surpassed its pre-COVID level. The economy now appears to be entering a new period of growth after a very rapid rebound, Oster added.

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Japan’s GDP Contracts 3.9% On Year In Q1

Japan’s gross domestic product shrank an annualized 3.9 percent on year in the first quarter of 2021, the Cabinet Office said in Tuesday’s final reading.

That exceeded expectations for a decline of 4.8 percent following the 11.7 percent surge in the three months prior.

On a quarterly basis, GDP was down 1.0 percent – again beating forecasts for a decline of 1,2 percent following the 2.8 percent increase in the previous three months.

Capital expenditure was down 1.2 percent on quarter, matching expectations following the 4.3 percent gain in the previous quarter.

External demand was down 0.2 percent on quarter after rising 1.1 percent in the previous three months, while private consumption dropped 1.5 percent on quarter after gaining 2.2 percent three months earlier.

The GDP price index was down 0.1 percent on year after rising 0.2 percent in the three months prior.

Also on Tuesday:

• The Ministry of Finance said that Japan posted a current account surplus of 1,321.8 billion yen in April. That missed expectations for a surplus of 1,500.6 billion yen following the 2,650.1 billion yen surplus in March.

Exports were up 38.0 percent on year at 6,825.5 billion yen and imports gained an annual 11.3 percent at 6,536.0 billion yen for a trade surplus of 289.5 billion yen.

\The capital account showed a surplus of 3.4 billion yen, while the financial account saw a shortfall of 242.7 billion yen.

The Bank of Japan said that overall bank lending in Japan was up 2.9 percent on year in May, standing at 578.366 trillion yen. That follows the 4.8 percent increase in April.

Excluding trusts, bank lending gained an annual 2.2 percent to 501.954 trillion yen, slowing from the 4.3 percent expansion in the previous month.

Lending from trusts climbed 7.5 percent on year to 76.411 trillion yen after rising 8.3 percent a month earlier. Lending from foreign banks rose 2.5 percent on year to 3.381 trillion yen, up from 1.2 percent in April.

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European Economics Preview: Eurozone Retail Sales Data Due

Retail sales data from euro area is due on Friday, headlining a light day for the European economic news.

At 3.00 am ET, GDP data from Slovakia and retail sales from Hungary are due.

At 3.30 am ET, Germany’s construction PMI data for May is due.

At 4.30 am ET, IHS Markit publishes UK construction Purchasing Managers’ survey data for May. The index is forecast to rise to 62.3 from 61.6 in April.

At 5.00 am ET, Eurostat releases euro area retail sales data for April. Sales are forecast to fall 1.2 percent on month, reversing a 2.7 percent rise in March.

In the meantime, Greece GDP data is due from the Hellenic Statistical Authority. At 6.00 am ET, Ireland’s Central Statistics Office is scheduled to issue GDP data for the first quarter.

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India’s Central Bank Holds Key Rates As Expected

India’s central bank decided to keep its key interest rates unchanged and to continue with its accommodative stance as long as necessary.

At the end of three-day rate setting meeting, the Monetary Policy Committee of the Reserve Bank of India unanimously voted to hold the benchmark policy rate at 4.00 percent. The reverse repo rate was retained at 3.35 percent.

The Marginal Standing Facility rate and the Bank Rate were also left unchanged at 4.25 percent at the meeting.

Also, the committee unanimously decided to continue with accommodative stance as long as necessary to revive and sustain growth on a durable basis and continue to mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.

The central bank forecast the real GDP to grow 9.5 percent in the financial year 2021-22. Consumer price inflation inflation was projected at 5.1 percent during 2021-22.

Governor Shaktikanta Das unveiled additional steps to mitigate the adverse impact of the second wave of the pandemic. He announced a separate liquidity window of INR 150 billion to certain contact-intensive sectors.

Under the scheme, banks can provide fresh lending support to hotels and restaurants, tourism, aviation ancillary services, and other services that include private bus operators, car repair services, rent-a-car service providers, event/conference organizers, spa clinics, and beauty parlours/saloons.

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European Shares Seen Opening On Cautious Note

European stocks are likely to open on a cautious note Friday after robust U.S. economic data boosted the dollar and bond yields.

Concerns about higher inflation and sooner-than-expected monetary policy tightening are back in focus, with New York Fed President John Williams saying that it makes sense for Fed officials to begin discussing their options for adjusting policy.

Asian markets traded mixed and gold hovered near two-week lows after seeing its worst tumble since February, while oil dropped from over two-year highs on concerns about the patchy roll-out of anti-coronavirus vaccinations around the globe.

It’s a busy day ahead on the economic calendar, with Eurozone retail sales for April and construction PMI figures from Germany due out later in the session.

ECB President Lagarde and FED Chair Powell are scheduled to speak and any chatter on monetary policy could sway the market mood.

In the United States, trading is likely to be driven by reaction to the monthly jobs report, which could have a significant impact on the outlook for monetary policy.

Economists expect the report to show employment jumped by 664,000 jobs in May after climbing by 266,000 jobs in April. The unemployment rate is expected to dip to 5.9 percent from 6.1 percent.

U.S. stocks ended lower overnight as upbeat private payroll, jobless claims and service sector activity data led to renewed concerns about the outlook for monetary policy. Investors also mulled over a new report that Biden may be open to a lower tax hike.

The Dow slipped 0.1 percent and the S&P 500 dropped 0.4 percent while the tech-heavy Nasdaq Composite lost 1 percent.

European stocks ended Thursday’s session broadly lower as upbeat euro zone business growth data fanned fears of rising inflation.

The pan European Stoxx 600 eased 0.1 percent. France’s CAC 40 index shed 0.2 percent and the U.K.’s FTSE 100 dipped 0.6 percent, while the German DAX rose 0.2 percent.

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Singapore’s PMI Picks Up Steam In May – Markit

The private sector in Singapore continued to expand in May, and at a faster pace, the latest survey from Markit Economics showed on Thursday with a services PMI score of 54.4.

That’s up from 51.8 in April and it moves further above the boom-or-bust line of 50 that separates expansion from contraction.

Both manufacturing and services registered stronger performances in May, but the construction sector saw a sharp downturn. The finance and insurance sub-sector registered another rapid rate of expansion in activity.

The key domestic event that took place in May had been the reintroduction of Phase 2 restrictions mid-month. Some respondents noted an increase in output ahead of the setting of new restrictions contributing to the overall improvement of business activity. Foreign demand supported the increase in new orders, with renewed export growth in May following a marginal fall in April.