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05/15/2023

Inflation in Sweden slowed faster than expected in April, data from the statistics office showed on Monday, good news for the central bank that has fretted that price pressure could prove sticky and force it to make monetary policy tighter for longer.

Consumer prices in Sweden, measured with a fixed interest rate, rose 0.2% in April from the previous month and were up a 7.6% from the same month last year, the statistics office (SCB) said in a statement.

The central bank targets 2% CPIF inflation. Stripping out volatile energy prices - a measure the central bank is looking closely at - underlying inflation was 8.4% on the year.

For headline inflation, analysts had forecast 7.9%, the same as the Riksbank. Underlying inflation was seen by analysts at 8.7% and at 8.6% by the Riksbank.

Central banks have pushed up rates at a record pace over the last year. Economic growth is slowing and the strain of higher rates has revealed fault lines in the financial system.

Inflation seems to have peaked, but it remains much too high. Rate-setters are worried that if it does not fall quickly, it will prove even harder to control price pressures in the longer term, presenting them with a nasty choice - increase the pain for households or let their grasp on prices slip.

At the end of April, the Riksbank raised rates by a half-percentage-point to 3.50%. Another quarter-point hike is expected in June or September, before the tightening cycle comes to an end.

Policy-makers said they were ready to rethink the plan if price pressures did not fall back as expected.

April's dip in inflation will give the Riksbank some breathing space and, if supported by another reassuring outcome in May, could even be enough for them to draw a line under the past year's long string of rate increases.

"We think that the Riksbank is going to hold the policy rate around the current level for the rest of the year and next year," Lars Kristian Feste, head of fixed income at Ohman Fonder, said.

Markets see another increase but then interest rates starting to fall around mid-2024.

The crown was slightly weaker against the euro after the data.

May inflation data is due on June 14. The Riksbank will announce its next policy decision on June 29.

05/15/2023

Billionaire entrepreneur Elon Musk will attend a business conference close to Paris and meet French President Emmanuel Macron and other political leaders on Monday, the Elysee palace said, confirming earlier media reports.

BFM TV earlier reported that Musk, the CEO of Tesla (NASDAQ:TSLA) who bought social network Twitter in a $44 billion deal last year, would meet Macron and Finance Minister Bruno Le Maire.

Musk will also visit the sixth edition of the annual "Choose France" summit in Versailles, aimed at promoting France's attractiveness for international investments.

Talks with Musk would not center on the Choose France conference alone, Bruno Le Maire told BFM TV, adding there were ongoing discussions between the government and Musk in several fields, from space exploration to car manufacturing.

05/15/2023

Most Asian stock markets retreated on Monday as investors hunkered down before a string of Chinese economic readings, while monetary policy signals from a slew of Federal Reserve speakers were also on tap later in the week.

China’s Shanghai Composite index was the worst performer for the day, down 1.1% as local industrial, shipping, and media stocks logged steep losses amid waning optimism over an economic recovery in the country.

The blue-chip Shanghai Shenzhen CSI 300 index fell 0.4%, with investors now awaiting industrial production, retail sales and fixed asset investment data from China, due on Tuesday. While the data is expected to reflect some improvement in April from the prior month, it also comes after a string of Chinese economic readings missed expectations for the month.

Chinese imports, inflation and manufacturing activity all shrank in April, indicating that a post-COVID rebound was running out of steam.

Weakness in China soured sentiment towards broader Asian markets, given the country’s role as a major trading hub for the region. Hong Kong’s Hang Seng index was flat on Monday, while South Korea’s KOSPI and the Taiwan Weighted index lost 0.3% each.

Australia’s ASX 200 lost 0.1% as data showing a continued decline in building approvals pointed to continued weakness in the country’s housing market, which in turn weighed on heavyweight bank stocks.

Shares of Newcrest Mining Ltd (ASX:NCM), the country’s largest gold miner, rose 1.2% after its board recommended a $17.8 billion takeover offer from U.S. miner Newmont Corp (NYSE:NEM).

Regional markets took a weak lead-in from Wall Street following softer-than-expected consumer sentiment data on Friday, which pointed to slowing growth as the world’s largest economy grapples with high interest rates and sticky inflation.

Focus this week is now on U.S. industrial production and retail sales data for more cues on the world’s largest economy. Markets are also awaiting a barrage of Fed speakers this week, most notably Fed Chair Jerome Powell on Friday, for more insight into monetary policy, amid growing expectations that the Fed will keep rates higher for longer.

Japan’s Nikkei 225 index was the sole outlier for the day, rising 0.7% as softer-than-expected producer inflation data pointed to less pressure on the Bank of Japan to tighten policy this year. Sentiment towards Japan was also aided by a stellar first-quarter earnings season.

India's Nifty 50 index rose 0.2% in early trade, ahead of a reading on wholesale price inflation in April.

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