China Takes Bold Step to Fix Housing Market By Vicky Ge Huang
China announced plans to clear a backlog of unsold homes, but questions remain over scale and financing. Meanwhile, the housing market is cooling in some cities in Florida and Texas. And the Supreme Court rejected a conservative-backed challenge that could have dismantled the Consumer Financial Protection Bureau.
Read on for this news and more.
Top News China Is Finally Getting Serious About a Housing Rescue
China rolled out its boldest steps yet to fix its broken housing market , as Beijing sought to finally bring to an end a drawn-out real-estate crunch that has hobbled its economy for years.
The centerpiece of Friday's measures is Beijing's embrace of a policy already being tested in some cities in China - getting city and local authorities to buy up unsold homes and convert them into affordable housing for low- and middle-income families.
U.S. Economy Florida and Texas Show Signs of Home Prices Falling
In most of the U.S., the limited number of homes for sale is pushing prices back toward record highs.
Yet the market is cooling and prices have started falling in some cities in Florida and Texas, where robust home-building activity in recent years has helped boost the number of homes for sale. The two states accounted for more than a quarter of all single-family residential building permits every year from 2019 to 2023, according to Census Bureau data.
Financial Regulation Federal Consumer Financial Watchdog Survives Supreme Court Scrutiny
The Supreme Court rejected a conservative-backed challenge that could have dismantled the CFPB, ruling that Congress had authority to insulate the agency's funding stream from political interference.
Forward Guidance Tuesday (all times ET)
7 p.m.: Atlanta Fed's Bostic, Boston Fed's Collins, Cleveland Fed's Mester speak at Atlanta Fed conference.
Wednesday (all times ET)
10 a.m.: National Association of Realtors releases U.S. existing-home sales for April.
2 p.m.: Fed releases minutes of April 30-May 1 FOMC meeting.
Research BofA Strategists Say U.S. Rates Now at Fair Levels
U.S. rates now appear to be at fair levels, after falls in the past week following in-line inflation data and a soft retail sales print, say Bank of America rates strategists. "We now see U.S. rates as close to fair and are neutral duration," they say in a note. They continue to believe that investors should be aiming to trade in the 4%-4.5% range in 10-year U.S. Treasurys, increasing duration near or above the 4.5% yield level and lightening duration exposure near or below 4%. - Emese Bartha
Basis Points The European Union could well follow the U.S. in upping import charges on Chinese electric vehicles, economist Andrew Kenningham at Capital Economics writes in a note. President Biden this week set out plans to sharply raise U.S. tariffs on Chinese EVs and other clean-energy goods, a move aimed at countering Chinese efforts to boost exports. The EU is meanwhile investigating Chinese subsidies to EVs, and could raise its tariffs on the vehicles to 25%, Kenningham says. Chinese investment in Europe could also be restricted if security concerns mount or the U.S. exerts pressure on European authorities, he says. "Europe is set to increase tariffs and use other ... instruments to de-risk its economy from China," Kenningham says. But we think it will do so gradually and with carefully targeted measures." - Joshua Kirby The Japanese yen remains weak despite the Bank of Japan's initial normalization of monetary policy and its intervention on the foreign exchange market, Nordine Naam and Kohei Iwahara, FX strategists at Natixis Research, say in a note. "In the absence of action by the BOJ, USD/JPY will move in line with U.S. long term rates, and especially U.S. inflation," they say. If U.S. inflation keeps decelerating, U.S. 10-year Treasury yields will continue to decline, resulting in a weaker dollar and benefiting the yen in the long run, they say. For the coming weeks, they keep a forecast of 155 for USD/JPY and a slow decline toward 150 by the end of the year, with U.S. long rates remaining stable around the current level of 4.30%. - Emese Bartha China's benchmark lending rates were held steady this month, central bank data showed Monday after Beijing announced bold moves to address property-sector malaise. The one-year loan prime rate was steady at 3.45% while the five-year rate was unchanged at 3.95%, according to the official data. The Bank of England could cut its key interest rate over the coming months if wage growth and the rise in services prices show signs of cooling as forecast, Deputy Governor Ben Broadbent said Monday. The U.K.'s central bank left its key interest rate at a 16-year high earlier this month, but signaled that it is getting closer to a cut. Two of the Monetary Policy Committee's nine members voted for a rate cut, but Broadbent sided with the majority. - Paul Hannon JPMorgan Chase's Jamie Dimon and other big-bank CEOs played hardball with the Federal Reserve over proposals that the lenders hold more capital. Now, it looks like those tactics are paying off. The Fed and two other federal regulators are moving toward a plan that would significantly lessen a nearly 20% mandated increase in capital for the biggest U.S. banks , according to people familiar with the matter. - Andrew Ackerman Japan's 10-year government bond yield climbed to an 11-year high on Monday, driven by growing market expectations that the Bank of Japan 8301 0.66%increase; green up pointing triangle will take additional steps to tighten policy in the coming months. The 10-year yield rose to 0.975%, its highest level since May 2013. - Kosaku Narioka About Us
WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com[].
This article is a text version of a Wall Street Journal newsletter published earlier today.
(END) Dow Jones Newswires
05-20-24 0715ET
