Bond traders are cutting expectations for U.S. inflation by the most since December, providing Federal Reserve Chairman Ben S. Bernanke the scope for additional stimulus as the central bank
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Stock futures rose Tuesday as government data showed that consumers spent slightly more in April as prices remained flat.
Dow Jones industrial average futures rose 60 points to 12,715. Standard & Poor’s 500 futures added 7.6 points to 1,341.7. Nasdaq composite futures rose 19 points to 2,604.
With gasoline prices down and possibly an earlier-than-usual start to the spring shopping season, the Commerce Department reported that retail sales rose 0.1 percent in April. Retail spending had risen 0.7 percent in March and 1 percent in February.
A very warm winter may have had shoppers out early, and could explain some of the slowdown in spending, as could lower gas prices.
However, even with gasoline removed, consumer spending rose only 0.2 percent.
U.S. consumer prices were flat last month as cheaper gas offset modest increases for food, clothing and housing. The data indicate that inflation remains in check, according to the Labor Department.
A pair of retailers, Home Depot and Saks, posted first quarter earnings Tuesday.
Shares of Saks Inc. slid more than 3 percent on disappointing revenue numbers, though profit rose 13 percent for the quarter.
And shares in The Home Depot Inc. slumped as well after full-year revenue guidance from the world’s biggest home-improvement company fell short of Wall Street expectations.
Germany and the European Commission on Tuesday called on EU nations to stick to their agreed budget cuts despite mounting voter discontent, but promised some new efforts to boost growth to alleviate economic hardship.
In elections on Sunday, voters in France and Greece gave strong support to parties who want to roll back or slow down the spending cuts and tax increases that have defined Europe’s response to its debt crisis.
That added to cries from labor unions and some governments for more measures to boost economic growth to offset the devastating impact on jobs that austerity measures are having.
Officials in Berlin and Brussels said there was some room for more reforms to help growth, but insisted that any new growth policies must not detract from Europe’s drive to lower its deficits.
European Commission President Jose Manuel Barroso said there could be no fundamental change in direction.
“What member states have to do is be consistent, implementing the policies that they have agreed,” Barroso told reporters on the eve of Europe Day, which celebrates the ever closer cooperation between the nations of the Continent. “Now, the key is implementation.”
On Sunday night, however, the calls from some European capitals were different, with French socialist president-elect Francois Hollande vowing that “austerity can no longer be inevitable.”
In Greece, parties that rejected belt-tightening made big gains and there were fears that the new leadership would renege on commitments made to secure the country’s massive rescue loans. An outright rejection of the bailout could eventually see Greece leave the euro currency bloc, a possibility that was unnerving financial markets.
As the debate over austerity intensified, EU President Herman Van Rompuy called for an informal summit of the 27 EU government leaders on May 23 to discuss economic growth and to prepare for a summit in June focused on job creation short term personal loans.
Barroso discounted the notion that Europe was going to revise its fiscal policy commitments.
“It would be completely demagogical and not serious to propose to some of our member states to relax now the efforts of fiscal consolidation,” he said.
He insisted that sustained debt reduction was essential to convince markets, build confidence and cut borrowing costs. “Every euro spent on interest payments is a euro less for jobs and investment,” he said.
Germany largely backed the Commission’s stance of staying rigid on fiscal restraint while seeking concerted measures for growth.
“The end of the debt policy has been agreed in Europe. It has to stay that way,” said German Foreign Minister Guido Westerwelle in Berlin.
Like Barroso, he suggested that economic growth could be enhanced, but through structural reforms _ not through increased government spending.
“It’s right that we are simultaneously creating new growth impulses. That’s why we have to add to the fiscal pact for less debt a growth pact for more competitiveness.
“I’m very confident that we will be able to overcome the crisis this way with less debt and more growth. Both belong together,” he said.
The debate on the policies should come up at the May 23 summit, the first for newly elected President Hollande.
Outgoing president Nicolas Sarkozy and German Chancellor Angela Merkel worked closely together to set the EU course out of the financial crisis. Now, Hollande comes in with his own agenda.
He said his first act as president will be to write a letter to other European leaders calling for a renegotiation of a budget-trimming treaty aimed at bringing the continent’s economies closer together _ a stance that puts him at odds with Merkel.
WASHINGTON
Japan
Treasury 10-year yields are poised to fall for the fifth straight week, the longest stretch since June, amid speculation the European sovereign-debt crisis is far from resolved.
The yield on the 10-year note traded below 2 percent for a sixth straight day even as governments committed more than $430 billion in fresh money to the International Monetary Fund to help it protect the world economy against turmoil in Europe. The Federal Reserve sold $8.63 billion in notes as part of its program known as Operation Twist.
Asian stock markets struggled for direction Thursday as investors remained wary following more unsettling news from economically fragile Spain and a record trade deficit in Japan.
Tokyo’s Nikkei 225 stock average slipped after the country _ which for decades has blanketed the world with its exports _ posted its biggest annual trade deficit ever.
The benchmark index fell 0.6 percent to 9,609.89 after the Finance Ministry said exports for the fiscal year that ended March 31 dropped 3.7 percent from the previous year, while imports climbed 11.6 percent.
The trade deficit for the year was 4.41 trillion yen ($54 billion). With all but one of Japan’s 54 nuclear power reactors offline in the aftermath of last year’s nuclear disaster, the country has been forced to rely on imported oil and gas to generate electricity.
South Korea’s Kospi index opened higher then slipped into negative territory, falling 0.2 percent to 2,002.75.
But Hong Kong’s Hang Seng index held onto its gains, rising 0.4 percent to 20,865.11 while Australia’s S&P/ASX 200 added 0.4 percent to 4,365.90.
Benchmarks in mainland China, Indonesia, New Zealand and the Philippines fell, while Singapore and Taiwan rose.
The Bank of Spain said the amount of bad loans held by Spanish banks rose to an 18-year high in February. If those banks falter, it would put pressure on Spain’s already troubled government to prop them up.
The next key indicator for Spain will occur Thursday when the country holds a 10-year bond auction.
Spain’s problems have added to ongoing worries about global economic growth because China’s economy also is slowing.
Wall Street fell Wednesday on concerns about Europe’s debt crisis. The Dow Jones industrial average fell 0.6 percent to 13,032.75. The Standard & Poor’s 500 fell 0.4 percent to 1,385.14. The Nasdaq composite index fell 0.4 percent to 3,031.45.
Benchmark oil for May delivery was up 10 cents to $102.77 per barrel in electronic trading on the New York Mercantile Exchange. The contract declined $1.53 to finish at $102.67 per barrel on Wednesday.
In currency trading, the euro fell to $1.3120 from $1.3133 late Wednesday in New York. The dollar rose to 81.46 yen from 81.24 yen.
Under pressure to take action on rising gasoline prices, President Barack Obama wants Congress to strengthen federal supervision of oil markets, increase penalties for market manipulation and empower regulators to increase the amount of money energy traders are required to put behind their transactions.
The White House plan, which Obama was to unveil Tuesday, is more likely to draw sharp election-year distinctions with Republicans than have an immediate effect on prices at the pump. The measures seek to boost spending for Wall Street enforcement at a time when congressional Republicans are seeking to limit the reach of federal financial regulations.
Obama plans to spell out his $52 million proposal Tuesday at the White House, where he will be joined by Attorney General Eric Holder.
Republicans have been hammering Obama on his energy policies, recognizing the political cost of high gas prices on the president. Obama’s plan would turn the tables on Republicans by taking aim at Wall Street’s role in the oil price chain.
Senior administration officials who put together the proposal said it aims to detect and deter illegal manipulation by energy speculators, the type of practices that many Democrats blame for the high cost of gasoline. The officials spoke on the condition of anonymity to discuss the plan ahead of Obama’s announcement.
They would not go as far as to say that market manipulation is responsible for rising gas prices, but the officials said they wanted to curtail the ability of speculators to take unlawful advantage of oil price volatility.
At issue is the increasing role of investment in oil futures contracts by pension funds, mutual funds, hedge funds, exchange traded funds and other investors. Much of that money is betting that oil prices will rise. Analysts say it is possible that such speculation has somewhat inflated the price of oil.
At the same time, investors can also bet that prices will go down _ indeed, speculators have been credited for low natural gas prices. Studies of the effects of speculation on oil markets indicate that it probably increases volatility, but doesn’t have a major effect on average prices.
Still, seeing a potential problem with speculators is not limited to Obama or Democrats or this election season. When gasoline hit $3 a gallon in 2006, George W business cards. Bush launched an investigation, declaring Americans “don’t want and will not accept … manipulation of the market. And neither will I.” Last year, as prices rose, Obama and Holder announced the creation of a task force to look into fraud in the energy markets.
Obama’s plan this time calls on Congress to:
_ Increase six-fold the surveillance and enforcement staff of the Commodity Futures Trading Commission to better deter oil market manipulation.
_ Increase spending on technology to provide better oversight and surveillance of energy markets.
_ Increase civil and criminal penalties against firms that engage in market manipulation from $1 million to $10 million.
_ Give the Commodity Futures Trading Commission authority to increase the amount of money that a trader must put up to back a trading position. The administration officials said such authority could help limit disruptions in energy markets.
In addition, the Obama administration, on its own, will increase access to the commission’s data so the White House Council of Economic Advisers can examine and analyze trading information.
The White House effort comes at the same time that Republicans have been pushing Obama with their own energy proposals. House Speaker John Boehner, R-Ohio, wants to seek votes on more domestic oil and natural gas exploration, a freeze on regulations on refineries and approval of construction of the Keystone XL pipeline from Canada to Texas, a project Obama has blocked.
Republicans are also trying to place limits on the financial regulation legislation Congress passed in 2010 over Republican objections. Though the House Republican budget, which calls for sharp reductions in government programs, does not specify reduction in spending by the trading commission, the administration officials said that if the cuts were applied the commission would lose more than five times what it spends on regulating energy markets.
The debate will pit Republicans who blame Obama for high gasoline prices against a White House that blames Republicans for coddling Wall Street.
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