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Significant Drop in US Unemployment Claims, US Commercial Real Estate Prices Decline

Shemesh Shahar
Latest News
May 18 2023 07:59AM

G7 Leaders Discuss Ukraine

Leaders of the G7, a group of wealthy democracies, have arrived in Hiroshima, Japan, for their annual summit. Ukraine will be a key topic on the agenda, with discussions centered around a peace summit to advance a ten-point roadmap proposed by President Volodymyr Zelensky. The G7 comprises the United States, Britain, Canada, France, Germany, Italy, and Japan.

DeSantis Joins Presidential Race

According to The Wall Street Journal, Ron DeSantis, the Republican governor of Florida, is set to officially join the presidential race next week. He is expected to file his candidacy paperwork on May 25th during a donor meeting in Miami. DeSantis is considered the main rival to former President Donald Trump for the Republican nomination and currently ranks second in polls.

Speculation Causes Market Fluctuations

Speculation regarding a potential interest rate hike by the Federal Reserve caused Treasury yields to rise and stock markets to fluctuate. After comments from Fed Bank of Dallas President Lorie Logan and central bank Governor Philip Jefferson, traders increased the odds of a rate increase in June to around 40%. As a result, the S&P 500 (SPI:SP500) experienced a slight decline, while two-year yields reached their highest level since April.

Significant Drop in US Unemployment Claims

Following an increase in fraudulent claims in previous weeks, applications for unemployment benefits in the United States saw the largest drop since 2021. The Labor Department reported a decrease of 22,000 initial unemployment claims to 242,000 in the week ending May 13. Unadjusted claims, which factor out seasonal fluctuations, fell to 215,810, primarily due to a decline in Massachusetts.

Diminishing Collateral in EU Raises Concerns

Concerns are arising about Europe’s diminishing pool of bond collateral, despite overall market optimism. The European Central Bank’s efforts to discourage national governments from depositing funds has led to an increase in circulating cash, which is now being invested in safer assets offering higher returns. Consequently, banks are acquiring German two-year notes and other top-rated debt, resulting in a reduction of quality collateral volume.

Chile’s Economy Shows Strong Growth

The central bank of Chile announced that the country’s economy showed strong growth at the beginning of the year, reaching its fastest pace since the end of 2021. The service industries played a significant role in this expansion. Gross domestic product (GDP) increased by 0.8% in the first quarter compared to the previous three months, while registering a 0.6% contraction year-on-year. Economists surveyed had anticipated a 1% quarterly expansion and a 0.9% annual contraction.

UK Water Companies Apologize for Pollution

UK water companies have issued an apology for the disposal of billions of liters of sewage and have committed to investing £10 billion to reduce waste outflows. However, this announcement has been met with skepticism by environmental campaigners. In an open letter, trade body Water UK expressed remorse for polluting rivers, lakes, and coastal waters in England and Wales, with Ruth Kelly, the former Labour cabinet minister and current head of Water UK, emphasizing the apology.

Eskom Warns of Record Blackouts

Eskom, South Africa’s troubled electricity monopoly, has warned of the potential for record-level rolling blackouts during the upcoming cold months unless the utility can prevent its deteriorating power plants from succumbing to breakdowns. With power cuts already lasting up to 12 out of every 32 hours, Eskom’s acting chief executive, Calib Cassim, stated that the country could face a challenging winter with outages lasting up to 16 hours.

US Commercial Real Estate Prices Decline

Moody’s Analytics reported that commercial real estate prices in the United States declined in the first quarter for the first time in over a decade. The less than 1% drop was driven by decreases in multifamily residences and office buildings, as observed in courthouse records of transactions.