Europe:  

UK consumer spending falls for first time in nearly 4 years

British consumers cut their spending for the first time in nearly four years last month, figures from credit card firm Visa showed, as households turned more cautious even before last week’s shock election result. Consumer spending in May was 0.8 percent lower than in the same month in 2016 after adjusting for inflation, the first year-on-year fall since September 2013, Visa said on Monday. Sales fell by a hefty 1.9 percent in monthly terms. “Our index clearly shows that with rising prices and stalling wage growth, more of us are starting to feel the squeeze,” Visa managing director Kevin Jenkins said. Britain’s economy has shown signs that it is stagnating and confidence among businesses and consumers it expected to take a further hit after Prime Minister Theresa May failed to win a parliamentary majority in last week’s election. She now plans to lead a minority government with support from Northern Ireland’s main unionist party, raising questions about how Britain will progress in Brexit talks and whether another election might be called soon.

http://www.reuters.com/article/us-britain-economy-consumers-idUSKBN192196

U.S.:

As inflation eludes, U.S. rate-hike bets lose shine

A surprisingly weak run of U.S. inflation data has investors backing off bets the Federal Reserve will meet its three targeted interest rate hikes this year, and has breathed fresh life into the bond market after a rough start to the year. The Fed’s preferred measure of price pressures earlier this year had shown signs of breaking out of five years of stagnation to reach the Fed’s 2 percent inflation goal, partly on hopes of the Trump administration’s fiscal stimulus. But lack of progress on the Trump agenda, only a wisp of wage growth, and three straight months of falling oil prices have sapped that momentum. Inflation in other major economies has plateaued or is weakening as well. On Thursday, the European Central Bank downgraded its inflation forecasts. Protracted low price growth hurts the economy as companies struggle to charge more for goods and services, salaries stagnate and investors get low returns. Policymakers worldwide have pegged an annual 2 percent inflation rate as optimal for supporting healthy business and consumer spending growth.

http://www.reuters.com/article/us-usa-bonds-inflation-analysis-idUSKBN1930H0

Asia:

If Fed raises rates, China likely to follow with more modest move

A small majority of traders in China’s financial markets think its central bank will likely raise short-term interest rates this week if the U.S. Federal Reserve hikes its key policy rate, as widely expected, according to a Reuters poll. The People’s Bank of China (PBOC) surprised markets in mid-March by raising short- and medium-term interbank rates hours after the Fed raised overnight borrowing costs. The move prompted some analysts to speculate the PBOC had decided to “synch” its moves with those of the U.S. central bank in a bid to reduce persistent depreciation pressure on the yuan currency against the dollar and discourage capital outflows. It also dovetailed with China’s pledges to tackle risks from an explosive rise in debt. Six out of 10 traders in China’s money, forex and bond markets asked by Reuters said they believed China would move rates up if the Fed did so. But the size of the move would be more modest, and it would likely be confined to rates on open market operations (OMOs), the traders said. They did not expect a hike in China’s benchmark lending rate, which has been unchanged for nearly two years.

http://www.reuters.com/article/us-china-economy-rates-idUSKBN1930SC