In the US the Biden administration reached a bipartisan infrastructure deal framework valued at $1.2trn over 8 years. It includes $312bn for transportation, $65bn for broadband, $21bn for environmental remediation such as replacing lead pipes. While still large, many of these amounts are lower than originally proposed, and some proposals were scrapped altogether such as $400bn on Medicaid, $200bn on free pre-kindergarten, and $213bn on affordable housing. Who pays from all the projects that were agreed upon though? Biden wanted to raise corporation taxes. Republicans drew a line in the sand by increasing IRS (the US tax collector) enforcement, selling off petroleum reserves and using unused unemployment insurance benefits and municipal bonds.
Mixed Manufacturing Results
Global manufacturing is showing mixed results. In the UK manufacturers reported the strongest output growth on record but also expect to raise their prices at the fastest pace in almost 40 years. Industrial production in Singapore rose 30% year-on-year – its fastest pace in a decade. Eurozone manufacturing has been rising but France and Germany have been experiencing supplier issues. Japanese manufacturing slipped recently but overall orders and export orders gained, while US new orders slipped as there is concern over the difficulty finding new labour and rising costs.
Central Bank Digital Currencies To Modernise Finance?
The Bank for International Settlements – dubbed the central bank to the to the world’s central banks – has given its full backing to the development of Central Bank Digital Currencies (CBDCs). The BIS said they are needed to modernise finance and control over money from big tech. The Bahamas become the first country to launch a general CBDC, which it has named the Sand Dollar.
The Week That Was…
Data collected by Rightmove between 9th May and 12th June showed house prices in the UK rising 0.8% m/m*. This would represent the biggest rise since 2015 for this time of year. Official data (based on completed transactions) showed a rise of 8.9% y/y
In the US, recorded high prices are tempering home sales with existing and new home sales falling by -0.90% m/m** and -5.9% m/m*** respectively. However, mortgage applications rose 2.1% w/w as refinancing activity rose 3% (despite the increase in rates).