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[Quick Facts]

1. Bailey: We will see if markets are right on rates.

2. Top central bankers assert the need for policy tightening.

3. U.S. Deputy Secretary of State talks with the Chinese ambassador about "key issues" between the nations.

4. Russian Foreign Minister: President Putin will never reject any concrete proposals for dialogue.

5. U.S. merchandise-trade deficit shrank in May due to falling imports.

[News Details]

Bailey: We will see if markets are right on rates

Bank of England Governor Andrew Bailey said in a speech yesterday that it remained to be seen if financial markets are right about how high the British central bank will need to raise interest rates, and how long it will be before the first rate cuts are made.

Financial markets currently expect the BOE to raise interest rates to 6.25% by the end of this year from the current 5%.

According to Bailey, the terminal rate and how long it needs to stay at the peak are two different things. "The market thinks the peak will be quite short-lived, in a world where we're dealing with more persistent inflation," Bailey said. "My response to that would be: 'Well, we'll see,'" Bailey added.

Top central bankers assert the need for policy tightening

The world's top central bankers attended the European Central Bank Forum on Wednesday. They argued that further policy tightening is needed to curb stubbornly high inflation, but they still believed this can be achieved without triggering a full-blown recession.

Federal Reserve Chairman Jerome Powell did not rule out the possibility of consecutive rate hikes, while ECB President Christine Lagarde solidified expectations for a ninth consecutive rate hike in July.

BOE Governor Andrew Bailey said he will take necessary steps to bring down persistent inflation in the U.K. Even Bank of Japan Governor Kazuo Ueda paved the way for abandoning its ultra-loose monetary policy one day.

U.S. Deputy Secretary of State talks with the Chinese ambassador about "key issues" between the nations

U.S. Deputy Secretary of State Wendy Ruth Sherman held a call on Tuesday (June 27) with China's new ambassador to the United States, Xie Feng, about "key issues" between the two nations.

The U.S. State Department noted that the call was a substantive conversation, and it continued the dialogue from Secretary of State Blinken's recent visit to China. Sherman and Xie discussed key priorities between the United States and China, as well as a range of global and regional issues. Sherman reiterated the importance of maintaining open channels of communication between the U.S. and China on a variety of issues. She emphasized that the U.S. will continue to use diplomacy to raise areas of concern and seek potential cooperation where their interests align.

Xie Feng said that a healthy and stable U.S.-China relationship is in the common interest of both countries and is also the common expectation of the international community. He hopes that the U.S. side and the Chinese side can move in the same direction, adhere to the consensus reached by the two heads of state in Bali, take practical action to reflect respect and remove interference, properly deal with Taiwan as well as other important and sensitive issues in accordance with the principles of the three China-U.S. joint communiqués, strengthen dialogue, manage differences, develop cooperation, and strive to gradually return to the right track in China-U.S. relations.

Russian Foreign Minister: President Putin will never reject any concrete proposals for dialogue

On June 28, local time, Russian Foreign Minister Sergey Viktorovich Lavrov said that the Russian leadership has not been in contact with the West in recent times, but Russian President Vladimir Putin will never reject any concrete proposals for dialogue.

President Putin has repeatedly said that Russia is open to international cooperation. But the current problem is that cooperation between Russia and its former Western partners cannot continue to be based on established agreements, including those that once had legal force. Therefore, the relations between Russia and the West are a struggle between different worlds.

Lavrov also noted that Russia is unlikely to abandon its stated goals for special military operations.

U.S. merchandise-trade deficit shrank in May due to falling imports

The U.S. merchandise-trade deficit shrank in May, decreasing 6.1% to $91.1 billion, reversing only a small amount after a large increase in April, as imports fell. Even with the shrinking in May, the merchandise-trade deficit has expanded by more than 10% since March, and trade could create a drag on economic growth in the second quarter. However, the drag on GDP from trade may be offset by an increase in inventory investment, as retail inventories in May released on Wednesday grew strongly.

In addition, imports fell 2.7% to $254 billion in May. While the drop in imports helped shrink the deficit, it also suggests that domestic demand is weakening. Imports of consumer goods plunged 7.3%, dragging down overall imports. Imports of industrial supplies, including crude oil, fell 5.9%. Food imports decreased by 3.0%.

A series of upbeat data this month, including non-farm payrolls, retail sales, durable goods orders, and housing starts, suggested that the economy remained on a steady growth trajectory in the second quarter, ignoring growing fears of a recession.

[Focus of the Day]

UTC+8 17:00 Eurozone Economic Confidence Index (Jun)

UTC+8 20:30 U.S. Weekly Initial/Continued Jobless Claims

UTC+8 18:00 Atlanta Fed President Bostic speaks

UTC+8 00:30 the Next Day: Bank of England member Teng Reiro delivers a speech

UTC+8 03:00 the Next Day: Atlanta Fed President Bostic speaks on the U.S. economic outlook

TBD The Federal Reserve releases annual bank stress test results