US - Obama targets USD72bn business tax break
Barack Obama’s proposal to end a business tax break worth USD72bn is among the tensions the president may confront as he meets today with Senate Minority Leader Mitch McConnell in an effort to revive bipartisan talks over reducing the debt. Ending the so-called last-in-first-out, or LIFO, provision, a method of accounting for inventory costs, was among options offered by White House officials for raising USD400bn in revenue over 10 years during seven weeks of negotiations led by Vice President Joe Biden, three persons familiar with the issue said on the condition of anonymity because they weren’t authorized to comment publicly. (Bloomberg)
US - Fed seen purchasing USD300bn in Treasuries after QE2
The Federal Reserve will remain the biggest buyer of Treasuries, even after the second round of quantitative easing ends this week, as the central bank uses its USD2.86trn balance sheet to keep interest rates low. While the USD600bn purchase program, known as QE2, winds down, the Fed said 22 June that it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as USD300bn of government debt over the next 12 months without adding money to the financial system. (Bloomberg)
US - Consumer spending in US unexpectedly stagnated in May as prices climbed
Consumer spending unexpectedly stagnated in May as employment prospects dimmed and rising inflation caused Americans to cut back. Purchases were little changed, the weakest outcome since June 2010, after a revised 0.3% gain the prior month that was smaller than previously estimated, Commerce Department figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News called for a 0.1% gain. Prices excluding food and energy rose more than forecast. (Bloomberg)
US - Fed seen buying USD300bn in Treasuries in year after QE2
The Federal Reserve will remain the biggest buyer of Treasuries, even after the second round of quantitative easing ends last week, as the central bank uses its USD2.86 trillion balance sheet to keep interest rates low. While the USD600 billion purchase program, known as QE2, winds down, the Fed said June 22 that it will continue to buy Treasuries with proceeds from the maturing debt it currently owns. That could mean purchases of as much as USD300 billion of government debt over the next 12 months without adding money to the financial system. (Bloomberg)
US - Spending, manufacturing probably slowed
Consumer spending probably climbed at the slowest pace in almost a year and manufacturing cooled as dimmer job prospects and elevated commodity costs weighed on the US expansion, economists said reports will show. Purchases rose 0.1% in May, the smallest gain since June 2010, according to the median estimate of 63 economists in a Bloomberg News survey. The disaster in Japan also held back American factories this month, a survey of purchasing managers may show. The highest gasoline prices since 2008 and unemployment hovering around 9% caused households to pare spending, which may temper demand at factories already contending with higher input expenses and supply chain disruptions. (Bloomberg)
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