Economic Update – Macron Wins French Presidency, Fed Chairwoman Talks up June Rate Hike, more…

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CNBC: Macron now has mandate to deepen euro zone integration, says EU Commissioner Moscovici

  • French voters have given Emmanuel Macron a mandate to strengthen the euro zone and push forward with reforms for deeper EU integration, European Commissioner Pierre Moscovici, has told CNBC.
  • “He has now a mandate and this mandate is to propose to our European partners a deeper integration and especially a deepening of the euro zone,” said Moscovici in Paris.
  • “What we need today is a euro zone that is stable,” he added.
  • “The most important of that reinforced cooperation, I would say, is the euro zone. The euro tomorrow, when the U.K. leaves, will be about 85 percent of the GDP (gross domestic product) of the EU and all the countries inside the EU will have the capacity to join the euro,” he said.
  • “The euro is the currency of all Europeans … We need to give a new impetus, a new strength to the euro zone,” Moscovici urged.

Bloomberg: Fed’s Mester Warns Against Falling Behind With Rate-Hike Pace

  • Federal Reserve Bank of Cleveland President Loretta Mester said the central bank should continue on its gradual path of raising interest rates to prevent the risk of overheating the U.S. economy.
  • “It’s important for the FOMC to remain very vigilant against falling behind as we continue to make progress on our goals,” Mester said in the text of a speech Monday in Chicago, referring to the policy-making Federal Open Market Committee.
  • “If we delay too long in taking the next normalization step and then find ourselves in a situation where the labor market becomes unsustainably tight, price pressures become excessive and we have to move rates up steeply, we could risk a recession,” she said.
  • “The softness in the first quarter hasn’t changed my medium-run outlook, and I expect a rebound in consumer spending over the rest of the year,” she said.

Bloomberg: ECB’s Mersch Says Risks to Growth Are Almost Back in Balance

  • The European Central Bank will soon be able to adopt a more optimistic tone on the euro-area economy — a possible first step in winding down stimulus — according to Executive Board member Yves Mersch.
  • “The recovery in the euro area is gaining more and more traction,” Mersch said in a speech in Tokyo on Monday. “The confirmation of a broadly balanced risk outlook for growth is within reach.”
  • “The Governing Council is convinced of the need to continue an accommodative monetary policy stance without deviation from the announced measures under implementation to be expected,” he said. “But we could examine the interaction of our different policy measures and their functioning in a new environment of balanced prospects, as opposed to the environment of deflationary risks that prevailed when they were first introduced.”

CNBC: US created 211,000 jobs in April, vs 185,000 jobs expected

  • Job creation in April bounced back from a disappointing March, with nonfarm payrolls growing by 211,000 while the unemployment rate fell to 4.4 percent, its lowest since May 2007.
  • An alternative reading on the unemployment rate that includes those not actively looking for jobs as well as those working part-time for economic reasons dropped to 8.6 percent from 8.9 percent in March, the best reading since November 2007. Those counted as not in the labor force swelled to 94.4 million but that was countered by an increase of 156,000 counted as employed, according to the household survey.

Market Watch: Jobs report ‘cements’ Fed interest rate hike in June, economists say

  • The solid April jobs report settles the debate over whether there will be another interest rate hike from the Federal Reserve in June, economists said Friday.
  • “The report virtually cements the odds of a June rate hike. Something dramatic has to happen to persuade the Fed not to move,” said Sal Guatieri, senior economist at BMO Capital Markets.
  • Carl Tannenbaum, chief economist at Northern Trust, agreed, saying that if there was any doubt that the Fed would move, it is now gone.

Zero Hedge: US Student, Auto Loans Hit New All Time High Of $2.6 Trillion

  • Speaking of student and auto loans, the Fed also released its latest quarterly estimate for the two series as of March 31, and as one would expect, the numbers rose to new all time highs, and as of the end of the first quarter, US consumers owed $1.44 trillion in student loans, an increase of $32 billion for the quarter and $80 billion for the year, as well as $1.12 trillion in auto loans, an increase of $8 billion Q/Q and $73 billion Q/Q. This means that as of March 31, Americans owed two and a half times as much on their auto and student loans, as on their credit cards, a new all time high.

Zero Hedge: A Problem Emerges: Central Banks Injected A Record $1 Trillion In 2017… It’s Not Enough

  • Two weeks ago Bank of America caused a stir when it calculated that central banks (mostly the ECB & BoJ) have bought $1 trillion of financial assets just in the first four months of 2017, which amounts to $3.6 trillion annualized, “the largest CB buying on record…”
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