US consumer inflation highest since 2008, as initial jobless claims hit pandemic low – as it happened

Graeme Wearden

from on 2021-06-10 18:05 (#5JWKT)

Rolling coverage of the latest economic and financial news

Latest: US initial jobless claims lowest since March 2020
US CPI jumped to 5.0% in May
Consumer prices rose 0.6% month-on-month
Core inflation rose 3.8% y/y, fastest since 1992
Energy and used car prices have jumped over last year

Earlier:

ECB presses on with bond-buying programme
Bank regulators say bitcoin should face toughest bank capital rules
Plan would mean banks holding enough capital to cover losses in full

7.05pm BST

Time to wrap up. Here's a quick recap

US consumer prices increased by the most in nearly 13 years in May, year-on-year, as rising demand, supply chain bottlenecks, and the base effect' from last year's lockdown push up inflation. Energy, used cars, flights and clothes all pushed CPI up by 5.0%, higher than expected.

ABI Chart of the Day: Weekly U.S. Unemployment Claims Fall to 376,000, Sixth Straight Drop. https://t.co/dG14qN217r pic.twitter.com/N6y2envKTc

Vote of confidence in the company? That's always a board's default spin on events when a billionaire buys a large stake, purrs politely about management but is slightly mysterious about his long-term intentions. The pitch is rarely convincing because billionaires are not generally the type to sit back and simply collect a stream of dividends. They tend to want something.

It's too soon to be confident about the motives behind Patrick Drahi of Altice's purchase of a 12.1% stake in BT, worth 2bn. But, on this occasion, the non-threatening interpretation may be correct. Or, at least, it looks the most likely line for a while.

6.25pm BST

After a busy day, Europe's stock markets have ended the session roughly where they started it!

The FTSE 100 index has closed just 0.1% higher at 7088, up 7 points.

5.56pm BST

Back in the UK, supermarket chain Morrisons has suffered a serious shareholder revolt over pay.

Morrisons shareholders have voted overwhelmingly against the award of millions of pounds in bonuses to executives who missed profit targets during the pandemic, in one of the biggest shareholder rebellions of recent years.

The vote is not binding so the chief executive, David Potts, and his two most senior managers will still be able to receive the 9m in pay and bonuses they were awarded, despite a year in which the company fell out of the FTSE 100 and profits halved because of extra pandemic costs.

Nobody doubts that the big supermarket chains, including Morrisons, did an excellent job of keeping the shelves stocked in tricky conditions. But a bonus is not meant to be a semi-guaranteed entitlement. If profits have been clobbered, and half the bonus relates to profits, applying discretion" to imagine what might have been is a nonsense.

Modern bonuses structures grant huge upsides to executives in good years. The system has to be seen to work in reverse in leaner times, whatever the cause.

5.22pm BST

Back in the eurozone, the ECB raised its projections for inflation this year.

The eurozone's central bank now expects euroarea consumer prices to rise by 1.9% in 2021 -- bang on its target, up from a previous forecast of 1.5%.

President Christine @Lagarde introduces the baseline GDP and inflation outlook for the euro area. pic.twitter.com/WaH5GmGNR3

We don't see much by way of service prices going up... and that is because wages have not increased significantly.

We see a little bit more movement possibly, and we hope that we will see more of it."

The latest signal that we are getting is a strong rebound in the second quarter and hopefully (that) will be amplified in the third quarter."

ECB turns really optimistic. GDP growth is being upgrade d significantly for this year and next and forecasts for inflation are also being revised up. But the PEEP continues at it's current pace - for now.

Broad-based upward revision to ECB's growth and inflation outlooks. They are no clearly ahead of consensus and slightly more upbeat than us in 2021/22. Hence, the "significantly higher" PEPP pace can be seen as reinforcing the message of the unchg. 2023 forecasts, i.e. transitory pic.twitter.com/cV4UOmMzHP

4.51pm BST

4.41pm BST

US government bonds have taken the jump in US inflation in their stride.

The yield, or interest rate, on 10-year Treasuries is hovering around 1.485% now, slightly lower on the day, despite annual core inflation hitting its highest in almost 30 years.

The bond market is pretty firmly in the "inflation is transitory" camp as the yield on 10-year U.S. Treasuries remained below 1.5%, and edged lower. Remember bond vigilantes? They are not here today. https://t.co/boAERaYTi4 via @markets pic.twitter.com/ISLiwzezay

May is the last month for which we will be rolling off negative numbers from last year for the consumer price index. As such, for year on year inflation to continue to rise in June and July, prices will have to rise by more than 0.5% each month.

These base effects may explain why fixed income investors are looking beyond the current surge in prices. Bond yields have come down in recent days, perhaps in anticipation of softer inflation numbers in coming months."

4.30pm BST

President Biden's Council of Economic Advisors have tweeted about US consumer price inflation hitting a 13-year high.

They highlight that base effects' helped to push the annual CPI rate to 5% (because prices fell a year ago due to the pandemic).

Inflation as measured by CPI increased at a 5.0% rate year-over-year last month and 0.6% month-over-month. Core inflation-without food/energy-rose 3.8% year-over-year and 0.7% month-over-month. The year-over-year numbers were impacted by base effects from last spring. 1/

The month-over-month inflation was a slight deceleration from the April inflation numbers, but slightly above expectations. 2/

Much of the annual inflation was due to base effects, reflecting the depressed prices from last spring. Controlling for base effects by smoothing across the 15 months since February 2020, the rate of CPI inflation was 3%. 3/ pic.twitter.com/RX98UKsEoU

In core inflation, controlling for base effects the rate of annualized CPI inflation was 2.6% 4/ pic.twitter.com/pL5XV9CJhJ

Cars once again accounted for a large share of the increase. Used cars, new cars, and car rentals together made up about half of core month-over-month inflation 5/ pic.twitter.com/2DqjqkiUvE

Prices of pandemic-affected services rose again this month and contributed 7 basis points to the core inflation increase in May, relative to 19 basis points in April. 6/ pic.twitter.com/uTPOxbfRWG

We know that the recovery from the pandemic will not be linear. The Council of Economic Advisers will continue to monitor the data as they come in. /end

After President Biden jokes that he and Prime Minister Boris Johnson have in common that they both married up, Johnson says, "I am not going to dissent on that one - or indeed on anything else."

3.57pm BST

The S&P 500 index hit a fresh record high in early trading, before easing back, as Wall Street investors try to decide whether the rise in inflation is transitory or not.

Stocks rose at the open, with the drop in jobless claims reassuring traders that the recovery is on course. But the rally has cooled a little since.

That US consumer prices accelerated the most in almost 13 years surely makes an eye-catching headline. However, rather than a generalised spiral, this looks mostly driven by pent-up demand combined with transitory supply bottlenecks as the US economy reopens - especially for a few categories such as like rental cars, hotels and flights.

Not all of the price increase is about the feed-through of energy prices nor is it just an easy comparison with low prices last year during the worst of the pandemic. And how long the shortages will last remains to be seen. Yet the Fed, so far, looks relatively tolerant about this spike, appearing to see it as temporary. In part, this is because of past undershoots relative to the central bank's inflation target: consumer prices have been subdued for quite a long time, despite monetary easing.

US core inflation in May was 3.8% (vs expectations of 3.4%) - highest since 1992... pic.twitter.com/M9QzdvM8qc

...Overall US inflation 5% (vs expectations of 4.7%)... pic.twitter.com/v37XmNcY41

...More fuel for the inflation hawks of course - but markets and most Wall Street analysts seem relaxed about the slightly higher than expected print - still see it as result of temporary supply bottlenecks, in line with Fed/White House analysis.

3.21pm BST

CHART OF THE DAY: The price of used cars in the US jumped 29.7% y-on-y in May, the biggest annual increase in ~45 years (reason is very strong demand for cars and supply bottlenecks due to ship shortages). Older cars are less efficient than new ones (and unlikely to be EV) #OOTT pic.twitter.com/2vOCok9v9f

3.14pm BST

The number of Americans filing new claims for unemployment support has hit a fresh pandemic low as the labor market recovery continues.

The number of initial claims for jobless benefits fell last week to its lowest since mid-March 2020 (just as the first wave of Covid-19 hit).

Jobless claims continue to fall. 376K initial claims were filed last week, the fewest since the pandemic began. Overall, 15 million people are still receiving govt #unemployment benefits. A year ago that figure was above 30 million. #economy pic.twitter.com/lD9ulDI867

NEW: U.S. weekly jobless claims fell for a sixth straight week to 376,000 https://t.co/SbhBF89vAU

UI claims dropped again last week, falling to 438K (367 UI initial claims NSA + 71K PUA claims), falling to ~2x pre-crisis levels.

The NSA decline was boosted by the Memorial Day weekend, so no reason to worry if we see a small rebound next week.#joblessclaims 2/ pic.twitter.com/ELyWcRmat7

Continuing claims resumed their decline last week after a surprise jump the week prior.

The improvement in continuing claims over the last 1-2 months has been much slower than for initial claims.#joblessclaims 2/ pic.twitter.com/jZv0Vp40KK

2.57pm BST

Investors shouldn't panic about the jump in US inflation, says Ron Temple, Co-Head of Multi Asset and Head of US Equities at Lazard Asset Management:

Before hitting the panic button, investors should recognise that used cars, auto insurance, and airfares drove nearly half of the core CPI increase.

These increases are all easily explained by depressed prices a year ago and the semiconductor shortage that has turbocharged used car prices. The next few months are likely to be noisy, and investors should focus on data this fall when schools are fully reopened and several million workers can rejoin the labor force, mitigating the challenges of reopening the world's largest, and rapidly recovering, economy."

2.53pm BST

Andrew Hunter, senior US economist at Capital Economics says America's surging inflation is starting to look a little less transitory.

Hunter writes:

The further jump in core CPI inflation to a 28-year high of 3.8% in May, from 3.0%, was again driven by the same handful of categories most directly affect by the lifting of virus restrictions.

But there were also signs of emerging inflationary pressures in other sectors, including housing costs and restaurant prices, which suggests that not all the current upward pressure on inflation will prove transitory.

The 0.6% rise in food away from home prices suggests that the labour shortages (and resulting upward pressure on wages) in the leisure & hospitality sector are feeding through.

2.43pm BST

The big question for central bankers at the Fed is whether the jump in US inflation is transitory, or a sign that prices rises are stickier.

If it's a temporary impact, due to the impact of the pandemic, then they're more likely to look through' it rather than tighten monetary policy (by slowing their stimulus programs).

Within US inflation data, those areas that were producing DOWNSIDEs on inflation over COVID(lodging, airline fares, apparel) are now unwinding but those areas that produced UPSIDE during COVID (used cars, household stuff) have yet to unwind - they will but it's not smooth pic.twitter.com/GABuUePh1y

Importantly, the "inflation" we're seeing in things like airline tickets or apparel is mean-reversion to the price levels that existed pre-covid. We'll likely see mean-reversion to the downside on items like household furnishings and used cars. Watch the LEVELS as well as m/m% pic.twitter.com/FQgOyd0hbR

2.26pm BST

Heather Long of the Washington Post has highlighted some of major price changes over the last 12 months:

What costs more now?
It's murky to compare to May 2020, but people still feel these increases.

Car rental 110% (y/y)
Gas 56%
Used cars 30%
Laundry appliances 27%
Airfares 24%
Auto insurance 17%
Moving 16%
Bacon 13%
Bikes 10%
Hotels 10%
Furniture 9%
Whole milk 7.2%
Clothes 6%

2.25pm BST

Household furnishings, new vehicles, airline fares and clothing prices all rose last month.

The US CPI report shows that:

2.21pm BST

Used car and truck prices remained hot in May -- rising by 7.3% during the month, following a 10% jump in April.

That accounted for about one-third of the increase in the CPI last month, the inflation report shows.

Used cars account for 1/3 of overall CPI increase...WOW pic.twitter.com/fUYdBb2K7C

2.07pm BST

US energy prices were 28.5% higher than a year ago, the inflation report shows, helping to push the headline rate of CPI up to 5%.

That includes a 56% rise in gasoline prices compared with May 2020, when demand slumped due to pandemic.

1.51pm BST

NEWS: Consumer prices rose faster than expected in May.

- Headline CPI rose 5% from a year ago, versus 4.7% expected and the largest annual burst since 2008

- Core CPI rose 3.8% year-over-year, versus 3.5% expected and the fastest pace since 1992https://t.co/cmUMVVS35b pic.twitter.com/wZMiPw9nZI

1.49pm BST

At 3.8% year-on-year in May, core inflation across the US economy has risen at the fastest annual rate since June 1992 (that's excluding food and energy).

The core CPI jumped again in May, by 3.8% year-over-year, more than the expected 3.5%. By this measure, inflation looks to be accelerating. pic.twitter.com/3Yh5cgi1kS

But looking at price levels (not %s), this could be seen as catching up after sluggish price increases during pandemic. My view: Inflation is accelerating and we should be trimming stimulus. pic.twitter.com/v7G5t9PkPz

Gain in US CPI exceeds forecasts, Fuels inflation concern. U.S. consumer price index rose 5% YoY, vs. 4.7% estimate. Rose 0.6% MoM vs 0.5% expected. Core CPI rose 3.8% most since 1992! pic.twitter.com/sJFnSg1aQb

1.41pm BST

HOT:

CPI (YOY) rises 5.0% vs. 4.7% expected.

Core CPI (YOY) up 3.8% vs. 3.5% expected.

S&P futures slipping a little on the news https://t.co/GCpQ3slHLX pic.twitter.com/PGZ6d2jOOE

1.38pm BST

Newflash: US inflation rose to 5% year-on-year in May, the highest since 2008.

That's a bigger jump than expected, up from 4.2% in April, and will fuel concerns that inflationary pressures are building in America as the economy rebounds strongly from the pandemic.

BREAKING: US CPI +5% YoY, ex-food/energy +3.8%

Boom. #inflation

*US May Consumer Prices +0.6%; Consensus +0.5%

*US May CPI Ex-Food & Energy +0.7%; Consensus +0.5%

*US May Consumer Prices Increase 5% From Year Earlier; Core CPI Up 3.8% Over Year#trading #news #stocks #usa #inflation #cpi

US May inflation 5%, 3.8% core highest in a generation

5% US CPI inflation (expected 4.5%)

Oof pic.twitter.com/BCVPlXmwJU

1.20pm BST

Gurpreet Gill, Macro Strategist, Global Fixed Income, Goldman Sachs Asset Management, says the European Central Bank has remained on the dovish side today:

Despite a brighter growth outlook, the ECB has chosen to err on the dovish side, keeping the pace of PEPP purchases unchanged at a significantly higher pace than during the first months of the year" due to weak underlying inflation and to some extent, the longer-term challenges related to pandemic-induced debt levels.

In the coming months, we expect the European economy to rebound sharply as COVID-19 infection rates fall and the economic reopening across the continent continues to accelerate. That said, the positive picture is not uniform: supply-side issues are challenging manufacturing production, while curtailed tourism presents an ongoing headwind for Europe's South. Moreover, room for further acceleration in growth from here looks somewhat limited.

As most market participants expected, the ECB maintained its dovish tone and decided to leave its ultra-loose policy unchanged by keeping the current PEPP purchases at the fastest pace for the third quarter of 2021.

While there are clear signals of optimism around the European economy, after a pickup in vaccinations and falling coronavirus cases. There are still uncertainties surrounding the euro-area and its recovery.

We fully expected the ECB to retain its current policy positioning, despite continued concerns around short-term inflation and the improving economic outlook.

The gradual re-opening of the services sectors, recent progress around vaccinations and better survey data has indicated the Eurozone economy may be returning to form. However, the recovery remains in its early phases and medium-term inflation is still expected to remain below the ECB's target of 2%, even if it has trended higher recently, in part thanks to the higher oil price.

1.13pm BST

There aren't any significant changes in the ECB statement, compared to the previous meeting, as this tweet helpfully shows

ECB Statement Changes >>> pic.twitter.com/o1Rg1pTnEg

Absolutely nothing in that statement there that markets didn't expect - emphasis now on the projections and press conference at 1:30 BST. Note though that "significantly higher" purchases doesn't exactly mean 80bn a month!

1.07pm BST

The ECB has decided to keep running its emergency bond purchases at a significantly higher pace" than early this year, to spur the eurozone recovery on.

This means no let-up in the pace of the pandemic emergency purchase programme (PEPP), despite the recent pick-up in inflation and encouraging signs that the eurozone economy will exit recession this quarter.

Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council expects net purchases under the PEPP over the coming quarter to continue to be conducted at a significantly higher pace than during the first months of the year.

"Significantly" it is (remains). Dovish considering the likely upgrade to staff projections, but not a surprise for markets which were likely positioned for this. https://t.co/nXf9dGT5MI pic.twitter.com/2LxQ8pOoFc

The Governing Council will purchase flexibly according to market conditions and with a view to preventing a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation.

#ECB keeps door open to slowing down money printing over the summer compared to now by simply pledging to buy bonds at a significantly higher pace" than at the start of the year.

same language as in April, same wiggle room https://t.co/FlnjM6iyJY

12.53pm BST

The European Central Bank's governing council has left interest rates on hold across the eurozone, at their current record lows.

It means the headline interest rate, the main refinancing operations rate, stays at 0.0%.

The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.

Aaaaaaand...exactly what you expected. https://t.co/rqUYQERmHW

12.35pm BST

Bitcoin has rallied today, gaining 4% to around $38,000.

That's its highest level in nearly a week, but still 40% off April's record high of nearly $65,000.

The announcement from the Basel Committee on Banking Supervision is another sign that the world of traditional finance is responding to the rise of crypto assets.

While the proposal would introduce tough capital controls, it also shows that regulators are taking the fast-growing market seriously and preparing the banking industry for how to deal with its widespread adoption.

Bitcoin rallies following a proposal from global regulators that would introduce capital requirements for banks dealing in crypto https://t.co/ct9gL3QljU

12.22pm BST

If global bank regulators have their way, a $100 exposure in bitcoin would result in a minimum capital requirement of $100, Basel said.https://t.co/JCvi2xCzOs pic.twitter.com/FY8g4q85Wb

11.58am BST

Global banking regulators have proposed that cryptocurrencies to carry the toughest bank capital requirements of any asset.

Cryptoassets have given rise to a range of concerns including consumer protection, money laundering and terrorist financing, and their carbon footprint. The Committee is of the view that the growth of cryptoassets and related services has the potential to raise financial stability concerns and increase risks faced by banks.

Certain cryptoassets have exhibited a high degree of volatility, and could present risks for banks as exposures increase, including liquidity risk; credit risk; market risk; operational risk (including fraud and cyber risks); money laundering / terrorist financing risk; and legal and reputation risks.

Banks will face the toughest capital requirements for #Bitcoin and cryptoassets under global regulators' plans to ward off threats to financial stability from the volatile market, The Basel Committee on Banking Supervision said on Thursday.https://t.co/EudChMtwFb

Few other assets that have such conservative treatment under Basel's existing rules, and include investments in funds or securitisations where banks do not have sufficient information about their underlying exposures.

The Basel proposals come as global regulators grapple with the rapid emergence of digital assets and mushrooming interest from investors. US authorities also want to take a more active role in supervising the $1.5tn cryptocurrency market because of concerns that a lack of oversight risks harming investors in the highly volatile and speculative industry.

10.56am BST

The ONS also reports that shopping visits rose last week, partly due to the Bank Holiday Monday

UK retail footfall in the week to 5 June 2021 increased by 12% and was at 85% of its level in the same week of 2019, according to @Springboard_.

This coincides with the Spring Bank Holiday on 31 May 2021 and is consistent with previous Bank Holidays https://t.co/jwetqqswKX pic.twitter.com/DWFhFOiBZg

10.43am BST

The number of people on the UK's furlough scheme has dropped to a new low as the economic recovery continues.

The Office for National Statistics reports that the proportion of the workforce of all UK businesses on the Coronavirus Job Retention Scheme fell to 7% in the last two weeks of May.

The proportion of the workforce of all UK businesses on furlough has decreased to 7% (approx 1.8 million people), according to the latest Business Insights and Conditions Survey.

This is the lowest level reported since the series began in June 2020 https://t.co/fAHjuBE3uP pic.twitter.com/i0nRNu6I7G

This continues the recent strong upward trend for this category, having risen by 83 percentage points since 9 April 2021, just before the first easing of hospitality restrictions when pubs and restaurants reopened in England.

10.21am BST

In the eurozone, Italian factories had a strong April.

Italy's industrial output jumped by 1.8% in April, stronger than expected.

Italy: recovery gaining pace in industry (and services are about to follow)
Industrial output increased much more than expected in April, by 1.8% m/m.
Economic activity this year should rebound by as much as 4.6%, after collapsing -8.9% last year.

10.02am BST

Altice, the telecoms group controlled by billionaire Patrick Drahi, has become BT's biggest shareholder after taking a 12.1% stake, claiming it wants to capitalise on the UK's full-fibre broadband rollout plans.

Drahi, who founded Altice in 2001 and still serves as its chairman, said in a statement the investment was a sign of confidence in BT, given the UK government's plan to expand full-fibre broadband across the country.

10.01am BST

Travel and hospitality stocks are lower in London, amid the ongoing uncertainty around whether the UK will end lockdown restrictions on 21 June.

IAG, which owns British Airways, are down 1.3%, while budget airline easyJet has dropped by 2.8%. Their hopes of a summer revival were hit when Portugal was removed from the UK's green (no-quarantine-needed) list.

9.27am BST

European markets have opened rather cautiously, as investors await the US inflation report and the ECB's decision.

The FTSE 100 has gained ground, up 28 points or 0.4% to 7109 points.

US inflation figures could set the tone for the rest of the month, let alone the rest of the day when they are released later. A higher than expected number could put the markets back in panic mode over rising prices, even if the US Federal Reserve has done its best to convince investors the trajectory of interest rates is more closely tied to the employment market.

The European Central Bank meets later with little expectation of any change in emphasis let alone policy but any sign that the ECB might seek to taper its support for the economy could also provoke a shock."

9.16am BST

German carmaker Volkswagen has predicted that the semiconductor shortage gripping the car industry will ease in the third-quarter of this year.

But, it also sees the bottlenecks - which have already hit car production - continuing in the longer term, given it will take time to build more fabrication plants.

At the moment we have reached the lowest point. We are facing the toughest six weeks," Murat Aksel, the head of procurement on the Volkswagen board, told the Handelsblatt newspaper in an interview.

He said he expects around 10% shortage in chips over the long-term as building up production capacities takes up to two years.

9.07am BST

Shares in Auto Trader have jumped 6% this morning, after the new and second-hand car seller gave an upbeat outlook after a tough year.

We decided early on to proactively support our people, car buyers and our customers, many of whom run small family-owned businesses. These actions have positioned us for a strong start to this next financial year.

There has been a dramatic shift towards buying online which means we now have more buyers than ever turning to Auto Trader to help with their next car purchase, making us even more relevant to retailers and manufacturers. This positions us ideally to enable the buying and selling of cars online, which will materially improve the car buying experience and the business of our customers.

8.32am BST

The BBC's Simon Jack has more details of Altice's acquisition of a 12.1% stake in BT:

1/The French Telecomms group Altice has acquired a very significant stake in BT.

Altice is owned by French telecoms tycoon Patrick Drahi who also owns businesses in the US, Israel, Portugal and also owns Sothebys.....

2/A stake of 12% is much more than would usually be considered a passive interest in the company and the BBC understands that Mr Drahi does have strategic intentions for working closely with BT but Altice has notified the Takeover Panel that he does not intend to make a bid....

3/...for the company. That notice is good for 6 months.

Mr Drahi informed the BT Chairman Jan du Plessis and the BT CEO Philip Jansen of the accumulation of the stake last night at 4 am Insiders for Drahi say this = vote of confidence in the current CEO and the company's..

4/favourable position for future fibre roll out.

Worth remembering another 12% of BT is owned by Deutsche Telekom and that stake has been sitting in the DT's pension fund for the last decade.

Altice insiders conceded that....

5/this is not the same as Legal and General buying s stake in BT obviously. This buys us a conversation with the board to see what we might be able to do together.

The move follows a recent regulatory ruling over the rate of return BT and others are allowed to make...

6/on their fibre investments - a ruling that was considered favourable to the telecom companies. Also super deduction in budget "was a factor" in making BT fibre plan more attractive. Any bid in future would be called in by Sec of State.

8.24am BST

There's some drama in the UK telecoms world too, with billionaire Patrick Drahi's Altice Group becoming BT's largest shareholder.

BT has a significant opportunity to upgrade and extend its full-fibre broadband network to bring substantial benefits to millions of households across the UK. We fully support the management's strategy to deliver on this opportunity.

We understand that the expansion of the broadband network is one of the UK Government's most important policy objectives and a core part of its levelling up agenda.

Altice has a long and highly successful record of effectively operating national fibre and mobile networks in a number of countries, serving over 40 million customers.

Our approach is to combine high levels of technical expertise, resilience and operating efficiency with a strong focus on innovation and customer service. Altice has brought an entrepreneurial culture, energy and effectiveness to building its networks and operations."

Altice UK takes minority (yet not insignificant) stake in @BTGroup, becoming the #telco's largest shareholder. Also issues statement of support for BT's #strategy and management, noting the compelling opportunity to invest amid #fibre build-out https://t.co/30xyaSqapD

BT Group notes the announcement from Altice of their investment in BT and their statement of support for our management and strategy. We welcome all investors who recognize the long-term value of our business and the important role it plays in the UK.

We are making good progress in delivering our strategy and plan.

8.10am BST

The US dollar is hovering near a five-month low this morning, as traders await today's inflation report.

That leaves the pound trading around $1.41 this morning, having recently dipped back from last week's three-year high of $1.4250.

This is the last piece of important information that the Federal Reserve is going to have before their monetary policy decision next week.

Last week, we saw weakness in the US Jobs data-at best, we could say that the data had mixed ingredients. The other piece of the puzzle is the Fed's monetary policy decision, and this is why today's number is of significant importance.

Dollar stuck near 5-month low as caution reigns ahead of U.S. CPI, ECB tests https://t.co/AaGwuRTYIT pic.twitter.com/VnMH1gSL30

8.00am BST

Analysts at BNP Paribas predict the European Central Bank will pave the way for a moderate slowdown' in its bond-buying stimulus programme, PEPP, today:

Today we expect the #ECB to announce a dovish' taper by altering or removing the language regarding the significant increase" in PEPP purchases.

This paves the way for a moderate slowdown in the purchases, but keeps the underlying message the same - accommodation will persist despite the improved outlook .

It is also possible that the assessment on the balance of medium-term risks will shift to the upside.

However, recent comments from #ECB board members indicate that some are reluctant to slow down asset purchases at this point in time.

This suggests the possibility that the decision to taper may be postponed to September.

7.40am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It's a big day for the markets, with the latest US inflation figures and the European Central Bank releasing its latest monetary policy decision, and giving its view on the eurozone recovery.

Welcome to the day with the most eagerly anticipated data point in recent memory.

I suspect that neither side will admit defeat if the number goes against them as it's likely too early to see a definitive trend. There will still be large anomalies all over the place. Nevertheless, so far I would say that the inflationists have overwhelmingly won round one of this bout but that the Fed put up a confident defence in round 2 to draw level. Round 3 starts today.

Hot inflation became scorching in May and is expected to hit a 28-year high https://t.co/5hhpKyBdgk

US Core CPI spiked to 3.0% you last month, and consensus is for a 3.5% yoy reading Thursday. But the debate about transitory or not will not be settled any time soon. The debate will go on.

And twitter is not a bad place to follow how the views are evolving.

There are still major uncertainties. One is the threat of the new Covid-19 strains and resulting economic impacts. Also, financial conditions have been tighter since the March meeting, and the ECB does not want to give a hawkish signal that could further tighten them. Additionally, although service sectors are reopening, the ECB would like to confirm that an activity rebound recreates jobs.

Finally, the pace of a recovery in inflation rates and the ability of the ECB to support a gradual and sustained rise in inflation rates is uncertain.

Futures largely unchanged this morning, while Treasuries find slight demand, and G10 FX treads water in familiar ranges.

Looking ahead, a busy day awaits, including the ECB decision, US CPI & US jobless claims.

European Opening Calls:#FTSE 7101 +0.28%#DAX 15606 +0.16%#CAC 6577 +0.20%#AEX 723 +0.08%#MIB 25746 +0.02%#IBEX 9208 +0.57%#OMX 2276 +0.15%#STOXX 4105 +0.20%#IGOpeningCall

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