US: Axios-Top Dems Believe Biden Will Exit Presidential Race
Axios is reporting that "Several top Democrats privately tell us the rising pressure of party congressional leaders and close friends will persuade President Biden to decide to drop out of the presidential race, as soon as this weekend." The report does not list any additional Democratic lawmakers calling for Biden to step down, with Rep. Adam Schiff (D-CA) and Sen. John Hickenlooper (D-CO) the most recent high-ranking names to directly call for Biden's withdrawal (see 1832BST 17 July and 1435BST 18 July bullets).
- Article claims that "A panic pressure campaign is pounding Biden. It has been relentless — and coordinated". Goes on to list Senate majority leader Chuck Schumer (D-NY) and former House Speaker Nancy Pelosi (D-CA) as both actively pressing for Biden's withdrawal without going public.
- Axios: "We increasingly hear top Biden aides, including ones who initially urged him to fight on after his disastrous debate on June 27 — 21 days ago — are saying it's now when, not if, Biden announces he's not running."
- It is important to note that without Biden stepping down voluntarily he will be the Democratic nominee. Party rules around delegates means that by holding a majority Biden ensures no other candidate can be selected. Axios notes, "If Biden wanted to stay in, he'd be impenetrable, thanks to liberal leaders and the Congressional Black Caucus. But his closest friends believe he's fought the good fight and will succumb to reality."
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FED: Richmond Fed's Barkin: May CPI "Very Encouraging", To Learn A Lot More Over Coming Months
Richmond Fed President Barkin says at MNI's webinar that May's inflation report was "very encouraging", and overall, the economy appears to be "clearly" on the "back side" of inflation. Says that inflation in Jan/Feb/Mar "came in hot", though Apr / May were "less hot". "I certainly didn't get more confidence from the first quarter of the year...we'll see where we go."
- Inflation doesn't just go down to 2% in an instant, he says. He's looking for "sustainment" and "broadening" of disinflation (for example, the % of the PCE basket that is rising at 2% vs 3+%).
- Barkin says that labor market reports are, overall, heading in the right direction. But it's "not hard to envision scenarios where the labor market weakens." The hiring rate has dropped a lot; that hasn't shown up in the jobs numbers because the separations rate is low. But that can change quickly. Covid-hit sectors are still in catch-up mode, and you wonder what happens when they catch up.
- In deciding how to read data in order to reach a conclusion on policy, Barkin says: You can choose to take a lot of signal from 2H 2023: if you do, you see a soft landing right in your sights. Or you could take a lot of signal from 1Q 2024: strong economy, inflation potentially re-accelerating. Or you could take a lot of signal from the last month's data: the economy flattening out (though payrolls were strong), and most people would project a PCE in line with our target. It's not clear to me which of those frameworks to use, and we will learn a lot more over the next several months.
GILT AUCTION PREVIEW: On offer next week
The DMO has announced it will be looking to sell GBP1.5bln of the 0.75% Nov-33 linker (ISIN: GB00BMF9LJ15) at its auction next Tuesday, June 25.
AUD: AUDJPY highest since 2013
- Shorts are bailing out after AUDJPY breaks through the 2024 high, now at its highest level since 2013, and past the last MoF Yen intervention.
- Further upside momentum opens to 105.433, the 2013 high and the highest level since 2007, now at 105.05.
