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 U.S. banking profits soared 79.5% to $64.2 billion in the first quarter of 2024, largely as big banks didn’t absorb billions of dollars in extraordinary charges to cover the costs of bank failures last spring. The FDIC said the profit increase was largely due to banks not being aware of the review, which led to lower bank profits at the end of 2023.Specifically, the FDIC said banks’ noninterest expenses fell by $22.5 billion in the first quarter, which was the main reason for the profit increase. The decline in special assessment fees accounted for more than half of these declining fees. Overall, the FDIC said asset quality measures remained generally good but noted deterioration in credit card and commercial real estate (CRE) portfolios. In particular, the FDIC said the illiquid rate on non-owner-occupied CRE loans is currently at 1.59%, the highest level since the fourth quarter of 2013, driven primarily by the office portfolios of large banks.The FDIC also said its “list of problem banks” expanded from 52 companies to 63 in the first quarter, with the banks’ total assets rising to $82.1 billion. Currently, 1.4% of banks are considered “problem banks,” a number the FDIC says is within the normal range. Bank deposits rose 1.1%, or $190.7 billion, for the second consecutive quarter. Uninsured deposits are expected to grow 0.9%, the first increase since late 2021.

  Bank of Japan Governor Kazuo Ueda said on Monday that the Bank of Japan would advance its inflation targeting framework cautiously, noting that some of the challenges facing Japan after years of ultra-loose monetary policy are “extraordinarily difficult.” In his opening speech at a central bank meeting hosted by the Bank of Japan in Tokyo, Ueda said Japan had “made progress in moving away from zero interest rates and raising inflation expectations.” He said that in order to achieve 2% inflation in a sustainable and stable manner, the Bank of Japan “will act cautiously like other central banks that set inflation target frameworks.” Accurately estimating the neutral rate is particularly challenging in Japan, Ueda noted, given the long period of short-term rates near zero over the past three decades.At the same meeting, Bank of Japan Deputy Governor Shinichi Uchida said Japan’s fight against persistent deflation was coming to an end, but acknowledged that anchoring inflation expectations at the 2% target was “a huge challenge.” Uchida said labor market conditions have undergone structural and irreversible changes that will help address the root causes of deflation such as excess labor supply.In March, the Bank of Japan made a landmark move to end the remnants of eight years of negative interest rates and other aggressive stimulus measures as it believes sustained achievement of its 2% inflation target is within reach. Ueda said the central bank intends to raise interest rates to a level that is neutral for the economy as long as economic growth and inflation are in line with its forecasts. The market expects the Bank of Japan to begin a full reduction in bond purchases soon, with Japan’s 10-year government bond yield rising to a 12-year high last week.  They also expect rates to rise by at least 0.20% by the end of the year.

 The survey showed new home prices will fall by 5.0% in 2024, compared with a 0.9% drop expected in the last survey in February. Prices are likely to remain unchanged in 2025, compared with a 0.5% rise predicted in February. The poll, conducted between May 10 and 17, may only partially take into account the government support measures announced on Friday to stabilize the housing market.Beijing has pledged up to 1 trillion yuan ($138 billion) in funding and loosened mortgage rules and local governments will buy “some” apartments, in what many analysts say is the government’s strongest move yet to turn around the industry. However, questions remain about the latest measures, particularly whether they were overly enforced and how the government can help clear out the trillions in housing inventory.Since the real estate market fell into crisis in 2021, Chinese authorities have launched wave after wave of policy support measures to boost demand, but with little success. Property sales are likely to contract 10.0% in 2024, up from the 5.0% forecast in the previous survey, while investment is expected to fall 10.0% from the 6.1% forecast in the previous survey, the survey showed.

 Indonesia’s April trade surplus was slightly higher than expected at $3.56 billion, as imports were lower than expected, Statistics Indonesia data showed on Wednesday.Southeast Asia’s largest economy has reported a merchandise trade surplus every month for the past four years, but the surplus has been narrowing recently due to weak exports. For more than a year, the resource-rich country’s exports have been hurt by falling commodity prices and weak global trade. Exports in April increased by 1.72% year-on-year to US$19.62 billion, lower than economists’ expectations of 4.57%. Although weaker than expected, Indonesia’s exports expanded in April for the first time in 11 months.Affected by falling global coal prices, coal shipments fell 19.26% to $2.61 billion in April from the same period last year despite higher export volumes. Coal is Indonesia’s largest export product. Imports grew by 4.62% to US$16.06 billion, while economists predicted an annual growth rate of 8.69%.April trade data reinforced expectations from Permata Bank economist Josua Pardede that Indonesia will continue to see a decline in its trade surplus and a widening of its current account deficit this year, but only to a limited extent. Pardede said: “As inflation expectations remain low, considering that the external balance is controllable and the Indonesian rupiah exchange rate remains stable, we believe that Bank Indonesia may maintain the BI interest rate at 6.25% at the Bank Indonesia meeting in May.”Bank Indonesia will hold its monthly monetary policy review next week. The central bank unexpectedly raised interest rates in April to support the rupiah currency after it fell to a four-year low against the dollar. Governor Perry Warjiyo said last week that the central bank may not need to raise interest rates further as the currency stabilizes and capital inflows return.

 Australian Treasurer Chalmers said on Sunday that this week’s federal budget is expected to help ease the country’s stubbornly high inflation as many Australians continue to deal with cost-of-living pressures.Economists at the Reserve Bank of Australia forecast that consumer inflation would rise to 3.8% in June from 3.6% in the first quarter and remain at that level until the end of the year, highlighting local inflation challenges. Since May 2022, the central bank has responded to persistently high inflation by raising interest rates by 425 basis points to a 12-year high of 4.35%.Chalmers said the budget due to be published on Tuesday would be “primarily, but not exclusively, focused on inflation”. “The budget will be a responsible budget that will ease cost of living pressures and invest in the future of Australian manufacturing,” he added.Officials said on Tuesday the budget would focus on housing as rising rents, rising interest rates and soaring costs of living in recent years have exacerbated what was already the world’s most unaffordable rental market. Chalmers said the government would chart a responsible middle path in a budget that would put it on track for a second surplus despite more spending measures.

 Data released by Japan show that Japan’s inflation-adjusted real wages fell by 2.5% annually in March, falling for two consecutive years. The data showed the pace of decline accelerated from 1.8% last month as rising costs of living outpaced nominal wages. Japan is seeing early signs of a virtuous cycle of rising wages and inflation. However, workers’ incomes still lag behind rising costs, underscoring the challenges policymakers face in getting companies to raise wages.Some economists say they expect real wages to turn positive sometime in the 2024/25 financial year. Nominal wages, the average total cash earnings per worker, rose 0.6% to 301,193 yen ($1,940.30), a slowdown from 1.4% in February. On the other hand, consumer prices increased by 3.1% year-on-year in March, slightly slower than the 3.3% increase in February, hovering above the Bank of Japan’s 2% inflation target and price growth. Of total cash receipts, regular wages, which determine basic wages, increased by 1.7%, while overtime wages fell by 1.5%, falling for the fourth consecutive month. Special payments such as bonuses and other benefits in March are reduced by 9.4% annually.At annual labor talks this year, Japan’s major companies offered to raise workers’ monthly wages by more than 5 percent, a level not seen in about three decades. But small businesses, which employ seven in 10 workers, are lagging behind, holding back wage gains. Low-wage informal workers also make up about 40% of the workforce. The specter of sluggish wage growth is dashing policymakers’ hopes of achieving healthy economic growth led by durable inflation and stable wages, which are considered a prerequisite for normalizing monetary policy.

 The government said on Sunday that a weakening global economy and a slowdown at home were among the reasons Australia reported a smaller increase in federal budget revenue for the year to June 30 than in recent years. The Labor government is expected to report a budget surplus on May 14, although it said in March that revenue growth would be smaller than a year earlier due to lower commodity prices and a weaker labor market. On Sunday, it said the tax revenue hikes in the budget, which excludes levies from the goods and services tax, are expected to be more than A$100 billion ($66.08 billion) higher than the average hike of A$129 billion in the past three budgets.The expected results are due to a weakening global economy, a slowdown in the domestic economy, a weak labor market and falling commodity prices, the report said. “We are realistic about the challenges facing the economy and budget, including that the kind of large-scale revenue upgrade we saw in the recent budget update will not continue,” Finance Minister Jim Chalmers said in a statement. Chalmers has previously cited weak commodity prices, particularly for key export iron ore, and rising unemployment as key drivers of the change. Australia’s unemployment rate reached 4.1% in January, a two-year high. In April, he warned that events in the Middle East had heightened concerns about the global economy and would impact the government’s budget in May.

 A former central bank official who was involved in the Tokyo market push a decade ago said Japan may continue to intervene to support the yen until the risk of speculators triggering a sharp yen depreciation is removed. The yen rose sharply on Thursday, a day after traders suspected intervention measures were taken on Monday to stem a sharp decline. Japan’s Finance Ministry declined to confirm whether it had intervened, making markets nervous about the possibility of another round of intervention.At the time of Tokyo’s intervention from 2010 to 2012, Ton Takeuchi, head of the Bank of Japan’s foreign exchange department, said Japan might enter the market on Monday because the yen suffered sudden and huge losses in a short period of time that day. He said if the yen suddenly appreciated 2-3 points in a day without supervision, it could trigger a free fall in the yen, exacerbating concerns about the yen and the broader economy. By intervening when the yen’s decline accelerates in the short term, the authorities can maximize the psychological impact by alerting traders to the possibility of more action.Japan has historically been primarily concerned with preventing a sharp appreciation of the yen that would damage its export-reliant economy. Takeuchi participated in several yen sell-off intervention actions between 2010 and 2012. Under Japanese law, the government has jurisdiction over monetary policy, with the Bank of Japan acting as an agent for the Finance Ministry in deciding when to intervene.