1. Global spending on renewables, nuclear, energy efficiency and low-emissions fuels like hydrogen is set to eclipse $2 trillion in 2024, double the $1 trillion spent on fossil fuels, according to the International Energy Agency’s annual review of global energy spending. The transformation is particularly strong in the power sector, where worldwide investment in solar ($500 billion) is set to exceed spending on all other forms of power generation combined. The IEA's annual World Energy Investment report is closely tracked by industry analysts as a leading indicator for trends in the energy industry. This year's report predicts that spending on clean energy will grow by almost 6 percent, up from nearly $1.9 trillion in 2023. The report also notes an uptick in clean energy spending in emerging markets, a critical development for reaching the world's climate targets. (Source: scientificamerican.com)
2. Federal Reserve officials penciled in just one interest-rate cut this year and forecast more cuts for 2025, reinforcing policymakers’ calls to keep borrowing costs high for longer to suppress inflation. Officials voted unanimously to keep the benchmark federal funds rate in a range of 5.25% to 5.5% — a two-decade high first reached in July. But policymakers signaled they now expect to cut rates only once this year, compared to the three reductions forecast in March, according to the median projection. (Source: bloomberg.com)
3. The US government added $347 billion to the deficit in May, up 5% over the same month last year, as elevated borrowing costs continued to drive the growth in spending. That brought the year-to-date shortfall to $1.2 trillion, slightly lower than for the first eight months of fiscal year 2023, according to data released Wednesday by the Treasury. Receipts for the fiscal year are so far running 9% higher than last year, helped by a 29% jump in gross corporate taxes. Those numbers, however, are somewhat inflated by tax deadlines that were pushed back from 2023 into the current fiscal year for taxpayers in areas affected by natural disasters. On the spending side, year-to-date outlays for interest paid on public debt reached $728 billion, a 37% increase over last year. Total outlays for the fiscal year grew an adjusted 6% to $4.5 trillion. The Federal Reserve’s aggressive interest-rate hiking campaign — aimed at quelling high inflation — has made debt more expensive. (Source: bloomberg.com/Italics mine)
4. PIMCO expects more regional bank failures in the US because of a “very high” concentration of troubled commercial real estate loans on their books. “The real wave of distress is just starting” for lenders to everything from malls to offices, John Murray, Pimco’s head of global private commercial real estate team, said in an interview. The turmoil has been particularly felt among regional banks, which boosted their CRE exposure that in many cases is now worth only a fraction of their value at their peak. Smaller banks have also continued to worry investors ever since the collapse of a few last year. Earlier this year, New York Community Bancorp shocked investors by slashing its dividend and stockpiling more cash for potentially bad loans, sending shares into a tailspin that ended in a capital injection. US Bancorp, the largest regional bank by assets, increased its provisions for credit losses in the first quarter. Shares of Axos Financial Inc. slumped last week after a short seller took aim at what it called the bank’s “glaring” property loan problems. (Source: bloomberg.com)
Keep reading with a 7-day free trial
Subscribe to News Items to keep reading this post and get 7 days of free access to the full post archives.