Inflation jumped 5.4 percent in June, the biggest rise since 2008.

The Consumer Price Index jumped sharply, rising 0.9 percent over the last month, as used-car prices rose rapidly.

Daily Business Briefing

July 13, 2021Updated July 13, 2021, 9:04 a.m. ETJuly 13, 2021, 9:04 a.m. ET

The Consumer Price Index jumped sharply, rising 0.9 percent over the last month, as used-car prices rose rapidly.

U.S. stocks fall and bond yields rise after jump in inflation.JPMorgan Chase and Goldman Sachs start earnings season strong.France fines Google $593 million for not negotiating ‘in good faith’ with news publishers.Janet Yellen makes a case for Ireland to join the global tax deal.China reports strong export numbers despite shipping delays.Boeing will slow work on its 787 Dreamliner to fix a new problem.

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Outside the Queens Center mall in New York on Monday.Credit…An Rong Xu for The New York Times

A key measure of inflation jumped sharply in June, a gain that is sure to keep concerns over rising prices front and center at the White House and Federal Reserve.

The Consumer Price Index climbed by 5.4 percent in the year through June, the Labor Department said, as prices for used cars and trucks accelerated rapidly and accounted for more than a third of the surge. The overall inflation change was more than the 5 percent increase reported in May and was the largest year-over-year gain since 2008.

Investors, lawmakers and central bank officials are closely watching inflation, which has been elevated in recent months by both a quirk in the data and by mismatches between demand and supply as the economy rebounds. Quick price gains can squeeze consumers if wages do not keep up, and the pickup could prod the central bank to pull back on support for the economy if it looks as if the inflation is going to prove sustained. The Fed’s cheap-money policies are generally good for markets, so a rapid withdrawal would be bad news for investors in stocks and other asset classes.

Policymakers expect inflation will fade as the economy gets through a volatile pandemic reopening period, but how quickly that will happen is unclear. Prices have climbed faster than officials at the Fed had predicted earlier this year, certain measures of consumer inflation expectations have risen — something that could make inflation a self-fulfilling prophecy if it becomes more extreme — and some officials at the central bank are increasingly wary. At the same time, markets have become more sanguine about the outlook for inflation.

Part of June’s annual jump owes to a data quirk called the “base effect,” which makes gains in the price index look artificially high this year. The quirk was at its most extreme in May, and started to fade slightly in the latest data, but it remains a factor behind the larger-than-usual increase.

June 2021: +5.4%

Percent change in Consumer Price

Index from a year prior

Some of June’s rise can be explained through

what’s known as base effects — prices were still

low last summer, so the increase last month from

the year prior is larger. But base effects are now

fading, and are not the full story behind the

pickup in inflation.

2021 Consumer

Price Index

June 2021: +5.4%

Percent change in Consumer Price

Index from a year prior

Some of June’s rise can be explained through what’s known as base effects — prices were still low last summer, so the increase last month from the year prior is larger. But base effects are now fading, and are not the full story behind the pickup in inflation.

2021 Consumer Price Index

Here is what the data for June showed:

Monthly C.P.I.

The index rose 0.9 percent from May to June, faster than the 0.6 percent month-over-month increase the prior month and far more than economists had expected. That was the fastest monthly jump since 2008.

Stripping out volatile food and fuel costs, the C.P.I. also climbed 0.9 percent over the month, up from 0.7 percent the prior month.

Annual C.P.I.

The index rose 5.4 percent in the year through June, more than the 5 percent in the year through May.

Stripping out volatile food and fuel prices, the C.P.I. climbed 4.5 percent over the year, up from 3.8 percent in the year through May. That was the fastest pace since 1991.

Car Prices, Rents and Restaurants

Used car prices have been spiking thanks to a semiconductor shortage that has slowed auto production, and they rose 10.5 percent in June. That trend is expected to reverse soon, as production recovers.

Rent and a rental equivalent for owner-occupied houses have been firming, and the fresh data showed that continued. Because they make up nearly a third of overall inflation, that could bolster price gains going forward if it continues. Hotel prices also jumped sharply — 7.9 percent over the month — as demand for vacations bounced back.

The “food away from home” category increased by 0.7 percent from the prior month, and 0.8 percent for full-service meals. Restaurants have seen demand surge even as they struggle to hire, and many have raised wages to attract workers. They may be trying to pass those costs along. Food overall was more expensive, with prices picking up by 0.8 percent from the prior month.

U.S. stock futures fell after data showed inflation in the United States rose in June by more than economists expected. Futures on the S&P 500 index fell as much as 0.4 percent.

The Consumer Price Index rose 0.9 percent from the previous month, compared to expectations of a 0.5 percent increase. The core index, which strips out volatile food and energy prices, also rose 0.9 percent in June.

The yield on 10-year U.S. Treasury notes jumped to 1.38 percent, from 1.34 percent before the inflation data was released. Rising inflation erodes the value of fixed income assets, which sends bond prices lower and their yields higher. Also, rising inflation might encourage the Federal Reserve to reduce stimulus measures sooner than previously anticipated, which would push interest rates higher.

Banks

Shares in JPMorgan Chase fell 0.8 percent in premarket trading even after the giant bank reported net income of $11.9 billion in the second quarter, up from $4.7 billion a year earlier. But the bank said its expenses on technology and hiring rose and that demand for loans was flat.

Shares in Goldman Sachs rose 0.3 percent premarket after the investment bank reported a second-quarter jump in revenue from advising on deals that helped offset a slump in trading revenue.

Shares in British banks rose in early trading in London after the Bank of England lifted restraints on dividend payments and share buybacks that had been introduced during the pandemic. Analysts at Bank of America reiterated a buy recommendation for Barclays, NatWest and Standard Chartered.

But by early afternoon in London, as U.S. bank earnings were reported, the shares had reversed their gains. Barclays shares were 0.6 percent lower having risen as much as 2.2 percent. NatWest shares fell 1.7 percent and shares in Standard Chartered declined 0.3 percent.

Elsewhere in markets

Boeing fell about 2 percent in premarket trading after the aircraft maker said it would temporarily slow production of the 787 Dreamliner to fix another problem with the model. Boeing also said that it expected to deliver less than half of the Dreamliners in its inventory this year.

JPMorgan Chase reported net income of $11.9 billion in the second quarter, up from $4.7 billion a year earlier.Credit…Johannes Eisele/Agence France-Presse — Getty Images

The big banks are booking big profits as customers shake off the pandemic and deal makers seize on busy markets.

JPMorgan Chase, the country’s largest bank by assets, on Tuesday reported net income of $11.9 billion in the second quarter, up from $4.7 billion a year earlier. Its earnings per share of $3.78 and revenue of $30.5 billion exceeded analysts’ expectations.

Consumers are starting to spend more on travel and entertainment, and they’re also buying homes and cars at a faster clip, the bank said. Its investment banking fees were the highest they’ve ever been, buoyed by a hot market for mergers and acquisitions.

“Consumer and wholesale balance sheets remain exceptionally strong as the economic outlook continues to improve,” Jamie Dimon, JPMorgan’s chief executive, said in a statement.

The company’s confidence in the rebound was reflected in the release of $3 billion from its rainy-day fund that was set aside for an expected onslaught of consumer defaults that never emerged, thanks to robust government stimulus efforts that helped keep many Americans afloat. Net charge-offs, or debt that the bank has given up trying to recoup, fell 53 percent, “reflecting the increasingly healthy condition of our customers and clients,” Mr. Dimon said.

Goldman Sachs also reported a bigger profit for the quarter compared with the same period a year ago, earning nearly $5.5 billion on revenue of nearly $15.4 billion. On a per-share basis, Goldman’s $15.02 showing was much higher than Wall Street’s prediction of $9.88. Analysts had expected Goldman’s profit to be just $3.4 billion.

But compared with the first three months of 2021, its earnings were smaller, indicating that the bank and Wall Street competitors may be reaching the end of the frenetic period of trading touched off by the pandemic.

Goldman’s trading revenue for the quarter was lower than earlier this year and the same period last year. Its trading in fixed income, commodities and other financial products brought in $4.9 billion in revenues for the quarter, compared with almost $7.6 billion earlier this year and $7.2 billion during the same period a year ago. Analysts had expected a better showing, predicting the bank would take in just over $5 billion from such trades.

Google’s logo was displayed at the La Defense business and financial district in Courbevoie, just west of Paris. Credit…Charles Platiau/Reuters

Google was fined $593 million by French antitrust authorities on Tuesday for failing to negotiate a deal in “good faith” with publishers to carry news on its platform, a victory for media companies that have been fighting to make up for a drop in advertising revenue that they attribute to the Silicon Valley giant.

French officials said Google ignored a 2020 order from French regulators to negotiate a licensing deal with publishers to use short blurbs from articles in search results. The case has been closely watched because it represents one of the first attempts to apply a new copyright directive adopted by the European Union intended to force internet platforms like Google and Facebook to compensate news organizations for their content.

“When the authority imposes injunctions on companies, they are required to apply them scrupulously, respecting their letter and their spirit,” Isabelle de Silva, president of the French antitrust body, said in a statement.

Google has two months to come up with fresh ideas for compensating news publishers or risks further fines of up to 900,000 euros, about $1.065 million, per day, the French authorities said.

The French decision is the latest flash point in a battle between news publishers and internet platforms over the use of news content. In Europe and elsewhere, policymakers have increasingly sided with publishers who argue internet companies are profiting from the unfair use of their content. Companies like Google and Facebook have argued they are driving traffic to the news websites.

Internet companies fought a copyright law passed earlier this year in Australia that gave publishers more negotiating leverage. It led to a showdown in which Facebook briefly removed news from its platform for users inside the country, before quickly relenting.

As policymakers crack down, Google has been trying to strike deals with individual publishers. In October, the company said it would spend more than $1 billion to license content from international news organizations. And in February, it announced a three-year deal with News Corp., owner of The New York Post and The Wall Street Journal and other prominent news outlets.

Google, which can appeal the fine, said it was “very disappointed” with the French decision and that it was continuing to negotiate with publishers. “We have acted in good faith throughout the entire process,” Google said in a statement. “The fine ignores our efforts to reach an agreement, and the reality of how news works on our platforms.”

The French authorities said Google placed unfair restrictions on its negotiations with publishers, including requiring them to participate in the company’s new licensing program, News Showcase. Google had reached a deal with some prominent French news outlets — including Le Monde, L’Obs and Le Figaro — but others raised concerns about the process.

Google said it was finalizing a global licensing deal with Agence France-Presse, one of France’s largest media organizations.

Janet Yellen at the White House in Washington in May.Credit…Erin Scott for The New York Times

The United States is hopeful that Ireland will drop its resistance to joining the global tax agreement that it is brokering, as Treasury Secretary Janet L. Yellen made the case to her Irish counterpart this week that it is in its economic interests to join the deal.

The discussion with Ireland came during a weeklong trip to Europe, where Ms. Yellen worked to gather more support for a global plan that is intended to put an end to tax havens and curb profit shifting with a new global minimum tax. The agreement, which gained the support of the Group of 20 nations on Saturday, would usher in a global minimum tax of at least 15 percent. It would also change how taxing rights are allocated, allowing countries to collect levies from large, profitable multinational firms based on where their goods and services are sold.

“For Ireland, low taxes has been an economic strategy that has been incredibly successful,” Ms. Yellen said in an interview ahead of her return to Washington. “They see it as very vital to their economic success. And I think to go along with it, probably they need to be able to make the case that it’s in the interest of the country.”

Ms. Yellen held high-stakes meetings in Brussels this week with Paschal Donohoe, Ireland’s finance minister and president of the Eurogroup, a club of European finance ministers. Ms. Yellen needs Mr. Donohoe’s support because the European Union requires unanimity among its members to formally join the deal that will require changes to domestic tax laws.

After meeting with Ms. Yellen on Monday, Mr. Donohoe struck a positive tone and said that he would continue to engage in the process.

Despite growing global support for the deal, much work remains to be done.

More than 130 countries have now backed a framework of the global agreement, which would be the largest shake-up of the international tax system in decades, but important holdouts like Ireland as well as Hungary and Estonia remain. With stops in Venice and Brussels on her first trip to Europe as Treasury secretary, Ms. Yellen worked with her counterparts to develop a strategy for getting those countries to drop their concerns and join the agreement so that a final pact can be secured by October.

Ms. Yellen told her Irish counterpart that its economic model would not be upended if it increased its tax rate from 12.5 percent, noting that it would still have a large gap between its rate and the 21 percent tax rate on foreign earnings that the Biden administration has proposed.

The Biden administration believes that the agreement, if enacted, would end the “race to the bottom” on corporate taxation, heralding a new era of corporate governance that will help nations finance new infrastructure investments and reduce inequality. Greater tax fairness could also aid in pushing back against the rise of right-wing populists, who have come to power around the world on a wave of frustration that working-class citizens have been forgotten by the elites.

“Globalization is not just serving to enrich the rich further and harm the poor,” Ms. Yellen said. “In some broader sense the international tax piece is about that.”

Ms. Yellen said that the Biden administration’s tax plans, which include raising the corporate tax rate to 28 percent from 21 percent, are also meant to address what she considers to be the unfairness of the tax code in the United States.

“It just isn’t right for very successful companies to be able to avoid paying their fair share to support expenditures that we need to invest in our economy, to invest in our work force, in R.&D. and a social safety net that’s operational,” Ms. Yellen said.

Resistance is mounting from corporate America, with business groups warning that the possibility of $2 trillion in corporate tax increases will make American companies less competitive around the world. And with rising prices continuing to be a concern among policymakers in the United States, business interests have said that the tax increases could fuel inflation, as companies pass them on to consumers.

Ms. Yellen dismissed that theory, arguing that most of the economic research has found that corporate tax increases mostly falls on past investments and would not harm workers or lead to prices rising faster.

“There’s no reason to think that changing corporate taxes would have some direct impact on prices,” Ms. Yellen said.

Cargo containers stacked at Yantian Port in Shenzhen, China, last month.Credit…Agence France-Presse — Getty Images

BEIJING — China has prospered during much of the coronavirus pandemic as the world’s factory, making everything from face masks to exercise equipment for housebound consumers. Demand for its products doesn’t appear to be slowing even as Western economies reopen.

China’s General Administration of Customs announced on Tuesday that the country’s exports surged 32.2 percent in June compared with the same month last year. The increase caught many economists by surprise, as one of China’s biggest ports was partially closed for most of June and China’s exports of medical supplies have begun to level off.

China’s export performance in June “is quite impressive and not so easy to understand,” said Louis Kuijs, the head of Asia economics in the Hong Kong office of Oxford Economics.

Mr. Kuijs said that a little more than a third of the increase in value of Chinese exports might reflect rising prices. Chinese factories are passing on their own higher costs to foreign consumers.

Chinese manufacturers face escalating costs these days because prices have increased worldwide over the past year for commodities like iron ore and copper and for industrial materials like steel.

China’s currency, the renminbi, has also strengthened against the dollar. So Chinese producers need to charge more dollars to pay the same wages and other costs denominated in renminbi.

By raising prices for foreign buyers, Chinese factories can preserve their profit margins — at the risk of contributing to inflation elsewhere.

Port and shipping delays are driving the price tags for Chinese goods even higher in foreign markets. The cost of shipping a 40-foot cargo container across the Pacific has ballooned from the usual $4,000 to $5,000 to a record $18,000 or more.

Part of the problem lies in China’s drastic actions to prevent new coronavirus variants from spreading. These measures have included forcing port workers into lengthy lockdowns at the first sign of outbreaks.

China’s policies have been effective in keeping virus cases to a minimum, but at some economic cost.

One of the world’s largest ports, Yantian Port in the southeastern Chinese city of Shenzhen, partially shut down for more than a month from late May through much of June. Shenzhen acted in response to fewer than two dozen coronavirus cases.

When the port fully reopened on June 24, shipping executives and freight forwarders hoped that trade would start returning to normal.

It has not worked out that way.

Dozens of huge container ships fell far behind schedule when they had to wait weeks to dock in Shenzhen. That meant ships later showed up in bunches at ports in other countries, causing further congestion. Chinese export factories also sent goods by truck to alternative ports, like Shanghai’s, leaving them overcrowded as well.

Zhao Chongjiu, China’s deputy minister of transport, defended his country’s tough coronavirus measures. “Everyone knows that during an epidemic, workers in ports must be placed under lockdown, and various countries have taken corresponding measures, so the efficiency of loading and unloading would be reduced,” he said when Yantian reopened.

By mid-June, the freight yard was so crammed with containers at Shanghai’s vast, highly automated Yangshan Deep Water Port that the stacking cranes barely had room to lift containers on and off ships. Dong Haitao, a senior administrator at the adjacent free trade zone, blamed foreign ports for failing to handle arriving containers on time.

“Their schedule of shipments has been disrupted, but not ours,” he said.

Shipping rates for containers have continued to rise steeply in the weeks since Yantian Port reopened. The increase is widely expected to keep going as stores in the United States in particular race to restock shelves for returning shoppers and also start preparing for the Christmas shopping season.

“Each week these rates go up another few hundred dollars,” said Simon Heaney, the senior manager for container shipping research at Drewry Maritime Research in London. “Nobody seems to have any answers, and the only thing we can hope for is Chinese New Year — and that’s obviously a long way off.”

Factories in China typically close for several weeks during the Lunar New Year celebration, which could give the world’s ships time to catch up. But next year’s holiday does not start until the end of January.

Liu Yi and Li You contributed research.

A Boeing 787 Dreamliner flown by British Airways. Boeing said that it expected to deliver less than half of the Dreamliners in its inventory this year.Credit…Andy Rain/EPA, via Shutterstock

Boeing said on Tuesday that it would temporarily slow production of the 787 Dreamliner after it identified new work that needed to be done on the troubled wide-body jet.

The slowdown will cause the company to fall short of a target production rate of five 787s per month as it conducts inspections and completes the extra work, Boeing said. Reuters reported on the new production problem on Monday.

Boeing also said that it expected to deliver less than half of the Dreamliners in its inventory this year, a shift from April when its chief executive, Dave Calhoun, said the company would hand over the majority by 2022.

“We will continue to take the necessary time to ensure Boeing airplanes meet the highest quality prior to delivery,” the manufacturer said in a statement. “Across the enterprise, our teams remain focused on safety and integrity as we drive stability, first-time quality and productivity in our operations.”

Boeing had stopped delivering the 787 last year amid quality concerns related to shims used where parts of the plane’s fuselage, or main body, are joined. The company resumed deliveries in March, but said in May that it had stopped again after the Federal Aviation Administration said it was unconvinced by Boeing’s inspection methods, which relied on using a statistical analysis to identify where inspections were needed. Boeing said on Tuesday that discussions with the F.A.A. are ongoing.

Mr. Calhoun addressed the general 787 production disruptions at an investor conference last month.

“We will work our way and get to a stable delivery rate, which is, right now, our biggest challenge,” he said, adding, “But we think we’re doing this the right way, and we’re doing it alongside the F.A.A.”

News of the production slowdown comes as Boeing released strong, new monthly production and sales figures.

The company said on Tuesday that it had delivered 45 planes to customers in June, the most since March 2019, when its popular 737 Max plane was banned from flying around the world. The grounding of the Max, which was prompted by two fatal crashes, devastated Boeing’s finances and led to the ouster of Mr. Calhoun’s predecessor. The plane was allowed to start flying passengers again late last year.

Boeing also said on Tuesday that it had booked 219 gross orders in June, the most in three years. Nearly all of the orders were part of a record expansion of United Airlines’s fleet. And June was also Boeing’s fifth straight month of positive net sales, after accounting for cancellations.

China’s crackdown on foreign initial public offerings is quickly zooming beyond Didi Chuxing, the ride-hailing giant that government officials banned from app stores just days after it sold shares in the United States. Now, Beijing is proposing new regulatory requirements for all tech companies planning to list their shares abroad and erecting barriers around fintech firms, some of the country’s biggest start-up successes.

At the same time, President Biden is reportedly preparing to warn American companies about the increasing risks of doing business in Hong Kong, further fraying relations between the United States and China. As bankers assess what all this posturing means — economics has trumped politics before — the DealBook newsletter has started to do the math.

I.P.O. fee revenue for U.S. listings of Chinese companies

Chinese companies listing their shares in New York have been hugely lucrative for Wall Street in recent years. Investment banks have already brought in nearly $460 million in underwriting revenue this year, according to Dealogic. More was expected: Bloomberg estimates that about 70 companies based in Hong Kong and China have been set to go public in New York.

U.S. listings of Chinese companies have accounted for nearly 8 percent of Goldman Sachs’s underwriting fees so far this year, and more than 12 percent of Goldman’s underwriting revenue over the previous five years.

Value of private equity deals in China with U.S. investors

Investment firms’ portfolios could suffer, too. If an American I.P.O. is off the table, at least for now, hedge funds and private equity firms that doubled down on Chinese investments in search of growth may see the value of those holdings decline. (Investment firms could, of course, take Chinese companies public in China, but the shallow investor pool and proximity to the government can make that a less desirable path.)

It’s difficult to quantify the exact exposure investment firms have to China, but it looks substantial. U.S. private equity firms were involved in deals worth $45 billion in Greater China in the five years to 2019, according to PitchBook. Carlyle and Warburg Pincus have been among the biggest investors in recent decades.

Major platforms like Spotify, Twitter and Facebook are rushing to catch up to start-ups, particularly Clubhouse.Credit…Waldo Swiegers/Bloomberg

Investors are increasingly eyeing the creator economy — the huge, largely unexplored market of providing digital tools to influencers and helping them run their businesses.

The venture capital firm SignalFire estimates that 50 million people around the world consider themselves content creators, while the technology news site The Information estimates that venture capital firms have invested $2 billion into 50 creator-focused start-ups so far this year.

Last month, for example, the venture firm Founders Fund took the lead in a $15 million investment round for Pietra, a start-up aimed at helping influencers launch product lines. In April, Seven Seven Six, a venture firm run by Alexis Ohanian, a Reddit co-founder, and Bessemer Venture Partners announced a $16 million investment in PearPop, a platform that helps creators monetize their collaborations and social media interactions.

The list goes on. In February, the high-profile venture firm Andreessen Horowitz led an investment in Stir, a platform that helps creators manage how they make money, valuing the company at $100 million, Taylor Lorenz and Erin Woo report for The New York Times.

And then there is Clubhouse, the heavyweight of this young market, generating plenty of buzz from Silicon Valley and the media and entertainment world. Clubhouse, which requires an invitation to join, is a social network built around audio-only chat rooms. In April, it raised $200 million in a funding round led by Andreessen Horowitz, putting its valuation at roughly $4 billion.

Major platforms like Spotify, Twitter and Facebook are rushing to catch up to start-ups, particularly Clubhouse. Spotify recently announced its new live audio app, Greenroom, a Clubhouse competitor that Spotify built after acquiring the live audio start-up Locker Room. Twitter has already added its own Clubhouse rival, Twitter Spaces, and both Twitter and Facebook are starting newsletter services to compete with the success of Substack, which allows users to easily set up subscriptions for their writing.

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