By Takahiko Wada and Leika Kihara

TOKYO (Reuters) -Core inflation in Japan's capital perked up in June and remained above the central bank's 2% target for the 13th month, a sign price hikes were spreading to broader sectors of the economy and keeping policymakers pressured to dial back ultra-easy policy.

The data for Tokyo, which is seen as a leading indicator of nationwide trends, will likely feed into expectations for the Bank of Japan (BOJ) to phase out its massive stimulus this year.

However, there is uncertainty about how long households can weather price hikes and generate inflation driven more by demand, which holds the key to whether BOJ's 2% target can be achieved in a sustainable manner, analysts say.

"Inflationary pressure remains fairly strong as there are few signs companies are done hiking prices," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.

"The question is whether wages would rise enough to underpin consumption, and generate a positive wage-inflation cycle the BOJ hopes to achieve. The threshold seems quite high."

The Tokyo core consumer price index (CPI), which excludes volatile fresh food but includes fuel costs, rose 3.2% in June from a year earlier, accelerating from a 3.1% gain in May. It slightly missed a median market forecast for a 3.3% gain.

An index that strips away both fresh food and fuel costs rose 3.8% in June from a year earlier after a 3.9% gain in May, the data showed.

SUSHI, TOILET ROLL PRICES JUMP

Aside from an increase in utility bills that kicked off in June, Tokyo consumers paid 9.6% more than year-before levels for a box of sushi and 17% for hamburgers, the June data showed.

A roll of toilet paper was 15.5% more expensive and a tax ride was 14.4% higher in June than the previous year's levels.

While companies offered wage hikes unseen in three decades this year, inflation-adjusted real pay continues to fall in a sign of pain consumers are feeling from the wave of price hikes.

A survey by Teikoku Databank on 195 food goods producers showed they plan to raise prices for a combined 3,385 items in October, a report released by the think tank showed on Friday.

Uncertainty over the global outlook also keeps Japanese policymakers cautious of ending ultra-low rates too hastily.

Japan's factory output fell more than expected in May, data showed on Friday, underscoring risks to the export reliant economy as aggressive U.S. interest rate hikes and soft Chinese growth cloud the outlook for global demand.

Markets are focusing on the BOJ's new quarterly growth and inflation projections due at its next rate review on July 27-28, for clues on how soon the central bank could phase out stimulus.

Many analysts expect the BOJ to revise up its core consumer inflation for the current fiscal year ending in March 2024 from 1.8% projected in April. Dai-ichi Life's Shinke sees inflation averaging anywhere between 2.5% and 3% this fiscal year.

BOJ Governor Kazuo Ueda has repeatedly said the BOJ will maintain ultra-loose policy until stronger wage growth keeps inflation sustainably around its 2% target.

In an interview with Reuters conducted on Wednesday, BOJ Deputy Governor Ryozo Himino also said strong domestic demand and changes in corporate price-setting behaviour were emerging as new factors pushing up inflation. But he stressed the need to keep ultra-low interest rates for now.

"The BOJ may revise up its inflation forecast but probably keep policy steady in July," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"I don't think policymakers have changed their view it's still difficult for inflation to sustainably hit 2%."

By David Lawder and Andrea Shalal

WASHINGTON (Reuters) -The International Monetary Fund's executive board on Thursday completed its first review of Ukraine's $15.6 billion loan program, allowing Kyiv to immediately withdraw $890 million for budget support as it mounts a major offensive against Russia's invasion.

The board's approval brings Ukraine's withdrawals under the program launched on March 31 to around $3.6 billion so far.

The IMF said Ukrainian authorities have made "strong progress" toward meeting reform commitments under "challenging conditions," meeting quantitative performance criteria through April and structural benchmarks through June.

"Russia's invasion of Ukraine continues to have a severe impact on human and physical capital, and the environment, with loss of life, drop in living standards and rise in poverty, as well as damage to infrastructure," IMF Managing Director Kristalina Georgieva said in a statement.

"Nevertheless, the Ukrainian people have been resilient, and the authorities' skillful policymaking and continued external support have helped support macroeconomic and financial stability," Georgieva added.

IMF Ukraine mission chief Gavin Gray told reporters the IMF is continuing to study the social, environmental and economic impacts of the destruction of the Kakhovka Dam earlier this month, which caused widespread flooding in southern Ukraine.

Gray said the IMF initially expects the disaster to increase food prices and push up inflation in the country.

Nonetheless, the IMF reiterated the 2023 Ukraine economic forecast, recently upgraded to growth of 1% to 3%, from a March forecast range of a 3% contraction to 1% growth, as the new loan program underpins the economy.

The IMF loan program, approved under new rules that allowed lending into a highly uncertain situation, forms part of a total $115 billion package of support, with $100 billion coming from donor governments.

The IMF expects to carry out its next review of Ukraine's program in late November or early December, the official added.

The IMF said it was important for Ukraine to continue its reform momentum, including strengthening its tax compliance, with new tax legislation expected in July, and to build a strong 2024 budget based on available resources.

Gray said Ukrainian authorities also needed to continue work on strengthening governance and fighting corruption, with new legislation passed by the end of September.

"These measures are important because their strategy of mobilizing resources for reconstruction requires private sector investors to be convinced that there is a level playing field in Ukraine, and for official donors to be convinced that their resources will be appropriately spent," Gray added.

By Davide Barbuscia

NEW YORK (Reuters) - Several parts of the U.S. Treasury yield curve have reached deeper levels of inversion, a sign that bond investors are increasingly worried about an economic slowdown as the Federal Reserve looks set to raise interest rates further.

An inverted yield curve occurs when yields on shorter-dated Treasuries rise above those for longer-term ones, reflecting bets that the central bank will need to cut rates to buoy an economy hurt by higher borrowing costs.

The yield curve's inversions deepened in June, after Fed Chair Jerome Powell indicated that the central bank would likely raise rates two more times this year. Powell on Wednesday reiterated that two more hikes this year were likely, including an increase widely expected next month.

"Keeping rates higher for longer increases the chance that we move into a downturn," said Janet Rilling, a senior portfolio manager and the head of the Plus Fixed Income team at Allspring Global Investments. "So it is a logical reaction from investors that they would then expect, at some point, that the Fed's going to have to be more aggressive in cutting."

On Wednesday, yields on one-year Treasuries were as many as 153 basis points above those on 30-year Treasuries, the biggest inversion since 1981, according to Refinitiv data. The curve between five- and 30-year Treasuries, meanwhile, touched a low of -20.7 on Wednesday - the most inverted since March.

And the closely watched part of the curve that plots yields on two-year Treasuries against 10-year yields - a relatively reliable indicator of upcoming recession - has inverted further to below -100 basis points this week, close to the -108 bps level it touched before the March banking turmoil, in its turn the deepest since 1981.

The inversions are intensifying amid conflicting economic signals. Key areas of the U.S. economy, including housing and labor, have proven resilient despite higher rates. At the same time, however, signs of stress are piling up.

A recent Fed study showed the number of companies in financial distress was higher than during most previous tightening episodes since the 1970s, concluding that restrictive policies may contribute to a "marked slowdown in investment and employment in the near term."

By Upasana Singh

(Reuters) - Investors increased bearish bets on most Asian currencies, as a stuttering post-pandemic recovery in China, the world's second-largest economy, weighed on sentiment, a Reuters poll showed on Thursday.

Bearish bets on Thailand's baht and the Malaysian ringgit rose to their highest since early November, while investors raised their short positions on the yuan, according to the fortnightly poll of 12 analysts.

The ringgit has been among the worst performing currencies in the region this year, shedding about 5.8% so far.

The Malaysian currency remains tightly bound to the Chinese yuan, reflecting the country's strong trade links with China, analysts at ING said in a note.

The yuan has weakened 4.8% so far this year as weak consumer and private sector demand has sapped momentum from the post-pandemic recovery in China.

"China is in need of a credible economic recovery plan to boost the confidence of consumers and investors, and it is likely that the government will communicate that soon to revive animal spirits before the labour market conditions deteriorate further," said Fiona Lim, a senior FX strategist at Maybank.

"That is a key risk for investors, who are too bearish on Asian currencies."

Most of the responses to the poll were received after Chinese Premier Li Qiang said Beijing would take steps to boost demand and invigorate markets.

China's economic growth in the second quarter will be higher than the first and is expected to reach the annual economic growth target of around 5%, Li said.

Meanwhile, the baht's depreciation came as investors waited to see if the leading prime ministerial candidate has enough support to become the country's next premier.

Short positions were also increased on South Korea's won, the Singapore dollar and Indonesia's rupiah.

Bearish bets on the Philippine peso eased to a more than two-month low, while analysts stayed bullish on the Indian rupee, the sole outlier in the pack.

"As we anticipate funds to flow back into EM (emerging) markets when the U.S. Fed no longer requires raising rates, we maintain our expectations that EM currencies will appreciate in the latter part of the year," analysts at MIDF Research said in a note.

Futures see a near 80% chance that the U.S. Federal Reserve will hike rates by 25 basis points in July, before holding rates steady for the remainder of the year. [FEDWATCH]

The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht.

The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long on U.S. dollars.

The figures include positions held through non-deliverable forwards (NDFs).

The survey findings are provided below (positions in U.S. dollar versus each currency):

DATE USD/ USD/ USD USD USD USD/ USD/ USD/P USD/T

CNY KRW /SG /ID /TW INR MYR HP (NYSE:HPQ) HB

D R D

29-Jun 1.74 0.29 0.5 0.3 0.7 -0.1 1.85 0.29 1.03

-23 0 0 2 4

15-Jun 1.59 -0.0 0.1 -0. 0.6 -0.2 1.64 0.74 0.25

-23 3 7 33 8 4

01-Jun 1.88 0.68 0.7 0.2 0.7 0.48 1.77 1.08 0.45

-23 3 3 0

18-May 1.27 0.88 0.1 -0. 1 0.11 1.1 1.12 -0.5

-23 9 27

04-May 0.56 1.01 -0. -1. 0.6 -0.1 0.69 0.86 -0.43

-23 04 05 5 4

20-Apr -0.1 0.36 -0. -0. 0.3 0.30 0.54 0.95 -0.12

-23 4 13 47 0

06-Apr 0.04 0.56 -0. -0. -0. 0.3 0.29 0.08 -0.06

-23 39 26 03

23-Mar 0.17 0.87 0.1 0.7 0.6 0.58 0.74 0.36 0.37

-23 6 4 3

09-Mar 0.68 1.3 0.6 0.5 0.7 0.28 0.78 0.42 0.3

-23 5 6 8

23-Feb 0.36 0.77 0.2 0.1 0.3 0.80 0.49 0.33 0.37

-23 1 2 0

SYDNEY (Reuters) - Job vacancies in Australia fell in the three months to May, the fourth straight quarter of decline, but were still far above pre-pandemic levels as demand for labour remains strong.

Figures from the Australian Bureau of Statistics (ABS) out on Thursday showed vacancies in the May quarter fell 2.0%, from the previous quarter, to 431,600.

That was down 10% on a year ago, but 89% higher than in February 2020 before the pandemic struck.

"This May saw businesses continuing to report difficulties in recruiting and retaining staff," said Bjorn Jarvis, ABS head of labour statistics.

The percentage of businesses reporting at least one vacancy increased by one point to 25% in May. "This highlights the impact of a tight labour market on a broad range of businesses," said Jarvis.

The strength of the labour market is one reason the Reserve Bank of Australia (RBA) has raised interest rates 13 times to 4.1%, and might hike again next week.

Thursday's data showed vacancies in the private sector fell 2.3% in the May quarter, while the public sector saw a rise of 0.3%. The number of vacancies was highest in health care, followed by professional services, accommodation and food, and construction.

By Raphael Satter

WASHINGTON (Reuters) - The U.S. Department of Health and Human Services (HHS) was among those affected by a wide-ranging hack centered on a piece of software called MOVEit Transfer, Bloomberg News reported on Wednesday.

The report comes as the hackers behind the massive breach claimed credit for stealing data from two major law firms, Kirkland & Ellis LLP and K&L Gates LLP.

The ransomware gang known as cl0p posted the names of Kirkland & Ellis LLP and K&L Gates LLP to its leak site, typically a sign that negotiations between the victims and the hackers had broken down.

The hackers' claims could not immediately be verified. Kirkland and K&L did not immediately return messages left after hours. A spokesperson for HHS could not immediately be reached.

HHS' name did not appear among cl0p's list of purported victims. The group has previously insisted it doesn't deliberately steal data from government organizations, but that doesn't mean that data hasn't been compromised.

Bloomberg cited a person familiar with the incident at HHS as saying that tens of thousands of records could have been exposed.

Cl0p didn't immediately return an email seeking comment.

Believed by researchers to be a Russian-speaking group of hackers, cl0p was recently able to gain access to a wide swathe of organizations' data by compromising MOVEit Transfer, a file commercial management tool made by Progress Software (NASDAQ:PRGS).

Speaking to Reuters ahead of the latest claims, Jon Clay, the vice president for threat intelligence at cybersecurity firm TrendMicro, described cl0p as a resourceful group with little incentive to stop its shakedown spree.

"They aren't going away," he said. "Unless the heat gets on them very bad."

By Akash Sriram and Noel Randewich

(Reuters) -Apple's stock climbed to a record high close on Wednesday and was on the cusp of a $3 trillion market capitalization.

The iPhone maker's stock rose 0.6% to end the day at $189.25, putting Apple (NASDAQ:AAPL)'s market value at $2.98 trillion, according to Refinitiv data. It was the second straight record high close for Apple's shares.

Apple has yet to end a trading session with a stock market value above $3 trillion. It briefly peaked above $3 trillion in intra-day trading on Jan. 3, 2022 before closing the session just below that mark.

The latest gains in shares of the world's most valuable company follow strong rebounds this year from several of Wall Street's technology-related heavyweights, fueled by bets that the Federal Reserve is nearing the end of its campaign of U.S. interest rate hikes, and by optimism about the potential for artificial intelligence.

"There hasn't really been any new information fundamentally that would be supportive of the stock move," said Thomas Martin, Senior Portfolio Manager at Globalt Investments. "What you're left with is, you know, the market itself."

Apple has jumped 46% in 2023, while Nvidia (NASDAQ:NVDA) has surged 185%, making it the first chipmaker with a stock market value over $1 trillion. Tesla (NASDAQ:TSLA) and Meta Platforms have more than doubled this year, and Microsoft (NASDAQ:MSFT) has added 40%.

Apple's approach toward its $3 trillion milestone follows the June 5 launch of a pricey augmented-reality headset, its riskiest bet since the introduction of the iPhone more than a decade ago.

As well, Apple's most recent quarterly report in May showed a drop in revenue and profits, but still beat analysts' expectations. Along with a steady track record of stock buybacks, those financial results reinforced its reputation among investors as a safe investment at a time of global economic uncertainty.

Recent gains in Apple's shares have outpaced analysts' estimates for the company's future earnings. The stock is now trading at about 29 times expected earnings, its highest multiple since February 2022, according to Refinitiv data.

(Bloomberg) -- US new-home sales advanced in May to the fastest pace in over a year, bolstered by limited inventory in the resale market.

Purchases of new single-family homes increased 12.2% to an annualized 763,000 pace last month, government data showed Tuesday. The figure marked the third-straight monthly advance and beat all but one estimate in a Bloomberg survey of economists.

While new homes make up a much smaller share of overall housing stock than older construction, owners’ reluctance to list their homes in a high interest-rate environment has altered the makeup of home purchases. 

Builders are rushing to create more inventory to satisfy pent-up demand, driving a surge of groundbreakings and helping new-home sales reach levels above those seen before the pandemic.

The number of homes sold in May and awaiting the start of construction — a measure of backlogs — rose for a third month to the highest since January 2022.

Inventory Levels

There were 428,000 homes for sale as of the end of last month, roughly in line with prior readings this year. That represents 6.7 months of supply at the current sales rate, the lowest since February 2022.

High mortgage rates remain a key affordability concern, though there are indications that the housing sector has not only bottomed, but could also begin contributing to economic growth.

Read more: Homebuilding Set to Boost US Economy After Two-Year Contraction

The median sales price of a new home was down 7.6% from a year earlier to $416,300. That marked a second-straight month of annual declines.

Sales advanced in all four regions, and purchases in the South were the highest since the end of 2021.

Sales of new homes are considered a timelier barometer than purchases of previously-owned homes, which are calculated when contracts close. Those sales remained weak in May, separate data showed last week. 

The new-homes data are volatile; the report showed 90% confidence that the change in sales ranged from a 0.6% decline to a 25% gain.

A separate report Tuesday showed consumer confidence rose in June to the highest level since early 2022.

WASHINGTON (Reuters) - President Joe Biden said on Tuesday the United States economy is "strong now" and he does not expect a recession, a day before delivering an economic policy speech in Chicago.

Biden delivered his remarks on Tuesday at a private fundraiser in Chevy Chase, Maryland.

He will deliver a speech on Wednesday in Chicago on "Bidenomics," a catch-all term his aides use to describe his economic vision, as the president ramps up political events and travel two months after launching his re-election campaign.

By Wayne Cole

SYDNEY (Reuters) - Asian shares hesitated on Wednesday as surprisingly upbeat U.S. economic news warred with global growth concerns, while the embattled yen hit a 15-year low on the euro and Japan hinted at intervention to prevent further losses.

The strength of U.S. data also combined with hawkish commentary from the European Central Bank to undermine bonds as markets narrowed the odds on further rate hikes.

That only heightened attention on a star-studded panel of central bankers later in the day in Portugal which includes Federal Reserve Chair Jerome Powell, ECB head Christine Lagarde and Bank of Japan Governor Kazuo Ueda.

"The U.S. data signals continued resilience in interest rate sensitive sectors, and the Fed is very clear that a period of sub-trend activity may be needed to bring inflation under control," said analysts at ANZ. "So far, that doesn't seem to be happening."

"For the ECB, senior officials signalled the need for ongoing tightening unless core inflation slows materially and a September rate hike is looking increasingly on the cards."

The rate risk kept markets cautious and MSCI's broadest index of Asia-Pacific shares outside Japan was barely changed.

Chinese blue chips dipped 0.2%, having bounced on Tuesday as officials talked up the prospects for growth.

Japan's Nikkei outperformed with a rise of 0.7%, aided by the weakness of the yen.

Nasdaq futures eased 0.4%, dragged by a Wall Street Journal report Washington was considering new restrictions on exports of artificial intelligence chips to China. Shares in Nvidia (NASDAQ:NVDA) fell 3% after the bell.

S&P 500 futures dipped 0.2%, though that followed solid gains on Tuesday as U.S. data on housing, durable goods orders and consumer sentiment handily topped expectations.

"The data indicated a firmer pace of residential, inventory, and equipment investment in the second quarter," wrote analysts at Goldman Sachs (NYSE:GS). "We boosted our Q2 GDP tracking estimate by 0.4pp to +2.2%."

That resilience offset recent softness in manufacturing surveys and led the market to narrow the odds on a July rate hike from the Federal Reserve.

Futures now imply around a 77% chance of a hike to 5.25-5.5%, and slightly more risk of a further move to 5.5-5.75%, which nudged short-term Treasury yields higher.

EURO ON THE RISE

Bond yields also moved sharply higher in Europe after a bevy of central bankers sounded hawkish on inflation and warned rates would likely have to stay higher for longer.

Markets imply a 90% probability of a rate hike to 3.75% in July and a peak around 4.0%.

The euro responded by climbing to $1.0957, while surging on the low-yielding yen to a 15-year peak of 157.97.

The dollar rose to a near eight-month peak of 144.18 yen, before easing back to 143.87 as Japanese officials again protested the weakness in the yen.

Japan's top currency diplomat Masato Kanda on Wednesday warned against further falls in the yen, saying authorities would take an appropriate response if moves became excessive.

Markets are wary in case Japan intervenes to buy the yen as they did last October, when they knocked the dollar down from a top of 151.94 to as low as 144.50 in a matter of hours.

Yet, a rally in the yen looks unlikely while the Bank of Japan maintains its super-easy monetary policy.

"Following BOJ Governor Ueda's consistently dovish message and weak Japanese wage growth, market participants now lack the conviction the BOJ will soon tighten its monetary policy," said Carol Kong, a currency strategist at CBA.

"So we now see a higher risk Japanese authorities will step into the market to prop up the JPY."

In commodities, gold steadied at $1,915 an ounce, after finding support at the recent three-month low of $1,909.99. [GOL/]

Oil prices edged up after data showed a larger-than-expected draw in U.S. crude and gasoline inventories, but remains uncomfortably close to its lows for the year so far. [O/R]

Brent firmed 33 cents to $72.59 a barrel, while U.S. crude rose 29 cents to $67.99 per barrel.