According to economists surveyed by Bloomberg, the Fed is likely to raise interest rates in 2023 at its monetary policy meeting this week against the backdrop of accelerating economic growth and inflation, but they will not give a hint of cutting back on bond purchases until August or September. On Wednesday, the Fed will release a quarterly "bitmap" after a two-day policy meeting, and more than half of the economists surveyed expect the median expectation of 18 Fed officials to raise interest rates at least once in 2023. Other economists do not expect the Fed to raise its benchmark interest rate near zero until 2024 at the earliest, in line with the Fed's forecast in March.

The Fed's use of overnight reverse repurchase tools fell by $74 billion, the biggest one-day drop since April 1. Forty-five institutions deposited a total of $509.6 billion through overnight reverse repos on Tuesday, down from a record $583.9 billion on Monday, according to the New York Fed. This is the first time that the use of overnight reverse repos has fallen since June 2. 

After the profligacy of the stimulus bailout in the first two months, US retail sales fell in May, suggesting that consumers are starting to shift more spending to services as the economy reopens. Figures released by the Ministry of Commerce on Tuesday showed that total retail sales fell 1.3% in May; the April figure was revised up to 0.9%. Economists surveyed by Bloomberg expect retail sales to fall 0.8% in may.

The US producer price index rose more than expected in May, prompting companies to pass on price increases to US consumers. The producer price index for final demand rose 0.8 per cent in May from a month earlier, up from 0.6 per cent in April, according to data released by the US Bureau of Labor Statistics on Tuesday. Excluding volatile food and energy, the so-called core producer price index rose 0.7 per cent. PPI, which tracks changes in production costs, has soared in recent months. Rising prices and shortages of raw materials, coupled with transport bottlenecks and rising labour costs, have raised production costs. At the same time, pent-up demand was released, causing supply to outstrip demand and pushing up prices further.

Us manufacturing output grew faster than expected in May, suggesting that the industry is improving further despite supply shortages, recruitment difficulties and rising material prices. Data released by the federal reserve on Tuesday showed that manufacturing output rose 0.9 per cent in may, compared with a revised 0.1 per cent decline in April. Industrial output, which includes mining and utility output, rose 0.8 per cent in May, compared with a revised 0.1 per cent increase in April. Manufacturing output has been boosted by a strong rebound in car production and strong growth in machinery and chemicals output.

The White House said there was no deadline for a bipartisan compromise on infrastructure, but House Democrats said they were prepared to move forward without Republican support if a deal could not be reached by the end of next week. After House Democrats met with administration officials on Tuesday, including White House adviser Steve Ricchetti, House Budget Committee Chairman John Yarmuth said the White House would wait "a week or 10 days, and then we will go through the budget coordination process." A budget coordination process is a rapid legislative process that does not require Republican support. 

The EU's first bond issue will raise 20 billion euros ($24 billion) for recovery funds in the region, while near-record subscriptions show investors' appetite for high-rated securities. The European Union has launched a bond issuance program to finance the recovery fund, which is likely to reach 80 billion euros this year. The 10-year bond issue was twice as large as Dansk Bank and ABN Amro had expected, attracting subscriptions of more than 142 billion euros, second only to last year's EU social bonds. 

Russian President Vladimir Putin will hold his first summit with US President Joe Biden in Geneva on Wednesday. Putin has a long list of issues to discuss, but the Kremlin says there is little chance of a breakthrough in relations between the two countries. The official agenda covers bilateral relations, cybercrime, climate change and the Arctic, global economic cooperation and regional security issues, as well as issues that have not yet been agreed upon in advance, Kremlin foreign policy official Yuri Ushakov told reporters in Moscow.

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