Former Treasury Secretary Lawrence Summers warned against complacency from policymakers in bringing inflation down from its peak last year and predicted a further sell-off in bonds as investors adjust to the need for more monetary tightening.
“Nobody ever thought we were an underlying 8 per cent inflation country,” Mr Summers said on Bloomberg Television’s Wall Street Week with David Westin.
“So, the fact that the rate has come down shouldn’t be confused with saying that ‘we can be confident that we’re on a path of this all being OK.’”
Mr Summers spoke hours after Friday’s US jobs report, which he characterised as a “hot” set of numbers, with a payroll gain of 209,000 for June that was effectively double the growth of the adult US population. The release also showed a bigger-than-expected advance in wages, to 4.4 per cent for the year through to June.
Other strong data include a strengthening in the housing market and improving consumer confidence. While some indicators have suggested signs of a softening in the economy, the bond market has sold off in the expectation the Federal Reserve will have to raise interest rates further.
Two-year Treasury yields on Thursday hit their highest level since 2007, surpassing 5 per cent, while five-year yields headed towards the 2007 highs hit in October. Futures prices indicate the Fed will increases rates at least once more this year.
“You’ve seen an appropriate adjustment in medium-term interest rates to this reality” of the Fed’s need to do more, said Mr Summers, a Harvard University professor and paid contributor to Bloomberg TV.
“My best guess is that you’re going to see further adjustment as the data continues to come in.”
Next week, the consumer price index is forecast to show a fall in the headline annual inflation rate, with the Bloomberg survey suggesting a 3.1 per cent pace for June. That would be down from 4 per cent in May and a peak above 9 per cent in June 2022. The core rate, excluding food and energy, is forecast for 5 per cent.
The Fed’s target is for a 2 per cent inflation rate, using a separate gauge known as the PCE price index. In May, that was up 3.8 per cent from a year before, or almost double the policymakers’ goal.
“Since we haven’t yet had a significant slowdown in economic activity, it shouldn’t be surprising that we’ve still got inflation well above target,” Mr Summers said.
As for monetary policy, the best guess has to be that “if the Fed wants to see inflation get back to its target, it’s going to have to raise rates enough that, at some point, the economy suffers a downturn,” he added.
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Know before you go
- Jebel Akhdar is a two-hour drive from Muscat airport or a six-hour drive from Dubai. It’s impossible to visit by car unless you have a 4x4. Phone ahead to the hotel to arrange a transfer.
- If you’re driving, make sure your insurance covers Oman.
- By air: Budget airlines Air Arabia, Flydubai and SalamAir offer direct routes to Muscat from the UAE.
- Tourists from the Emirates (UAE nationals not included) must apply for an Omani visa online before arrival at evisa.rop.gov.om. The process typically takes several days.
- Flash floods are probable due to the terrain and a lack of drainage. Always check the weather before venturing into any canyons or other remote areas and identify a plan of escape that includes high ground, shelter and parking where your car won’t be overtaken by sudden downpours.
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
Director: Paul Weitz
Stars: Kevin Hart
3/5 stars
The five pillars of Islam
What is a robo-adviser?
Robo-advisers use an online sign-up process to gauge an investor’s risk tolerance by feeding information such as their age, income, saving goals and investment history into an algorithm, which then assigns them an investment portfolio, ranging from more conservative to higher risk ones.
These portfolios are made up of exchange traded funds (ETFs) with exposure to indices such as US and global equities, fixed-income products like bonds, though exposure to real estate, commodity ETFs or gold is also possible.
Investing in ETFs allows robo-advisers to offer fees far lower than traditional investments, such as actively managed mutual funds bought through a bank or broker. Investors can buy ETFs directly via a brokerage, but with robo-advisers they benefit from investment portfolios matched to their risk tolerance as well as being user friendly.
Many robo-advisers charge what are called wrap fees, meaning there are no additional fees such as subscription or withdrawal fees, success fees or fees for rebalancing.
'How To Build A Boat'
Jonathan Gornall, Simon & Schuster
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
Best Foreign Language Film nominees
Capernaum (Lebanon)
Cold War (Poland)
Never Look Away (Germany)
Roma (Mexico)
Shoplifters (Japan)
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Global state-owned investor ranking by size
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1.
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United States
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2.
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China
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3.
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UAE
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4.
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Japan
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5
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Norway
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6.
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Canada
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7.
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Singapore
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8.
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Australia
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9.
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Saudi Arabia
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10.
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South Korea
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The candidates
Dr Ayham Ammora, scientist and business executive
Ali Azeem, business leader
Tony Booth, professor of education
Lord Browne, former BP chief executive
Dr Mohamed El-Erian, economist
Professor Wyn Evans, astrophysicist
Dr Mark Mann, scientist
Gina MIller, anti-Brexit campaigner
Lord Smith, former Cabinet minister
Sandi Toksvig, broadcaster
Result
Qualifier: Islamabad United beat Karachi Kings by eight wickets
Fixtures
Tuesday, Lahore: Eliminator 1 - Peshawar Zalmi v Quetta Gladiators
Wednesday, Lahore: Eliminator 2 – Karachi Kings v Winner of Eliminator 1
Sunday, Karachi: Final – Islamabad United v Winner of Eliminator 2
UAE currency: the story behind the money in your pockets
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