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Recession fears, China reopening, and a no-confidence vote in the UK Prime Minister. Recession fearsMost economists say a US recession is un [View in browser]( [Bloomberg]( Recession fears, China reopening, and a no-confidence vote in the UK Prime Minister. Recession fears Most economists say a US recession is [unlikely]( in the immediate future, given the strength of the jobs market and the more than $2 trillion in excess cash on household balance sheets. They’re more worried about next year, though, as the Federal Reserve keeps raising interest rates. Those rate hikes and the Fed’s shrinking balance sheet make technology stocks and cryptocurrencies vulnerable in the coming months, according to participants in the latest [MLIV Pulse survey](. Meanwhile, the European Central Bank meets this week, and in all likelihood, it’ll set the stage for a rate increase next month. China reopening China’s worst [Covid-19 outbreak]( is ending. Cases are falling, major cities are loosening restrictions and daily life is mostly returning to normal. Infections are trending down nationwide, thanks to ebbing cases in Shanghai and [Beijing](, which is opening up restaurants and cinemas. Chinese stocks rose today and [foreign investors]( have returned to emerging Asian equities after several weeks of outflows. Chinese regulators are preparing to wrap up their investigation into [Didi Global]( Inc. and restore the ride-hailing giant’s main apps to mobile stores as soon as this week, the Wall Street Journal reported. No confidence UK Prime Minister Boris Johnson will face a[leadership vote]( in his ruling Conservative Party on Monday following a series of scandals. That so many members of parliament have lost confidence in him — about 15% of the Conservative Party — is a massive blow to Johnson, who led the the party to its biggest general election win in more than three decades in 2019. Still, it’s by no means a given that a vote will bring an end to his premiership, and Johnson [made clear]( he plans to come out fighting. Ousting him requires a majority of the party's 359 members of parliament and several factors may help Johnson retain power, including a lack of obvious successors. Oil demand Oil climbed after Saudi Arabia [signaled confidence](bbg://news/stories/RD08B8DWRGG1) in demand with a bigger-than-expected price increase of its crude for Asia in July as China — the world’s top crude importer — cautiously emerges from lockdowns. West Texas Intermediate traded at $120 a barrel, near the highest level in almost three months. Oil has rallied almost 60% this year as rebounding demand from economies recovering from the pandemic coincided with a tightening market after Russia’s invasion of Ukraine. Meanwhile, [US stock futures climbed]( as of 5:50 a.m. New York time. The dollar fell, while the 10-year Treasury yield rose close to 3 basis points to 2.9607%. Bitcoin climbed above $31,000. Coming up... Calendar is light with a blank slate for data, speakers and auctions today and a relatively quiet week ahead. The US Consumer Price Index print for May is due on Friday and will likely grab the spotlight. Fedspeak is absent during the blackout period before the June 14-15 meeting. This week's bond supply includes auctions of 3-year debt on Tuesday, 10-year on Wednesday and 30-year on Thursday.  It’s the first round of sales to take place as the Fed's balance sheet begins to unwind. What we've been reading Here's what caught our eye over the weekend. - [Peak inflation?]( - Elon Musk sends everyone on a [wild ride](. - How a [nail salon became the front line]( in the Covid battle. - [Social media]( becomes less addictive. - The narrow route to a [soft landing](. - [Panic rooms in Los Angeles](. - The [London Metal Exchange]( is getting sued. And finally, here’s what Joe’s interested in this morning Inflation hasn't meaningfully begun to slow yet. Right now, all we have are various reasons why inflation *should* slow. Some of those reasons include: - Monetary conditions have gotten tighter. - Fiscal policy has tightened significantly (just see this [WSJ piece]( about how income tax collections are coming in way higher than expectations) - Covid restrictions (at least in the US) have largely gone away - Supply chains generally seem to be improving - Freight costs are going down Anyway, it all looks promising in theory! Now it's just a matter of the data showing up in practice. In the meantime, here's something else to consider. On Friday we got the latest jobs report, and it was decent. Nothing special. Not too hot. But not recession numbers either. The pace of jobs growth seems to be shifting into a slower gear. But this was inevitable. Here's a chart of all US non-farm workers, with a few lines on it. You can see that the trajectory of employment gains coming off the 2020 bottom was way steeper than the pre-crisis trajectory. This was always going to be the case, coming off a sharp drop. In fact, almost any chart is going to look like that. We're getting closer to normal levels, by all kinds of metrics, as we claw our way out of the hole. So naturally, there's no way the growth is going to be as extreme. Of course, we don't know exactly what the new normal is going to look like. We don't know how many people will have permanently retired or anything like that. But as a matter of math and logic, as we return to pre-crisis levels of employment and overall activity, the labor market's heat is going to come down, and it seems logical that price heat will cool as well. Now we just gotta see what the numbers show, including this Friday’s CPI report. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart]( Follow Us Like getting this newsletter? 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