• Initial unemployment claims rose to 332,000 last week from a pandemic low of 312,000 a week earlier, the Labor Department reported Thursday. Link
    WSJ Central Banks Thu 16 Sep 2021 14:21

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  • U.S. retail sales rose 0.7% in August, a sign the economic recovery has resilience despite the Delta variant. Link
    WSJ Central Banks Thu 16 Sep 2021 14:06

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  • Sen. Elizabeth Warren sent letters to the 12 regional Fed presidents asking them to ban ownership of individual stocks among top officials at their banks Link
    WSJ Central Banks Thu 16 Sep 2021 12:41

    Sen. Elizabeth Warren (D., Mass.) is calling on regional Federal Reserve Banks to set rules that would prevent their leaders from trading individual stocks, following recent disclosures that the chiefs of the Boston and Dallas banks actively traded stocks and other investments last year.

    “The controversy over asset trading by high-level Fed personnel highlights why it is necessary to ban ownership and trading of individual stocks by senior officials who are supposed to serve the public interest,” Ms. Warren wrote in letters addressed to the leaders of the 12 regional Fed banks.

  • Product shortages and the Delta variant are preventing many Americans from spending at retailers, restraining the economic recovery. Link
    WSJ Central Banks Thu 16 Sep 2021 11:41

    Product shortages and the Delta variant are preventing many Americans from spending at retailers, restraining the economic recovery.

    U.S. retail sales likely fell for the second straight month in August, according to economists surveyed by The Wall Street Journal. The Commerce Department will release official figures at 8:30 a.m. ET Thursday.

  • Economists expect a Labor Department report to show initial jobless claims rose only slightly last week despite the economic impact of the Delta variant Link
    WSJ Central Banks Thu 16 Sep 2021 11:26

    Jobless claims likely held near a pandemic low last week, as layoffs ease despite a rise in coronavirus cases tied to the Delta variant.

    Economists expect a Labor Department report on Thursday to show initial unemployment claims rose slightly to 320,000 last week from a pandemic low of 310,000 a week earlier. Delayed filings following Hurricane Ida, which hit Louisiana at the end of August, could have contributed to a small increase last week, some economists say.

  • J.P. Morgan Cuts Third-Quarter U.S. GDP Forecast Link
    WSJ Central Banks Wed 15 Sep 2021 18:20

    J.P. Morgan has pared its estimate of U.S. economic growth in the current quarter from 7% to 5%, bank economist Michael Feroli wrote Wednesday in a note to clients. “The revision reflects a combination of weaker final demand growth and slower inventory accumulation,” he wrote, adding “these in turn are likely the result of, among other potential issues, the delta virus and supply-chain problems, the latter being particularly severe for the motor vehicle sector.” Mr. Feroli wrote that the economy will make up for some of the slower growth, lifting his fourth-quarter GDP projection from 3% to 3.5%.

    ...
  • The pandemic-induced shutdown was initially the worst hit to the U.S. economy since the Great Depression, but the fiscal response succeeded in pushing poverty in the opposite direction that usually occurs in recessions. Link
    WSJ Central Banks Wed 15 Sep 2021 17:15

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  • Federal Reserve officials got some welcome news regarding inflation on Tuesday Link
    WSJ Central Banks Wed 15 Sep 2021 11:29

    As the Federal Reserve ramps up for its monetary policy meeting next week, it faces some tough cross currents on the inflation front.

    The Fed has for some time been up against an unexpected surge in price pressures testing its desire to keep monetary policy on an aggressively supportive footing to help the U.S. economy recover from the body blow of the coronavirus pandemic.

    Fed...

  • Big Risks for U.S. From Debt Limit Brinkmanship, Goldman Sachs Says Link
    WSJ Central Banks Tue 14 Sep 2021 19:09

    The battle to raise the U.S. government’s debt limit carries some big risks, economists at Goldman Sachs wrote in a note to clients Monday. “While it seems likely that the Treasury would continue to redeem maturing Treasury securities and make coupon payments, if Congress does not raise the debt limit by the deadline the Treasury would need to halt more than 40% of expected payments, including some payments to households,” they wrote. They added that a failure to raise the limit could further crimp Democratic attempts to implement fiscal policy and lower the amount of money the U.S. can borrow. “While there is not necessarily...

  • Democrats’ tax proposals would hit households making at least $1 million the hardest, a new analysis shows Link
    WSJ Central Banks Tue 14 Sep 2021 18:04

    WASHINGTON—Households making at least $1 million in income would face a 10.6% tax increase in 2023 under House Democrats’ plan, raising their average federal tax rate to 37.3% from 30.2%, according to the nonpartisan Joint Committee on Taxation.

    The committee analysis, released Tuesday, shows that low-income households would get significant tax cuts from the proposal for the first few years, largely because of the extension of the expanded child tax credit.

  • “I’m making more money...But I don’t see it because I’m paying more money for stuff now.” Low-wage workers are getting sharp raises. Inflation is eating them up. Link
    WSJ Central Banks Tue 14 Sep 2021 16:44

    This should be the best of times for low-wage workers, as pandemic-induced labor shortages force employers to sharply raise pay. Yet for many, it doesn’t feel that way, because those same disruptions have pushed inflation to near its highest rate in over a decade.

    Troy Sutton, age 61, lost a job as a custodian at the start of the pandemic in 2020 that paid $12 an hour, and he spent more than a year unemployed. This past summer, he landed a job as a custodian at the University of Pennsylvania he said pays $18 or more an hour.

  • Heard on the Street: The Fed’s near-term plans are unlikely to be swayed by inflation readings over the next few months Link
    WSJ Central Banks Tue 14 Sep 2021 15:39

    When it comes to Federal Reserve interest-rate policy, what inflation is doing now matters much less than what it will be doing next spring.

    What inflation is doing now is running fairly high. The Labor Department on Tuesday reported that its index of consumer prices rose a seasonally adjusted 0.3% in August from July, putting it 5.3% above its year-earlier level. Core prices, which exclude food and energy items in an effort to better capture inflation’s trend, were up 4% from a year earlier.

  • Median household income was $67,500 in 2020, down 2.9% from the prior year, as the U.S. dealt with the economic fallout from the Covid-19 pandemic Link
    WSJ Central Banks Tue 14 Sep 2021 15:04

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  • RBA’s Lowe Pours Cold Water on Early Rate-Increase Speculation Link
    WSJ Central Banks Tue 14 Sep 2021 13:18

    Reserve Bank of Australia Gov. Philip Lowe, on Tuesday moved to strongly push back on current market pricing suggesting the central bank could raise interest rates as early as late 2022, saying the bank’s desired wages and inflation targets remain a long way off.

    Mr. Lowe also poured cold water on the idea that the RBA would raise interest rates soon to rein in runaway house-price growth.

    “These...

  • Inflation cooled slightly in August, though remaining strong, as a surge in Covid-19 infections slowed economic growth and pandemic-related shortages drove up prices Link
    WSJ Central Banks Tue 14 Sep 2021 12:58

    Inflation cooled slightly in August but remained strong, as a surge in Covid-19 infections slowed economic growth and pandemic-related shortages of labor and supplies continued to drive up prices.

    The Labor Department said last month’s consumer-price index rose a seasonally adjusted 0.3% in August from July, slower than the 0.5% one-month increase in July, and down markedly from June’s 0.9% pace. Prices eased for autos, with used vehicle prices dropping sharply, and hotel rates and airline fares declined in August from July.

  • Treasury Yields Still Haven’t Priced In Fed’s Inflation Framework, Research Firm Says Link
    WSJ Central Banks Thu 26 Aug 2021 11:01

    The bond market hasn’t fully priced in the framework the Federal Reserve put in place a year ago to allow inflation to overshoot a 2% target to make up for past shortfalls, Capital Economics says in a research report released Wednesday. “While yields have risen over the past year as the economy has recovered, we suspect they still do not fully reflect the implications of the new policy framework, and the inflationary pressures more generally,” the report says. The market will need to adjust, the report adds, noting “we think that as it becomes apparent that above-target inflation is proving more persistent, long-dated...

  • Questions over legitimacy of Taliban rule leads World Bank to suspend funding for projects in Afghanistan. Link
    WSJ Central Banks Wed 25 Aug 2021 20:51

    WASHINGTON—The World Bank suspended funding for dozens of projects in Afghanistan Tuesday, citing questions over the legitimacy of Taliban rule.

    The Washington-based institution has committed around $5.3 billion for reconstruction and development projects in Afghanistan since 2002 through its International Development Association that helps the world’s poorest countries.

    As of April, the development association had 12 active projects totaling $940 million in commitments, the bank said in its latest update earlier this year. Separately, its Afghanistan Reconstruction Trust Fund had 15 projects with $1.2 billion committed, it said in its April update.

    Under its policies, the World Bank said it cannot disburse funds when there is no agreement by its 189 member countries on whether a country has a legitimate government.

    “We have paused disbursements in our operations in Afghanistan and we are closely monitoring and assessing the situation in line...

  • Analysts don’t think Federal Reserve Chairman Jerome Powell will announce that the central bank is officially ready to start pulling back on its asset-buying stimulus effort Link
    WSJ Central Banks Wed 25 Aug 2021 19:36

    It’s pretty unlikely Federal Reserve Chairman Jerome Powell will announce in his speech Friday that the central bank is officially ready to start pulling back on its asset-buying stimulus effort, economists reckon.

    Mr. Powell is set to speak on Friday at 10 a.m. ET as part of the Federal Reserve Bank of Kansas City’s annual Jackson Hole economic symposium. The event was moved last week to an all-online format because of the rising risks around the coronavirus pandemic.

    Mr. Powell will speak amid broad expectations the Fed will soon be able to pull back on its $120 billion a month in Treasury and mortgage bond purchases, as the job market continues to make a solid pace recovering what it lost during the Covid crisis’s early stages.

    Recently released meeting minutes from the Fed’s late July policy gathering showed that officials believed then that asset buying could start to slow down—”taper” in market parlance—by the end of this year. That view is...

  • New orders for long-lasting manufactured goods slipped 0.1% in July Link
    WSJ Central Banks Wed 25 Aug 2021 19:01

    Orders for cars, appliances and other durable goods decreased slightly in July, as manufacturers continued to grapple with shortages in parts and labor and confront higher material costs.

    New orders for products meant to last at least three years decreased 0.1% to a seasonally adjusted $257.2 billion in July as compared with June, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had estimated a 0.5% decline.

    Orders increased 0.8% in June from the prior month, unchanged from the initial estimate for the month. Demand for durable goods has increased in 13 of the past 15 months.

    The overall number was hurt by a 48.9% decline between June and July on new orders for nondefense aircraft and parts, a category that is often volatile.

    Low business and retail inventories have translated to increased demand for manufacturers, but supply-chain issues continue to constrain production and delay some shipments. The Delta...

  • Research Firm Doubts Fed Needs to Lift Reverse Repo Counterparty Cap Yet Link
    WSJ Central Banks Tue 24 Aug 2021 20:00

    It is probably too soon for the Federal Reserve to increase the counterparty cap in place for its reverse repo facility, Wrightson ICAP said in a note to clients over the weekend. In comments sparked by the Fed’s late July meeting minutes, the research firm said there aren’t signs yet that money-market funds are running into individual constraints that limit how much cash they can park at the Fed via reverse repos. Referring to the $80 billion per-firm cap, “in the July 31 money fund reports collated by the Office of Financial Research, no individual fund had a [reverse repo] balance of more $60 billion, and only four...

  • If licensing rules were relaxed, “I’ll be able to give employment to people,” says a Louisiana hair salon owner, adding having more braiders would also help the business’s sales Link
    WSJ Central Banks Tue 24 Aug 2021 18:45

    The coronavirus pandemic has heated up the long simmering debate on whether a swath of workers should need a license for jobs such as hair braiding, nursing and fitness training.

    More than 1,100 occupations are licensed in at least one state, according to the National Conference of State Legislatures. Last year, 29 million workers, nearly a quarter of those employed full time, held a license, the Labor Department said. In the 1950s, about 5% of workers had licenses, according to researchers.

    President Biden, a Democrat, and some congressional Republicans say the need to hold a license to work in many different roles blocks Americans from taking well-paying jobs. Those concerns have been raised as job openings rose to a record 10.1 million at the end of June, but 3.4 million fewer workers were in the labor force that month versus February 2020, before the pandemic took hold in the U.S.

    Advocates of the requirements say licenses and regulations around...

  • Fewer bond purchases should mean a higher yield. But the Fed’s discussion of withdrawing stimulus shows a shift in mentality toward tighter monetary policy. Link
    WSJ Central Banks Mon 23 Aug 2021 20:39

    Three vital issues for investors remain uncertain as the Federal Reserve moves toward tapering its bond buying. Will this quantitative tightening mean Treasury yields go up or down? Will stocks do better with rising or falling bond yields? And, a linked issue, is the stock-bond relationship that has held for the past three decades going into reverse?

    Few people share my first uncertainty, because it seems so obvious that if the Fed buys fewer Treasurys, the price will drop and hence the yield rise. It is basic supply and demand, goes the response: Duh.

    It is certainly true that all else equal, fewer bond purchases should mean a higher yield. But all else isn’t equal, because the Fed’s discussion of withdrawing stimulus shows a shift in mentality toward tighter monetary policy. Tighter monetary policy means less growth and inflation in the long run, and so lower long-term bond yields. The balance between the demand impact of less Fed buying and the perception...

  • U.S. factories and service providers are reporting sharply slower growth due to the Delta variant and troubles in hiring and shipping Link
    WSJ Central Banks Mon 23 Aug 2021 18:33

    The U.S. economic expansion is losing momentum.

    Softening demand at a time of rising Covid-19 cases, labor shortages and persistent knots in shipping networks are restraining businesses in the U.S. and across the globe, according to private-sector surveys released Monday.

    The biggest shifts are occurring in the U.S., which has helped drive the global economic expansion since last year’s severe recession. U.S. factories and service providers reported sharply slower growth in August, the forecasting firm IHS Markit said Monday in its surveys of purchasing managers. Its index of service-sector activity, the broadest segment of the economy, fell to 55.2 last month from 59.9 in July, hitting an eight-month low. An index of factory activity dropped to 61.2, a four-month low, from 63.4 in July. A reading above 50 suggests activity—as measured by sales, output, prices and other factors—is growing.

    But the surveys show that the Delta variant of the Covid-19...

  • The inventory of homes on the market has risen in recent months, but the supply of homes on the market remains well below demand, according to market participants Link
    WSJ Central Banks Mon 23 Aug 2021 17:33

    Sales of previously owned homes rose in July for the second straight month as high prices prompted more homeowners to put their houses on the market.

    Existing-home sales rose 2% in July from the prior month to a seasonally adjusted annual rate of 5.99 million, the National Association of Realtors said Monday. July sales rose 1.5% from a year earlier.

    The frenzied housing market of earlier this year is showing signs that it is winding down, but the market remains competitive for buyers. The inventory of homes on the market has risen in recent months, but the supply remains well below demand, according to market participants.

    “It is still a very swift, fast-moving market, but there is some indication that the market is less intensely heated now than before,” said Lawrence Yun, NAR’s chief economist. “There are more homes available for sale compared to one or two months ago.”

    The median existing-home price rose 17.8% in July from a year earlier, NAR...

  • At the center of the Fed’s debate: how long the currently higher inflation will last, and what the central bank should do about it. Answers might come soon, when Fed Chairman Powell speaks this week. Link
    WSJ Central Banks Mon 23 Aug 2021 15:33

    After a decade of low growth and inflation, Federal Reserve Chairman Jerome Powell unveiled a new strategy a year ago in which the central bank would keep interest rates lower for longer.

    Reality has dealt Mr. Powell a different and unexpected challenge: the biggest inflation spike in decades. Consumer prices rose 5.4% in July from a year earlier.

    Mr. Powell heads into the Kansas City Fed’s annual conference this week at the center of the debate over how long the currently higher inflation will last, and what the Fed should do about it.

    He is managing internal disagreement and weathering external criticism, with economic recovery thrown into renewed turmoil by the rise of the Delta variant.

    Some central bank officials expect the recent price surges to reverse on their own, allowing the Fed to stick to the approach Mr. Powell outlined a year ago, intended to generate inflation slightly above 2%. Others see dangers that high inflation will...

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