Good day. The Federal Reserve's rate-setting committee said
Wednesday in a statement it could start to reduce, or taper, its
$120 billion in monthly bond buying as soon as its next scheduled
meeting, Nov. 2-3. "The purpose of that language is to put notice
out that that could come as soon as the next meeting," Fed Chairman
Jerome Powell said. He also discussed recently disclosed stock
trading by the heads of the Dallas and Boston Fed banks, adding
ethics rules about trading by Fed officials will be reviewed.
Elsewhere, Brazil's central bank raised its benchmark lending rate
by 1 percentage point to 6.25% and said a similar increase may be
coming at its next meeting in October to ensure inflation falls to
the bank's target.
Now on to today's news and analysis.
Top News
Fed Tees Up Taper and Signals Rate Rises Possible Next Year
The Federal Reserve signaled it was ready to start reversing its
pandemic stimulus programs in November and could raise interest
rates next year amid risks of a lengthier-than-anticipated jump in
inflation.
The Fed's rate-setting committee, at the end of a two-day
gathering, said in its postmeeting statement Wednesday that it
could start to reduce, or taper, its $120 billion in monthly asset
purchases as soon as its next scheduled meeting, Nov. 2-3.
Analysis: Fed Officials See 'Transitory' Inflation Lasting Quite
a While
Transcript: Fed Chief Powell's Postmeeting Press Conference
Powell: Fed Taking Questions About Officials' Trading Very
Seriously
Fed Chairman Jerome Powell declined to voice clear support for
the leaders of the Dallas and Boston Fed banks when asked about
their disclosed stock trading and pledged to change the rules that
allowed that by policy makers.
Key Developments Around the World
Brazil's Central Bank Raises Selic to 6.25%, Sees Increase to
7.25%
Brazil's central bank raised its benchmark lending rate by 1
percentage point as consumer prices continue to rise rapidly and
said it expects to increase it by the same amount at its next
meeting in October.
Taiwan Central Bank Leaves Policy Unchanged
Taiwan's central bank kept its benchmark discount rate at 1.125%
and raised its 2021 forecast for gross domestic product growth to
5.75% from 5.08%. (Dow Jones Newswires)
Taiwan Applies to Join Pacific Trade Pact Days After China
Europe Is Pumping Less Gas, Leaving a Gap Russia Is Filling
Europe's need for gas is drawing cargoes of American liquefied
natural gas across the Atlantic, feeding into higher prices for gas
in the U.S. itself. It has also handed more sway to Russia,
Europe's biggest supplier.
U.S. Economy
Infrastructure Plan Faces Uncertainty as Democrats Remain
Divided
Persistent divisions among Democrats over the size of their
climate and social-welfare plan are threatening to derail much of
President Biden's agenda, as progressives signal they could block a
roughly $1 trillion infrastructure package.
Hot U.S. Housing Market Cooled Some in August
Existing-home sales slipped 2% in August from the prior month to
a seasonally adjusted annual rate of 5.88 million, the National
Association of Realtors said Wednesday. August sales fell 1.5% from
a year earlier.
Financial Regulation Roundup
SEC Asks Dozens of Companies for More Climate Disclosures
The Securities and Exchange Commission has sent letters to
dozens of public companies asking them to provide more information
to investors about how climate change might affect their financial
earnings or business operations.
FASB Wants More Disclosure on Supply-Chain Finance Programs
The Financial Accounting Standards Board proposed requiring
companies to disclose key terms and the size of their supply-chain
financing, a move aimed at helping investors better understand the
borrowing mechanism.
Elizabeth Warren, Other Democrats Concerned About SPAC
Incentives
Four Democratic senators sent open letters to several creators
of special-purpose acquisition companies questioning how executives
are compensated and requesting details about potential conflicts of
interest.
London Stock Exchange to Close Interest-Rate Derivatives
Venture
London Stock Exchange Group PLC will shut its venture in
interest-rate derivatives, CurveGlobal Ltd., after it failed to
gain traction with traders over the past five years, a spokesperson
for the exchange operator confirmed.
Ant to Fully Share Consumer Credit Data With China's
Government
Credit data generated by Ant Group Co.'s consumer lending
service will be fully integrated into a government credit-reporting
system, a big step in a continuing effort to bring the fintech
giant into line with Chinese regulators' priorities.
Forward Guidance
Thursday (all times ET)
Time N/A: South African Reserve Bank releases policy statement;
Bangko Sentral ng Pilipinas releases policy statement; Central Bank
of the Republic of Turkey releases policy statement
Friday
8:45 a.m.: Cleveland Fed's Mester speaks virtually on economic
outlook at Ohio Bankers League CEO Symposium
9:25 a.m.: European Central Bank's Lane speaks on panel at
virtual Joint Regional Financing Arrangements seminar series
organized by the European Stability Mechanism
10 a.m.: U.S. Commerce Department releases August new-home
sales; Kansas City Fed's George speaks virtually on economy and
monetary policy to American Enterprise Institute; Fed's Powell,
Clarida and Bowman speak at virtual Fed Listens event on the
pandemic recovery
Research
Fed Doubles How Much Firms Can Park Via Reverse Repo
Facility
In a technical move Wednesday, the Federal Reserve said it would
lift the per-firm counterparty limit on its reverse repo facility
from $80 billion to $160 billion. The move comes amid massive
inflows into the facility: On Wednesday, $1.283 trillion in cash
from money funds and other qualified institutions flowed onto the
Fed's books, in a continuing surge of cash looking for options to
invest short-term. Last spring, daily activity for the facility was
negligible. The rise in the reverse repo's cap wasn't a surprise
and it is unclear if it is related to positioning due to the
debt-ceiling debate in Washington, which could aggressively affect
Treasury market borrowing activity.
-- Michael S. Derby
Commentary
Federal Reserve's Intentions on Rates Remain Muddled
Fed policy makers have been at pains to convince investors that
winding down its asset purchases won't necessarily lead to rate
increases, but they made something of a muddle of that message on
Wednesday, Justin Lahart writes.
Evergrande's Struggles Reflect China's Efforts to Rein in Debt
Boom
Lehman Brothers failed when a multiyear mortgage bubble
deflated, and now Evergrande is struggling because China is trying
to pivot away from a model of economic growth inordinately
dependent on debt, Greg Ip writes.
Basis Points
Consumer confidence in the eurozone picked up in September as
the spread of the Delta variant of Covid-19 was brought under
control and restrictions were eased, lifting the European
Commission's measure of consumer confidence in the single-currency
area to minus 4.0 from minus 5.3 in August. Economists polled by
The Wall Street Journal had forecast a reading of minus 6.0. (Dow
Jones Newswires)
The Ifo Institute cut its growth forecast for Germany in 2021 by
0.8 percentage point to 2.5%, as the economy didn't rebound as
strongly as expected in the third quarter, and raised its growth
forecast for 2022 by 0.8 percentage point to 5.1%. In 2023, Ifo
expects growth of 1.5%. (DJN)
France's total financing requirements will decline in 2022 from
this year, mainly due to a lower budget deficit, the French
Treasury Agency said, noting that financing requirements will total
292.7 billion euros ($343.26 billion) next year versus EUR313.5
billion expected this year. (DJN)
South Africa's annual consumer price inflation inched up to 4.9%
in August from 4.6% in July, Statistics South Africa said, marking
the fourth consecutive month in which annual inflation is higher
than the midpoint of the central bank's target range of between 3%
and 6%. (DJN)
The value of transborder freight in North America rose 22% in
July from a year earlier and was up 8.6% from July 2019, according
to the U.S. Bureau of Transportation Statistics. A total of $111.3
billion in transborder freight was moved in July, BTS said.
(DJN)
(END) Dow Jones Newswires
September 23, 2021 09:28 ET (13:28 GMT)
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