Good day. The Federal Reserve banks of Boston and Dallas said their presidents, Eric Rosengren and Robert Kaplan, respectively, would resign following reports of their investment trading activity, which spurred calls for the Fed to review its ethics rules. Mr. Kaplan acknowledged in a statement his stock trading distracted from the central bank's work, while Mr. Rosengren said in a statement he was leaving as he had qualified for a kidney transplant to deal with a long-running condition. Meanwhile, Fed governor Lael Brainard pushed back against concerns that inflation might soon accelerate because of difficulties hiring workers, and a preview of Mr. Powell's testimony before Congress today indicates he will tell lawmakers inflation is likely to stay high in the coming months before moderating.

Now on to today's news and analysis.

Top News

Fed Leaders Eric Rosengren, Robert Kaplan to Resign Following Trading Controversy

The Federal Reserve banks of Boston and Dallas said their presidents were resigning, following reports of the two leaders' investment trading that prompted calls for their departures and a central-bank review of its ethics rules.

The two banks gave different reasons for the exits. Dallas Fed President Robert Kaplan, a 64-year-old who is resigning effective Oct. 8., acknowledged in a statement released by the bank that his stock trading distracted from the Federal Reserve's work. The Boston Fed said its president, Eric Rosengren, also 64, would retire Thursday, about nine months early, citing health reasons. He said in a statement released by the bank that he was leaving as he had qualified for a kidney transplant to deal with a long-running condition.

Both men separately arrived at their decisions without being forced to resign by Chairman Jerome Powell, according to people familiar with the matter.

Powell Says Inflation Is Elevated but Likely to Moderate

Inflation caused by supply-chain bottlenecks and other challenges related to the reopening of the U.S. economy is likely to stay high in the coming months before moderating, Fed Chairman Jerome Powell is set to tell Congress Tuesday.

Brainard: Jobs, Inflation Can Return to Pre-Pandemic Equilibrium

Fed governor Lael Brainard said the U.S. economy was likely to make a complete recovery from the coronavirus and warned against prematurely concluding that the central bank needed to raise interest rates.

Fed's Williams: Tapering Bond Buying 'May Soon Be Warranted'

Federal Reserve Bank of New York President John Williams said Monday the time for the central bank to pull back on asset buying is coming up, but he indicated rate rises still lie well off.

Fed's Evans: Fed Likely to Taper Bond Buying Soon

Chicago Fed leader Charles Evans said he is on board with scaling back the central bank's bond buying, but added that as high as inflation is, it may not have risen enough to lift longer-term expectations as policy makers have sought.

U.S. Economy

U.S. Durable-Goods Orders Rise Sharply Despite Supply Constraints

New orders for products meant to last at least three years increased 1.8% to a record seasonally adjusted $263.5 billion in August as compared with July, the Commerce Department said, marking the biggest increase since May.

GOP Senators Block Bill to Fund Government, Suspend Debt Ceiling

Senate Republicans blocked a Democratic bill that would both fund the government and raise the country's borrowing limit, escalating a political showdown over the government's finances just days before it runs out of money.

Key Developments Around the World

Panic Buying in U.K. Creates Shortages at Gas Stations

The pandemic and the U.K.'s departure from the European Union have resulted in a shortage of tanker drivers to ferry fuel. Panic buying started last week after reports that a handful of gas stations had to close due to dwindling supplies.

Housing Affordability Concerns Rise to the Fore World-Wide

The record-setting rise in home values is triggering fresh debates about housing affordability world-wide, as policy makers search for ways to rein in price appreciation without driving prices sharply lower.

Financial Regulation Roundup

SEC Panel Backs Letting Ordinary Investors Into Private Equity

The SEC's Asset Management Advisory Committee unanimously approved a report recommending that the regulator increase ordinary investors' access to private-equity, private-debt and real-estate vehicles.

Crypto Exchanges Curb Trading From China After Beijing's Warning

One of the world's largest cryptocurrency exchanges said it would close all user accounts in mainland China by the end of the year, days after the country's central bank declared all crypto-related transactions illegal.

Crypto Guru Pleads Guilty to Advising North Korea

Cryptocurrency expert Virgil Griffith pleaded guilty to conspiring to violating U.S. law by traveling to North Korea to give a presentation on how to use blockchain technology to launder money and evade sanctions.

Forward Guidance

Tuesday (all times ET)

8 a.m.: European Central Bank's Lagarde gives introductory speech at virtual ECB forum on central banking

8:30 a.m.: European Central Bank's de Guindos chairs session on the corporate bankruptcy process and zombie lending at virtual ECB forum on central banking; U.S. Commerce Department releases August advance economic indicators report

9 a.m.: Chicago Fed's Evans speaks virtually at Chicago Fed payments symposium

9:45 a.m.: European Central Bank's Panetta chairs session on corporate debt and macroeconomic stabilization at virtual ECB forum on central banking

10 a.m.: Fed's Powell testifies on coronavirus and Cares Act before Senate Banking Committee

11 a.m.: European Central Bank's Schnabel chairs panel on the future of inflation at virtual ECB forum on central banking

1:40 p.m.: St. Louis Fed's Bullard gives introductory remarks at virtual community banking conference; Fed's Bowman speaks on creating a new model for the future of supervision at virtual community banking conference

2 p.m.: European Central Bank's Panetta gives prerecorded remarks at Luiss University ceremony in Rome

7 p.m.: St. Louis Fed's Bullard speaks virtually on economy and monetary policy at Bangko Sentral ng Pilipinas-Reinventing Bretton Woods Committee conference

Wednesday

Time N/A: Bank of Thailand releases policy statement

8 a.m.: European Central Bank's de Guindos chairs session on the pandemic and countries' business sectors at virtual ECB forum on central banking

10:30 a.m.: European Central Bank's Lane chairs panel on monetary policy, employment and inequality at virtual ECB forum on central banking

11:45 a.m.: Fed's Powell, European Central Bank's Lagarde speak on policy panel at virtual ECB forum on central banking

1 p.m.: San Francisco Fed's Daly speaks at virtual UCLA Anderson Forecast event

5 p.m.: New York Fed's Williams moderates discussion with Tala CEO Shivani Siroya at Economic Club of New York webinar

Commentary

U.S. Companies Getting Less Bang for Investment Bucks

The supply chain problems that are creating shortages throughout the economy are making it harder to obtain capital equipment, too, and driving up prices as a result, Justin Lahart writes.

Basis Points

The yield on the benchmark 10-year U.S. Treasury note topped 1.5% for the first time since June, lifted by optimism about the economic outlook and the prospects of tighter monetary policy.

Manufacturing production in Texas gained momentum this month compared with August, although overall activity in the sector expanded at the slowest level in more than a year, according to data from the Federal Reserve Bank of Dallas. The production index of its Texas Manufacturing Outlook Survey, a key measure of state manufacturing conditions, rose from 20.8 in August to 24.2, while its index for general business activity fell from 9.0 in August to 4.6. (Dow Jones Newswires)

Sentiment in the German export industry has improved, the Ifo Institute said, noting its export expectations index rose to 21.0 points this month from 17.0 points in August. (DJN)

Brazilian economists see faster inflation this year than they did a week ago, according to the Central Bank of Brazil's weekly survey. The median forecast by 134 economists is for Brazil's main inflation index to rise 8.45% during 2021, up from 8.35% a week ago, while the forecast for inflation in 2022 increased to 4.12% from 4.10%. (DJN)

Mexico ran up a $3.9 billion trade deficit in August, as exports rose 9% from a year earlier to $40.31 billion, while imports grew 43.3% to $44.22 billion, the National Statistics Institute said. (DJN)

(END) Dow Jones Newswires

September 28, 2021 09:24 ET (13:24 GMT)

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