Good day. Federal Reserve officials are preparing to speed up the pace of the so-called "taper" of the central bank's bond-buying program so they can wrap it up in March, which would open the door to the Fed raising interest rates next spring rather than later in 2022. The Fed would then be able to focus more on restraining inflation and less on helping the U.S. economy spur job growth. Fed Chairman Jerome Powell recently told lawmakers the central bank doesn't want to bet the farm on an outlook for inflation easing next year. "Almost all forecasters do expect that inflation will be coming down meaningfully in the second half of next year," he said. "The point is we can't act as though we're sure of that." The economic recovery is certainly making it easier for the Fed to shift its attention to inflation, with Friday's jobs report suggesting the labor market is growing tighter, even if recent job gains weren't as strong as in previous reports. Employers added 210,000 jobs in November while the unemployment rate fell to 4.2% from 4.6% in October and 6.7% a year earlier.

Now on to today's news and analysis.

Top News

High Inflation, Falling Unemployment Prompted Powell's Fed Pivot

Fed Chairman Jerome Powell's turnabout accelerated over the past month as new data showed price pressures rising and broadening amid a robust economic recovery.

PHOTO: AL DRAGO/BLOOMBERG NEWS

Just four weeks ago, the Federal Reserve set in motion carefully telegraphed plans to gradually wind down a bond-buying stimulus program by June. Officials are making plans to accelerate the process at their policy meeting next week, ending it by March instead.

The abrupt shift opens the door to the Fed raising interest rates next spring rather than later in the year to curb inflation, marking a significant policy pivot by Chairman Jerome Powell shortly after President Biden offered him a second four-year term leading the central bank.

Declining Jobless Rate Keeps Fed on Track to Accelerate Taper

Another decline in the unemployment rate in November keeps the Federal Reserve on track to quicken the wind-down of its stimulus programs at its meeting later this month, paving the way to raise interest rates in the first half of next year to curb inflation.

Bullard Upbeat on Jobs Data, Presses for Hawkish Monetary Policy

Federal Reserve Bank of St. Louis President James Bullard said Friday that November hiring data looks quite strong, as he again made a case for speeding the withdrawal of central-bank stimulus for an economy he believes is now in full recovery.

U.S. Economy

U.S. Added Just 210,000 Jobs in November

The U.S. economy added 210,000 jobs in November, marking a slowdown in hiring, but a tight labor market showed an early sign of loosening as almost 600,000 people joined the workforce. The slower pace of hiring last month -- the smallest monthly gain since last December -- followed an upwardly revised gain of 546,000 jobs in October. The jobless rate fell to 4.2% as more people joined the labor force.

Wages Shoot Up in Travel, Food and Other In-Demand Industries

Average hourly earnings were 4.8% higher in November compared with a year ago for all private industries, and 13.7% higher for leisure and hospitality and 8.9% higher for transportation and warehousing, two of the sectors most affected by labor shortages.

Retreat From Globalization Adds to Inflation Risks

While supply-chain disruptions, labor shortages and fiscal stimulus have all been blamed for the rise in short-term inflation, another force could also be at work: "deglobalization," as the pandemic speeds up a retreat from globalization that has been under way for several years.

Nasdaq Is On Track to Beat NYSE in Record Year for IPOs

Nasdaq Inc.is poised to beat the New York Stock Exchange in initial public offerings this year, far outpacing its crosstown rival during a record year for capital raised in U.S. public markets, writes Alexander Osipovich.

High-Income Business Owners Escape $10,000 Tax Deduction Cap

Congressional Democrats are debating whether increasing the $10,000 cap on the state and local tax deduction would benefit the rich too much, but some of America's top earners are legally circumventing the cap on much of their income.

Inflation Pressure Hits New Warehouse Leases

Rental rates to replace expiring multiyear warehouse leases are rising at a sharp pace, according to a new report, as real-estate firms look to incorporate the higher prices they have taken during the pandemic into new contracts, Lydia O'Neal writes.

Key Developments Around the World

Canada Delivers Stellar Job Gain, Putting Spotlight on Central Bank

Canada's economy added a net 153,700 jobs in November, following a gain of 31,200 in the previous month, while the unemployment rate dropped to 6.0% from the previous month's 6.7% reading. The rate is now approaching the pre-pandemic -- or February 2020 -- mark of 5.7%.

Turkey's Economic Turmoil Sends Desperation and Inflation Soaring

The two-decade economic boom that lifted millions of Turks into the middle class is beginning to unravel, threatened by a currency crisis that has people lining up for subsidized bread, cutting back on meat and fleeing for a better life in Europe.

China's Central Bank Cuts Reserve Requirement Ratio for Banks

China's central bank said Monday it would lower the amount of funds banks have to set aside, replenishing liquidity into the financial system in a bid to support the economy and cut financing costs for businesses.

Chinese Tariffs Fuel Boom in U.S. Trade With Tech Exporter Taiwan

U.S. trade with Taiwan is booming, as the island cashes in on demand for its computer chips and lures factories back from China, where many exports to the U.S. like electronics are subject to 25% tariffs. Taiwan is now ranked No. 8 globally in trade with the U.S., just behind the U.K.

Financial Regulation Roundup

Biden Struggles to Win Backing From Democrats for Wall Street Posts

The White House's desire to appease both liberal and moderate Democrats has left several top Wall Street regulatory posts unfilled, slowing President Biden's agenda and potentially forcing tough votes for Democrats ahead of next year's midterm elections.

Calls for Tougher Private Equity Rules Against Money Laundering

Public-policy groups have urged the Biden administration to expand anti-money-laundering rules to cover private investment advisers, calling private-equity vehicles and hedge funds a vulnerability in efforts to prevent criminals accessing the U.S. financial system.

U.S. to Urge Democracies to Sanction Corrupt Foreign Officials

The U.S. will levy sanctions against foreign-government officials and people it accuses of corruption and human-rights abuse, and urge other nations to join its pressure campaign at its coming Summit for Democracy, administration officials said.

China Evergrande Requests Help From Government

Chinese authorities on Friday said they would step in to help China Evergrande Group deal with its crisis, after the highly indebted property giant warned it risked defaulting on a large financial obligation and sought help from its provincial government.

Forward Guidance

Monday (all times ET)

6:30 a.m.: Bank of England's Broadbent gives speech on outlook for growth, inflation and monetary policy at Leeds University

10:30 p.m.: Reserve Bank of Australia releases policy statement

Wednesday

8:30 a.m.: U.S. Commerce Department releases October international trade data

3 p.m.: Federal Reserve releases October U.S. consumer-credit data

Research

J.P. Morgan Sees Inflation Cooling Next Year With Supply Chain Relief

There won't be any immediate relief from "quite elevated" price pressures but they should start easing next year, J.P. Morgan economists Bruce Kasman and Bennett Parish wrote in a report on Friday. The outlook "banks on a fading of supply constraints that promotes a growth pickup alongside a cooling of inflation pressure," they wrote. The pair added that "absent new shocks related to the Omicron variant, this easing looks likely to gather momentum in the coming months, lifting global growth and cooling inflation."

-- Michael S. Derby

Commentary

Pressure to Grow on RBA to Exit QE Entirely by February

Pressure is set to grow on the Reserve Bank of Australia to exit its government bond-buying program entirely by February, as other major central banks hasten the scaling back of their own bond purchases, while the Australian economy surges back, James Glynn writes.

Jobs Report Gets a Participation Trophy

(END) Dow Jones Newswires

December 06, 2021 10:07 ET (15:07 GMT)

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