Good day. The People's Bank of China is under scrutiny by Beijing, part of President Xi Jinping's push to curb capitalist forces in the economy. While the PBOC has worked for years to establish credibility among investors at home and abroad, Communist Party inspectors from China's top anticorruption agency have, The Wall Street Journal reports, told the central bank that Beijing has little tolerance for any talk of central-bank independence and it must answer to the party. Meanwhile, the Bank of Canada kept its benchmark overnight interest rate at the ultralow level of 0.25% and its forward guidance unchanged, while Brazil's central bank raised the Selic to its highest level in more than four years and pointed to another increase in February as consumer prices continue to climb.

Now on to today's news and analysis.

Top News

Beijing Reins In China's Central Bank

The People's Bank of China, based in Beijing, is among some 25 financial institutions at the heart of the Chinese economy now being scrutinized by state discipline inspectors.

Photo: WU HONG/SHUTTERSTOCK/EPA

The People's Bank of China has never been politically independent like a Western central bank, but it has nonetheless enjoyed a special status in the nation's economic hierarchy. Now, President Xi Jinping's shake-up of China's financial sector is stripping that away.

Earlier this week, pressured by senior leaders worried about plunging economic growth, the PBOC said it would ease banks' reserve requirements, effectively making more cash available for bank lending. The move went against policy signals it had sent weeks earlier and came as the central bank and other financial institutions came under scrutiny by Beijing, part of Mr. Xi's effort to curb capitalist forces in the economy.

Market Can Weather Evergrande Crisis, Says PBOC Governor

Financial stress at China Evergrande Group won't cause longer-term damage to the Hong Kong market, and broader problems with debt at Chinese property developers should be dealt with according to market principles, China's top central banker Yi Gang said.

China Reopens a Funding Spigot for Property Developers

Chinese Developer Kaisa Defaults, Fitch Says

U.S. Economy

Jobless Claims Are Stabilizing at Pre-Pandemic Levels

Worker filings for unemployment benefits are settling at pre-pandemic levels as a tight labor market keeps layoffs low. Economists surveyed by The Wall Street Journal expect jobless claims, a proxy for layoffs, fell to 211,000 for the week ended Dec. 4 from 222,000 the previous week.

Why Washington Won't Fix Student Debt Plans That Overload Families

Congress has repeatedly punted on changing student-loan programs. Among the reasons: resistance to restricting disadvantaged students' access to funds, fear of angering universities, and the fact that the programs -- on paper -- have historically made money for the government.

Covid Spurs Biggest Rise in Life-Insurance Payouts in a Century

The Covid-19 pandemic drove the biggest increase in death benefits paid by U.S. life insurers since the 1918 influenza epidemic, a trade group said. Death-benefit payments rose 15.4% in 2020 to $90.43 billion.

Key Developments Around the World

Bank of Canada Leaves Key Interest Rate Unchanged at 0.25%

The Bank of Canada on Wednesday kept its benchmark overnight interest rate on hold and its forward guidance unchanged, even as it warned that the Omicron variant of Covid-19 had introduced more uncertainty into the country's economic recovery.

Brazil's Central Bank Raises Selic, Sees Increase at Next Meeting

Brazil's central bank raised its benchmark lending rate by 1.5 percentage points to 9.25% and signaled another increase of the same size at its next meeting. The Selic, which was at a record low 2% in March, is at its highest level in more than four years.

Financial Regulation Roundup

Deutsche Bank Lender May Have Violated Criminal Settlement

The Justice Department has informed Deutsche Bank the German lender may have violated a criminal settlement when it failed to tell prosecutors about an internal complaint in its asset-management arm's sustainable investing business, people familiar with the matter say.

Brazilian Digital Lender Nubank Set for One of 2021's Biggest IPOs

From its beginnings in 2013 offering credit-card services, Nubank has expanded to serve 48 million customers. Total revenue has topped $1 billion, nearly twice the $535 million last year. Nubank had been losing money until the first half of this year, when it posted a profit.

Amazon Fined $1.3 Billion in Italian Antitrust Case

Italy's antitrust regulator fined Amazon.com Inc. $1.3 billion for harming competitors by favoring third-party sellers that use the U.S. company's logistics services. The fine comes as Amazon awaits the outcome of a similar investigation being carried out by the European Union.

Forward Guidance

Thursday (all times ET)

2 p.m.: Bank of Canada's Gravelle speaks on the economy to Surrey Board of Trade

Friday

4:05 a.m.: European Central Bank's Lagarde speaks on panel at Bank for International Settlements event

4:30 a.m.: Bank of England releases November Kantar inflation attitudes survey

5 a.m.: European Central Bank's Panetta speaks in Rome

8:30 a.m.: U.S. Labor Department releases November CPI

10 a.m.: University of Michigan releases preliminary December consumer sentiment survey

Research

Similar Living Standards Across U.S. for the College Educated

The college educated enjoy pretty much the same standard of living regardless of where they live in the United States, according to a new paper made public by the National Bureau of Economic Research. "We find that for college graduates, there is essentially no relationship between consumption and cost of living, suggesting that college graduates living in cities with high costs of living -- including the most expensive coastal cities -- enjoy a standard of living on average similar to college graduates with the same observable characteristics living in cities with low cost of living -- including the least expensive Rust Belt cities," Rebecca Diamond of Stanford University, and Enrico Moretti, of the University of California, Berkeley write. By contrast, their paper says that those without a college education face hits to their standard of living when living in costly cities.

-- Michael S. Derby

Commentary

This Inflation Defies the Old Models

Neither demand nor supply by itself is to blame for current inflation, Greg Ip writes, noting it was made possible only by strong demand interacting with restricted supply. The U.S. hasn't seen anything like this except, perhaps, in the aftermath of World War II, he adds.

Workers Are Poised to Take Greater Slice of the Pie

This might be labor's moment, the point when workers finally start grabbing a greater share of the economy, leaving employers and investors with a little less, but the Federal Reserve's willingness to let that happen hasn't yet been put to the test, Justin Lahart writes.

Basis Points

Sovereign credit conditions will improve next year, with fiscal balances forecast to strengthen for nearly 90% of rated sovereigns, according to Fitch Ratings. The ratings firm sees economic recoveries remaining subject to Covid-19 setbacks, but expects them to become more entrenched, allowing for policy tightening as some support measures are unwound. (Dow Jones Newswires)

Retail sales in Brazil fell in October as a decline in sales in supermarkets and hypermarkets outweighed increased purchases of clothing and footwear. Sales fell by a seasonally adjusted 0.1% in the month and by 7.1% from a year earlier, while September sales fell a revised 1.1% on month and declined a revised 5.2% from a year earlier, the Brazilian Institute of Geography and Statistics said. (DJN)

Car sales in China declined for the sixth straight month, as sporadic Covid-19 outbreaks in the world's biggest auto market hit retail, even as shortages of chips and components eased. Sales of passenger cars in November fell 12.7% from a year earlier to 1.82 million vehicles, while January-November sales rose 6.1% from the same period last year, the China Passenger Car Association said. (DJN)

China's factory-gate inflation ebbed in November after hitting a 26-year high, which economists say will give policy makers more room for easing to bolster a slowing economy. The producer-price index rose 12.9% from a year earlier in November, down from 13.5% growth in October, the fastest increase since 1995, according to data released by the National Bureau of Statistics. The reading beats the 12% increase expected by economists polled by The Wall Street Journal. (DJN)

German exports increased in October, beating forecasts and surpassing pre-pandemic levels. Exports rose 4.1% on month in adjusted terms, statistics office Destatis said Thursday. Economists had forecast a 1.1% increase in adjusted terms, according to a poll by The Wall Street Journal. (DJN)

(END) Dow Jones Newswires

December 09, 2021 08:50 ET (13:50 GMT)

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