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
Now on to today's news and analysis.
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
China Reopens a Funding Spigot for Property Developers
Chinese Developer Kaisa Defaults, Fitch Says
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
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
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
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
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.
Thursday (all times ET)
2 p.m.: Bank of Canada's Gravelle speaks on the economy to
Surrey Board of Trade
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
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
Similar Living Standards Across U.S. for the College
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
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.
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
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.
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)
Copyright (c) 2021 Dow Jones & Company, Inc.