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Fed Officials Eye November Taper; Boston and Dallas Fed Chiefs to Sell Stocks; ECB Sticks With Easy-Money Policies

Good day. Jerome Powell could use the Fed's Sept. 21-22 gathering to signal officials could start the process of reducing their monthly bond purchases at their following session in November. Meanwhile, the presidents of the Boston and Dallas Fed banks plan to sell individual stocks they own to avoid any perception their trading of securities and investments would conflict with their role in setting monetary policy. Elsewhere, the European Central Bank plans to slightly scale back its own bond-buying program. ECB President Christine Lagarde said the move didn't constitute a plan to reverse the bank's easy-money policies.

Now on to today's news and analysis.

Top News

Fed Officials Prepare for November Reduction in Bond Buying

Federal Reserve officials will seek to forge agreement at their coming meeting to begin scaling back their easy money policies in November.

Many of them have said in recent interviews and public statements that they could begin reducing, or tapering, their $120 billion in monthly purchases of Treasurys and mortgage-backed securities this year. While they are unlikely to do so at their meeting on Sept. 21-22, Fed Chairman Jerome Powell could use that gathering to signal they are likely to start the process at their following session, on Nov. 2-3.

MarketWatch: Fed's Bowman Expects Taper to Start This Year

Regional Fed Chiefs to Sell Stocks to Avoid Appearance of Conflicts

The leaders of the Boston and Dallas Federal Reserve Banks said they would sell off individual stocks they own, invest the proceeds in diversified indexed funds or cash savings and cease trading in individual securities.

ECB Sticks With Easy-Money Policies to Counter Delta's Impact

European Central Bank President Christine Lagarde signaled the bank will keep monetary policy loose for some time amid a resurgence in Covid-19 cases globally and signs of economic slowdown in China and the U.S.

Key Developments Around the World

Jobless Claims Hit New Pandemic Low as Employers Retain Workers

Initial unemployment claims, a proxy for layoffs, moved lower in the week ended Sept. 4 to 310,000 from a slightly upwardly revised 345,000 the prior week. The four-week moving average, which smooths out weekly volatility in the data, fell to 339,500, also a pandemic low. Claims have trended lower since mid-July, a sign employers are holding on to workers despite a rise in coronavirus cases and weaker-than-expected job growth in August.

Push to Let Teens Drive Trucks Interstate Divides the Industry

UPS, Postal Service Aim to Hire Thousands of Seasonal Workers

Amazon Dangles Free Bachelor's Degrees in Fight for Workers

Commodity Boom Pushes China's Factory Inflation to 13-Year High

Robust demand for coal, steel and other raw materials pushed China's producer-price index 9.5% higher in August from a year earlier, the fastest increase since August 2008, when it rose 10.1%, China's National Bureau of Statistics said.

Bank of Canada Sees Stronger Second Half

Bank of Canada Gov. Tiff Macklem says the central bank continues to expect the domestic economy to strengthen during the second half, even as a wave of Covid-19 cases and supply-chain bottlenecks could weigh on the recovery.

Financial Regulation Roundup

Democrats Advance Plan for Employers to Offer Retirement Plans

Democrats have included a provision in their $3.5 trillion healthcare, education and climate bill that would require companies without retirement plans to automatically enroll workers in individual retirement accounts.

Wells Fargo Fined $250 Million for Problems in Its Mortgage Business

The Office of the Comptroller of the Currency, one of Wells Fargo's top regulators, said the lender had failed to fix problems it first identified in a 2018 order, in which the bank was found to have harmed home lending customers.

CFTC's Five-Person Panel Left With One Republican, One Democrat

One of the three remaining members of the Commodity Futures Trading Commission said he plans to resign, leaving the five-person panel that regulates derivatives evenly split between one Republican and one Democrat.

Forward Guidance

Friday (all times ET)

8:30 a.m.: U.S. Labor Department releases August PPI

9 a.m.: Cleveland Fed's Mester speaks on monetary policy strategy at the Bank of Finland

Tuesday

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

Research

Big Rate Increases in Store if Fed Policy Set by Rules

If the Federal Reserve were setting its short-term interest rate target according to rules, rates would be on their way to rising quite a bit, a report by the Federal Reserve Bank of Cleveland released Wednesday said. The report said the Cleveland Fed's proprietary mix of seven policy rules suggests the federal-funds rate should move from the current near-zero target to 1.71% in the third quarter and to 2.84% a year later. There is little chance that will happen though, as the Fed said in June that its officials collectively don't expect a rate increase until 2023. That forecast will be updated at the Fed's meeting later this month. Fed officials say they look at rules like those used by the Cleveland Fed but don't follow them mechanically.

-- Michael S. Derby

Commentary

BlackRock-Soros Feud a Microcosm of Wall Street's China Dilemma

If you are scratching your head wondering why Beijing is welcoming American securities firms while relations with the U.S. are plumbing new depths, the answer is simple: The move is in China's interest, too, Jacky Wong writes.

Basis Points

Retail gasoline prices in the U.S. have stopped rising following a nearly uninterrupted surge from November through early August and have now steadied at their peak, with the national average around a seven-year-high of $3.19 a gallon, according to AAA, virtually unchanged from a week ago and a month ago. (Dow Jones Newswires)

Chinese banks extended 1.22 trillion yuan ($188.99 billion) in new yuan loans last month, up from CNY1.08 trillion in July, according to the People's Bank of China. Economists polled by WSJ had forecast new loans of 1.35 trillion yuan. New yuan loans issued by Chinese banks in August were up 60 billion yuan from a year earlier. (DJN)

U.K. economic growth slowed to 0.1% in July from 1% the previous month, official data showed, missing expectations of 0.5% growth in a WSJ poll of economists, (DJN)

Mexico's projected 0.3% primary budget deficit for 2022 isn't likely to affect Fitch's 'BBB-' rating or stable outlook on the country, according to Charles Seville, co-head for the Americas at the rating firm. (DJN)

Ford Motor Co. said it will stop making vehicles in India and cut about 4,000 jobs as part of a restructuring of its money-losing Ford India unit. (DJN)

 

(END) Dow Jones Newswires

September 10, 2021 09:35 ET (13:35 GMT)

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