More Fed Speak Today By Hardika Singh

Federal Reserve Chair Jerome Powell will testify this morning in front of the U.S. House Financial Services Committee. Chicago Fed President Austan Goolsbee and Fed governor Michelle Bowman will also speak later today. Meanwhile, the crucial U.S. jobs report has developed a bad habit: It keeps exaggerating how many new jobs are created each month. And banking regulators have made progress on revamped big-bank capital rules, Powell said in his Tuesday testimony to Congress. Read on for this news and more.

Note to readers: The Pro Central Banking newsletter on Monday incorrectly said that the "Chicago Fed President Austan Goolsbee and Fed governor Michelle Bowman speak at FedListens" event begins at 1:30 p.m. ET. The event begins at 2:30 p.m. ET.

Top News Powell Puts Greater Focus on Rate-Cut Timing

Federal Reserve Chair Jerome Powell made a subtle but important shift that moved the central bank closer to lowering interest rates when he suggested Tuesday that a further cooling in the labor market could be undesirable.

Powell Set for Second Day of Testimony in Congress U.S. Economy Jobs Report Is Exaggerating Employment Gains. What's Going On?

The government's early estimate of new job gains has overstated the increase in hiring in 15 of the past 17 months. Just how big a problem is it? The U.S. labor market is still quite strong, to be sure, but a less reliable jobs report could cause Wall Street or the Fed to misjudge how fast the economy is either growing or slowing.

The Fed's decision on whether to cut interest rates could also be affected, with big implications for the economy. ( MarketWatch )

Financial Regulation Powell: Significant Progress on Revamped Big-Bank Capital Rules

Banking regulators have made "quite a bit of progress" revising big-bank capital rules and are "very close" to agreeing to the substance of those changes, Fed Chair Jerome Powell said Tuesday.

Powell, testifying before the Senate Banking Committee, said it is the "strongly held view" of the Fed board that the rules in question should be re-proposed before they can be finalized. He cautioned that the three agencies involved in the process hadn't reached an agreement yet.

Forward Guidance Wednesday (all times ET)

10 a.m.: Powell presents Monetary Policy Report to U.S. House Financial Services Committee

10 a.m.: Monthly Wholesale Trade

2:30 p.m.: Chicago Fed President Austan Goolsbee and Fed governor Michelle Bowman speak at FedListens event


8:30 a.m.: Consumer-price index

8:30 a.m.: Initial jobless claims

1 p.m.: St. Louis Fed president Alberto Musalem speaks at Little Rock Regional Chamber's Power Up Little Rock event

Research ECB Might Be Pleased With Market Pricing

The European Central Bank is quite content with the current market pricing of interest-rate cuts and won't seek to affect expectations through its communication at the July 18 meeting, Jussi Hiljanen, chief strategist for dollar and euro rates at SEB Research, says. Next week's meeting thus "should confirm market pricing with a high probability of the next rate cut in September and a relatively high likelihood of another rate cut in December," he says. Markets are pricing in 19 basis points of interest-rate cuts in September and a cumulative 41 basis points through the end of the year, according to Refinitiv. - Emese Bartha

Basis Points Millions of homeowners are forced to pay hundreds or even thousands of dollars when they refinance their mortgages to protect against unexpected costs from a challenged property title. Yet claims on such insurance are exceedingly rare. Payouts may only amount to about 3% of overall premiums, according to loss data released by Doma, a financial-technology company that sells title-insurance policies. Doma's data suggest the cost of title insurance is out of sync with the risk it covers, at least on mortgage refinancings. - Andrew Ackerman Just as many investors and traders remain sanguine about the prospects of cooling U.S. inflation when Thursday's consumer-price index for June comes out, Wall Street is pointing to the potential inflationary impacts of a second presidency under Republican Donald Trump. What's emerging ahead of the CPI report's release are two contradictory notions about where U.S. inflation is likely to be headed in the months and years ahead-complicating the Federal Reserve's analysis of the most appropriate path for interest rates. - MarketWatch Americans aren't as restless in their jobs as they were a couple of years ago. Numerous surveys show that fewer U.S. adults are currently seeking to leave their roles, compared with the job-switching frenzy of the pandemic years. Other data suggest job satisfaction is rising, and in interviews, formerly job-hopping workers say they're content with the balance they've struck in the positions they have. - Ray A. Smith It could take days to restore power to millions of customers after Beryl tore through the Houston region, city officials said, raising fears that high temperatures could pose new risks. The storm made landfall as a Category 1 hurricane early Monday before being downgraded. It flattened homes and caused widespread power outages in Texas, mainly in the Houston area. - Gareth Vipers and Alyssa Lukpat The Reserve Bank of New Zealand held its official cash rate steady at 5.50% on Wednesday, staying in what central bank Gov. Adrian Orr likes to call watch-worry-and-wait mode. Still, the RBNZ's cautious narrative softened somewhat amid an admission that inflation pressures are starting to ease. - James Glynn China's consumer inflation remained tepid last month while factory-gate prices continued to fall, pointing to persistently lackluster demand despite Beijing's efforts to juice up consumption. The country's consumer-price index rose for a fifth consecutive month in June, edging up 0.2% from a year earlier , the National Bureau of Statistics said Wednesday. That missed the 0.4% rise expected by economists in a WSJ poll and compared with May's 0.3% increase. - Dow Jones Newswires The Guangzhou Futures Exchange has said it will launch the first platinum and palladium futures contracts in China, boosting the country's development of its Platinum Group Metals market and enabling domestic price-hedging. - Joe Hoppe Beijing began an investigation into the European Union's trade probes against a range of Chinese products on Wednesday, just days after the bloc pushed ahead with plans to slap additional tariffs on electric cars made in China as trade tensions mount. Upon request by a state-backed industry group that represents machinery and electronics exporters, China's commerce ministry said it would start investigating the EU's antisubsidy probes targeting Chinese-made trains, solar panels, wind turbines and security equipment. - Dow Jones Newswires The Bank of Japan said Wednesday it offered to buy outright on July 11 up to Y75.0 billion in Japanese government bonds maturing in over 25 years. The bank's previous operation in the same maturity range was also Y75.0 billion. - Dow Jones Newswires Indian Prime Minister Narendra Modi's visit to Russia-his first to the country in five years-is the latest example of India's delicate and not-quite-neutral approach on the war in Ukraine. Modi posted pictures hugging Putin while also publicly chastising Russian leader over attack on children's hospital in Kyiv. - Tripti Lahiri and Krishna Pokharel About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

07-10-24 0715ET