Good day. The theme of this year's Jackson Hole economic policy conference is "Macroeconomic Policy in an Uneven Economy." The event kicks off today at 10 a.m. Eastern time with remarks on the economic outlook by Chairman Jerome Powell amid a debate among central bank officials over how and when to begin dialing back the Fed's extraordinary stimulus, including $120 billion in monthly asset purchases. The presidents of the Dallas, Kansas City and St. Louis regional Fed banks in interviews Thursday said the time for the central bank to taper that bond-buying stimulus is looming. With inflation running at unexpectedly high levels and uncertainty about whether it will moderate next year, "we want to get going on taper, get the taper finished by the end of the first quarter next year," St. Louis Fed President James Bullard said on CNBC.
Now on to today's news and analysis.
Top News
Fed Conference Agenda Points to Policy Challenges in 'Uneven Economy'
The Kansas City Federal Reserve Bank last week scrapped plans to gather at the foot of the Tetons outside Jackson Hole, Wyo., for its annual economic policy conference amid rising concerns about health threats posed by the Delta variant -- a reminder of how the Covid-19 pandemic continues to pose considerable uncertainty for the U.S. economy despite the broad availability of highly effective vaccines.
Instead, Fed policy makers and academics are set to gather online Friday for the second straight virtual symposium. The theme of this year's event is "Macroeconomic Policy in an Uneven Economy."
Fed Officials Say Time for Tapering Is Nearing
Three Federal Reserve regional bank officials said in separate television interviews Thursday that the time for the central bank to cut back on its $120 billion a month in bond-buying stimulus is looming.
Stock Futures Rise Ahead of Powell Comments
Derby's Take: Fed Officials Warn Inflation Is Hurting Lower Income Earners
By Michael S. Derby
Two of the Federal Reserve officials most inclined to dial back on central bank stimulus are now warning that a bigger-than-expected inflation surge is weighing on those least able to bear it.
If they are right, what these central bankers are warning about suggests an incipient conflict with the shift in monetary policy put in place a year ago. At that time, the Fed said monetary policy would tolerate higher levels of inflation as part of an effort to bolster the job market and not leave behind those who want to work. Read more.
U.S. Economy
U.S. Jobless Claims Rise but Hold Near Pandemic Low
Unemployment claims edged up to 353,000 last week from a revised 349,000 a week earlier, while the four-week moving average, which smooths out volatility in the weekly figures, fell to 366,500 last week, a new pandemic low.
Growth in U.S. Consumer Spending Likely to Slow
Growth in U.S. consumer spending appears to be slowing as the latest wave of Covid-19 infections due to the Delta variant prompts event cancellations across the U.S., threatening to sap momentum from the economic recovery.
U.S. Economy Grew 6.6% in Second Quarter, New GDP Figures Show
The U.S. grew a bit faster in the spring than previously estimated, but not enough to change the underlying growth trend in an economy that's recovered quite rapidly from the pandemic, MarketWatch reports. Gross domestic product rose at a revised 6.6% annualized pace in the second quarter, the government said Thursday. Originally the increase was put at 6.5%. The slight increase in GDP reflected somewhat stronger consumer spending and U.S. exports than initially reported.
Key Developments Around the World
Bank of Mexico Was Divided on the Need for Its Recent Rate Increase
Mexico's central bankers disagreed earlier this month over the need for higher interest rates to address persistently high inflation which the bank expects will remain above its target until 2023, minutes of a policy meeting show.
Australia Already in Recession, CBA Says
Australia is back in recession as Covid-19-related lockdowns continue to cripple activity in key states, with the economy expected to show one of its biggest contractions on record in the third quarter, according to the Commonwealth Bank of Australia.
Financial Regulation Roundup
Firms Wary as Money-Market Rule Changes Studied After Covid-19
Regulators are weighing rule changes designed to ensure that money-market funds fare better in the next crisis. These funds emerged as a flashpoint in March 2020, when companies and pension managers raced to stockpile cash, and the firms managing those funds struggled to sell enough bonds to meet those redemptions.
China Plans to Ban U.S. IPOs for Data-Heavy Tech Firms
China plans to propose new rules that would ban companies with large amounts of sensitive consumer data from going public in the U.S., people familiar with the matter said, a move that is likely to thwart the ambitions of the country's tech firms to list abroad.
Forward Guidance
Friday (all times ET)
Kansas City Fed hosts virtual Jackson Hole Economic Policy Symposium
8:30 a.m.: U.S. Commerce Department releases July personal income and outlays; U.S. Commerce Department releases July advance economic indicators report
10 a.m.: Fed's Powell speaks on economic outlook at virtual Jackson Hole Economic Policy Symposium; University of Michigan releases final August U.S. consumer sentiment
Monday
10 a.m.: U.S. pending home sales for July
Research
Oxford Economics Says Coronavirus Surge Won't Derail U.S. Rebound
A resurgent coronavirus pandemic shouldn't knock the U.S. economy's recovery off course, according to a research report released Thursday by Oxford Economics. "With peak growth now in the rearview mirror, rising health concerns and lingering supply constraints are fostering worries about the path forward for the economy," the report said. "Still, we remain sanguine about the outlook and expect slowly improving health conditions, solid household finances, gradually easing supply constraints, a rebuild of inventories and additional fiscal stimulus will support solid growth into 2022."
-- Michael S. Derby
Commentary
The Regulators Are Coming After Sustainable Investing
Some of the investment industry's claims about sustainability aren't sustainable, and a U.S. probe into Deutsche Bank's asset-management arm could help sift out the fakers, Rochelle Toplensky writes.
Basis Points
Factory activity in the central U.S. kept expanding at a solid pace this month, according to the Federal Reserve Bank of Kansas City, which said its Tenth District Manufacturing Survey's composite index fell from 30 in July to 29. Values greater than zero suggest growth. The index has been indicating expansion since June 2020. (Dow Jones Newswires)
The potential economic impact of the Delta variant has prompted Bank of America to cut its year-end forecast for the 10-year Treasury yield to 1.55% from a previous forecast of above 2%. The bank projects the 10-year yield will struggle to sustain elevated levels and forecasts it will reach 1.9% by the end of 2022. (DJN)
The Supreme Court on Thursday lifted the latest federal ban on evictions during the Covid-19 pandemic, siding with landlords against a moratorium the Biden administration imposed this month despite questions about its legality.
Profits at China's industrial firms grew at a slower rate for a fifth consecutive month in July as the pandemic-driven distortions in the year earlier figures weigh, the National Bureau of Statistics said.
Sweden's economy picked up slightly in the second quarter, growing 0.9% on a seasonally-adjusted basis over the previous quarter compared with 0.8% in the first quarter, official data from Statistics Sweden showed. On an annual basis, the economy expanded 9.7% after flat growth in the first quarter, the data showed. Economists polled by The Wall Street Journal had forecast the economy to grow 0.8% quarter-on-quarter and 9.9% on the year. (DJN)
Sweden's economic sentiment indicator edged lower in August but remained at record highs, while manufacturing firms' and households' optimism increased further, offical data from the Swedish National Institute of Economic Research showed. (DJN)
France's consumer confidence indicator inched down to 99 in August from 100 in July. Economists polled by The Wall Street Journal had forecast a reading of 100. (DJN)
(END) Dow Jones Newswires
08-27-21 0916ET
