Good day. The Federal Reserve banks of Boston and Dallas will cooperate with a central bank probe into the trading controversy surrounding their leaders, who have both resigned. Meanwhile, the Fed is likely to start tapering its $120 billion a month in bond buying at its policy meeting next month despite Friday's disappointing September jobs report. That could come amid a new inflation threat to the U.S. economy, with energy prices on the upswing: Crude oil is at a seven-year high, natural-gas prices have roughly doubled over the past six months and coal prices are at records. At the same time, global supply-chain bottlenecks are feeding on one another, with component shortages and surging prices of critical raw materials squeezing manufacturers around the world and showing signs of choking the recovery in some regions.

Now on to today's news and analysis.

Top News

Boston, Dallas Fed Banks Pledge Cooperation With Trading Probe

The Fed last week said it had started discussions with its inspector general's office about conducting an independent review "of whether trading activity by certain senior officials was in compliance with both the relevant ethics rules and the law," adding that it would take appropriate actions based on the findings of this review.

A Boston Fed spokesman said that "we welcome the reviews, and will cooperate fully -- and won't comment or address specifics now so as to allow those reviews to proceed fully, without prejudgment or distraction." A spokesman from the Dallas Fed said his bank "will fully cooperate with the inspector general review."

Jobs Report Keeps Fed Taper on Track for November

Despite a disappointing September jobs report, Federal Reserve officials have signaled in recent weeks the gains are likely to satisfy thresholds they have laid out to start reducing their bond buying at their policy meeting next month.

Derby's Take: Fed Down Two Hawks as Regional Bank Presidents Depart

By Michael S. Derby

The number of Federal Reserve policy makers has dropped from 18 to 16, with potential implications for how the central bank communicates future policy changes. Read more.

U.S. Economy

U.S. Job Growth Falls to Slowest Pace of Year

The U.S. economy created 194,000 jobs in September, the smallest gain since December 2020 and down from 366,000 jobs added in August, the Labor Department said Friday. Many workers gave up a job search and exited from the labor force last month. The smaller pool of labor meant that despite the slowdown in hiring, the unemployment rate fell to 4.8% last month from 5.2% in August.

Despite Job Gains, Many Women Remain on Labor-Market Sideline

Soaring Energy Prices Raise Concerns About U.S. Inflation, Economy

As the pandemic fades and consumers around the world step up spending, factories and service providers are ramping up production, which requires energy, while oil supplies are tight because of measured oil output.

Oil Price Jumps Above $80 and Natural Gas Races Higher

Global Supply-Chain Problems Escalate, Threatening Recovery

The global economy is out of sync on the pandemic, restrictions and recovery, as factories and retailers in Western economies have largely emerged from lockdowns while many countries in Asia are still in the throes of them.

Biggest U.S. Retailers Charter Cargo Ships to Sail Around Port Delays

Soaring Home Prices Are Roiling Appraisals and Upending Sales

Many U.S. home buyers are plunking down payments of just 5% to 10% because they need extra cash available in case the house is appraised below the sales price, said Nicole Dudley, a real-estate agent in the Phoenix area.

These Cities and Small Towns Are Luring Workers With Perks

New York Speeds Up Rent Assistance, Asks for More Federal Funding

Key Developments Around the World

Brazil Comes Out of Pandemic and Hits the Next Hardship -- Inflation

Brazil is the latest country to emerge from the worst of the pandemic only to face its highest inflation rate in years, as prices in September rose at the fastest pace for the month since 1994, while the 12-month figure reached 10.25%.

U.K. Firms Plea for More European Workers. Government Says No.

As major economies bounce back from lockdowns, many are suffering from labor shortages. The U.K. is alone, however, in having cut off access to what had been an important source of workers.

Canada Adds 157,100 Jobs; Employment Back to Pre-Pandemic Level

Strong September data reinforced expectations among some analysts that the Bank of Canada could move into the so-called reinvestment phase of its quantitative easing, buying only enough bonds to replace those that are maturing.

China's Property Market Faces a $5 Trillion Reckoning

As China enters what many economists say is the final stage of one of the largest real-estate booms in history, it is confronting a staggering bill: More than $5 trillion in debt that developers took on when times were good.

Evergrande Is Leaving Foreign Bondholders in the Dark, Advisers Say

Bank of Korea Likely to Stand Pat in October, Poll Says

South Korea's central bank is expected to stand pat at Tuesday's rate-setting meeting, with 20 of 21 economists surveyed by WSJ forecasting the Bank of Korea will keep its policy rate unchanged at 0.75% in October ahead of another rate increase in November. One of those surveyed expects a rate increase in October. The central bank has signaled it would tighten policy further to address snowballing household debt and rising inflationary pressure amid an economic recovery from the coronavirus pandemic since it raised the rate in August after 15 months of keeping it at a record low. (Dow Jones Newswires)

Low Norwegian Inflation Not Seen Changing Norges Bank Policy Path

Norwegian core inflation came in at 1.2% year-on-year in September versus 1% in August, with the low figure mainly due to lower imported inflation, says Nordea. "The phasing out of last year's weak NOK combined with a stronger NOK year-on-year has led to a much lower imported inflation." Today's inflation figures should be fairly neutral for the upcoming rate path though, it says. (DJN)

Financial Regulation Roundup

SEC Digs Deeper Into Companies' EPS Manipulation

The Securities and Exchange Commission's review of companies' earnings per share has brought cases against three firms over the past year or so, and could come into greater focus under the regulator's new leadership.

Corporate Taxes Poised to Rise After 136-Country Deal

Nearly 140 countries agreed Friday to the most sweeping overhaul of global tax rules in a century, aiming to curtail tax avoidance by multinational corporations and raise additional tax revenue of as much as $150 billion annually.

Is the Income-Tax Rate on the Rich 8%, or 23%?

Government estimates put U.S. high-income filers' average income-tax rates in the mid-20s, but a new Biden administration analysis pegs the average tax rate for the 400 wealthiest households at 8.2% from 2010 to 2018.

Forward Guidance

Monday (all times ET)

8 a.m.: European Central Bank's Lane gives welcome address at ECB monetary policy conference

8:30 a.m.: European Central Bank's Lane speaks at Institute of International Finance meeting

6 p.m.: Chicago Fed's Evans speaks online

Tuesday

7 a.m.: European Central Bank's Enria speaks on panel at Institute of International Finance meeting

8:30 a.m.: European Central Bank's Lane speaks on the economy at "EU and U.S. Perspectives" conference

10 a.m.: U.S. Labor Department releases August Job Openings and Labor Turnover Survey

11:15 a.m.: Fed's Clarida speaks on economy and monetary policy at Institute of International Finance meeting

12:30 p.m.: Atlanta Fed's Bostic speaks on inflation at Peterson Institute for International Economics event

Commentary

Jobs Forecasters Got Schooled -- Here's Why

Reduced hiring at schools in September is illustrative of a more general problem: There is a lot of demand for workers, but many people have remained on the sidelines, Justin Lahart writes.

Basis Points

The head of Peru's central bank, Julio Velarde, will stay in his post for another five-year term, President Pedro Castillo said. Mr. Velarde, who has been in the post since 2006, is well-respected in the business community and among foreign investors and his reappointment will likely help to ease concerns among investors that Mr. Castillo would turn Peru to the far left, especially after he fired his far-left cabinet chief last week and replaced him with a moderate politician. (Dow Jones Newswires)

The Nobel Prize in economics was awarded to David Card, Joshua D. Angrist and Guido W. Imbens for their contributions to labor economics and causal relationships.

The Biden administration kicked off its trade-policy engagement with China late Friday with a virtual meeting between U.S. Trade Representative Katherine Tai and Chinese Vice Premier Liu He.

U.S. businesses are panning the Biden administration's new China trade policy, saying it fails to provide the tariff relief they expected for importers who lack cost-effective alternatives to Chinese products.

This year's deep drought in Afghanistan is compounding the economic crisis that deepened when the Taliban overthrew the previous government, prompting the U.S. and others to freeze some $9 billion in Afghan central-bank assets and spurring a large number of the country's professionals to leave.

(END) Dow Jones Newswires

10-11-21 1331ET