Bank of Canada Expected to Leave Rates Unchanged; Argentina's President-Elect Backpedals By James Christie

Good day. All 11 private-sector economists surveyed last week by The Wall Street Journal expect the Bank of Canada today will keep its target for the overnight rate at 5%. Most expect the central bank's statement explaining its interest-rate decision to mirror its statement in October-including language about possibly raising rates again should inflation fail to cool as expected. Central bank officials have repeatedly said they need to see evidence of sustainable slowing in core inflation before rate cuts can be entertained. And in Argentina, President-elect Javier Milei-who pledged to kill the central bank, cut ties with China and slash public spending-has taken a softer tone ahead of his inauguration.

Now on to today's news and analysis.

Top News Bank of Canada Expected to Hold Rates Steady

The Bank of Canada is widely expected to hold its benchmark interest rate unchanged Wednesday as data show the economy slowing , unemployment rising and inflation cooling.

Two weeks ago, Bank of Canada Gov. Tiff Macklem said interest rates may be at an appropriate level to wrestle inflation down further to the central bank's 2% target. Economists say those remarks were prescient given new indicators measuring price increases, gross domestic product and the health of the labor market.

'El Loco' Backpedals on Outrageous Ideas After Being Elected

Javier Milei, Argentina's president-elect, has jettisoned some top economic advisers who were enlisted to help him kill the central bank and adopt the U.S. dollar as the national currency. He has aligned instead with officials from a previous center-right government that he previously derided.

U.S. Economy Treasury Yields Fall to Lowest Levels Since Summer

The bond rally resumed Tuesday, driving yields on benchmark 10-year U.S. notes to 4.171% from 4.286% on Monday , their lowest level since summer, and lifting technology shares on an otherwise downbeat day for stocks.

Why Gold Prices Are Hitting Records

Gold has advanced for seven of the past eight weeks, bringing its gain this year to 11%, and many cite the potential for interest rate cuts from the Federal Reserve as a factor behind gold's current climb.

Key Developments Around the World Australia's Economy Grew More Slowly as High Rates Bite

Australia's economy grew by less than expected in the third quarter, fanning concerns that the Reserve Bank of Australia may have hit the policy brakes too hard by continuing to raise interest rates earlier this month. The economy expanded 0.2% in the third quarter and 2.1% from a year earlier, the Australian Bureau of Statistics said Wednesday. Economists had expected growth of 0.3% in the quarter.

Putin Seeks Closer Middle East Ties in Overseas Visit

Russian President Vladimir Putin heads to the Middle East this week in a rare overseas trip focused on global oil markets, the conflict between Israel and Hamas, and the war in Ukraine.

Venezuela Ramps Up Threat to Annex Part of Guyana

The growing dispute between Venezuela and Guyana comes as an Exxon Mobil-led consortium has made offshore oil discoveries and Guyana pushes for more hydrocarbons exploration in areas Venezuela claims as its own.

Financial Regulation Roundup SEC Head Warns Against 'AI Washing'

Securities and Exchange Commission Chair Gary Gensler has warned businesses against "AI washing," or making false artificial intelligence-related claims, likening it to the greenwashing phenomenon that has been the target of an agency crackdown.

SEC's Chief Accountant on What Worries Him Nondisclosure Agreements Get Trickier Under New SEC Scrutiny

Companies have long used employee nondisclosure agreements to protect proprietary information. Now, regulators are trying to ensure clauses in the agreements don't also inhibit whistleblowers .

New York Could Be the Latest State to Ban Noncompete Agreements

A ban on noncompete agreements could soon be coming to New York-potentially with a carve-out for higher earners. New York Gov. Kathy Hochul is considering whether to sign or veto a bill that would prohibit noncompete agreements , which typically prevent workers from taking a new job or starting a business for a period after leaving an employer.

Royal Bank of Canada Fined Over Money-Laundering Lapses

Canada's financial-intelligence agency said Tuesday it has fined Royal Bank of Canada, the country's largest lender by market capitalization, for failing to comply with the country's rules aimed at deterring money laundering .

Forward Guidance Wednesday (all times ET)

8:15 a.m.: ADP National Employment Report for November

8:30 a.m.: Canada trade report for October; U.S. trade report for October; U.S. productivity and costs for third quarter, revised

10 a.m.: Bank of Canada interest-rate decision


8:30 a.m.: U.S. weekly jobless claims

10 a.m.: U.S. wholesale trade for October

12:30 p.m.: Bank of Canada's Gravelle speaks to Windsor-Essex Regional Chamber of Commerce

3 p.m.: U.S. consumer credit for October

Research Dollar Vulnerable Until Data Challenge U.S. Rate Expectations

The U.S. dollar remains vulnerable until a shift in market expectations for Federal Reserve interest-rate cuts and that may be a story for 2024, Brown Brothers Harriman analysts say in a note. "At this point, it will likely take a string of firm U.S. data to truly challenge the current dovish Fed narrative," BBH analysts say. They expect the U.S. economy to continue to grow at or above trend even as the rest of the world slips into recession. At the same time, price pressures are expected to remain persistent enough that the Fed won't be able to cut rates as soon and by as much as markets think, the analysts say.

-Emese Bartha

Commentary The U.S. Can Afford a Bigger Military. We Just Can't Build It.

Intensifying security challenges from the western Pacific to Ukraine to the Middle East have fueled debate over whether the U.S. can afford a bigger military. In fact, the more pressing question is whether it can build one-when its principal adversary possesses vast industrial capacity, writes WSJ's Greg Ip .

Basis Points Job openings in the U.S. fell in October to a 28-month low of 8.7 million from a revised 9.4 million in September, the Labor Department said, adding to evidence the labor market is cooling in response to higher interest rates. (MarketWatch) U.S. services grew a little faster in November as activity and employment gained, with the Institute for Supply Management's services-activity index rising from 51.8 in October to 52.7. Economists polled by The Wall Street Journal expected a 52.4 reading. Readings above 50 point to expansion in the services sector, which has grown for the last 11 months, and 41 of the past 42, ISM said. (Dow Jones Newswires) Kenya's central bank raised its key interest rate from 10.5% to 12.5% due to persistent domestic inflationary pressures and a depreciation of the local currency. (DJN) Uganda's central bank held its benchmark lending rate at 9.5%, saying the risks to inflation have persisted despite easing food prices. (DJN) New orders at German factories declined more than expected in October, a further signal that any rebound in the country's struggling manufacturing sector will have to wait. Feedback Loop

This newsletter is compiled by James Christie in San Francisco.

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

(END) Dow Jones Newswires

12-06-23 0715ET