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Rate Cuts Might Not Cure What Ails the Job Market
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Jobs data will be the center of attention in the coming week, most notably Friday’s U.S. nonfarm payrolls figures for September. Recent weak labor market figures led the Federal Reserve to cut interest rates at its most recent meeting and many expect follow-up rate cuts in the coming months. Close attention will also be paid to the Oct. 1 deadline for Congress to approve U.S. government funding. Failure to agree on this would result in a government shutdown. In Europe, eurozone preliminary inflation data for September are set to be released. And in Asia, focus will center on central bank decisions in Australia and India.
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Rate Cuts Might Not Cure What Ails the Job Market
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Photo: Michael Nagle/Bloomberg News
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The Federal Reserve resumed its interest-rate cutting campaign earlier this month in an effort to reverse a stall in the job market. The problem: The hiring drought can’t be cured by lower interest rates alone, at least not soon.
Lower rates will help by bolstering demand, especially for interest-sensitive purchases such as houses. But many businesses say their problem, rather than demand, is a panoply of issues from high costs and tariffs to tight credit. The usual levers through which lower rates initially boost the economy—rising stock prices and lower mortgage rates—are also less potent than usual.
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Tiff Macklem: Fed Independence Issue Could Be Weighing On Markets
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Bank of Canada Gov. Tiff Macklem said earlier this week that concerns about Federal Reserve independence may already be percolating in markets. During turbulent times, investors have typically sought out dollar-denominated assets as a security blanket. But the value of the U.S. dollar as a hedge today “may not be as reliable as it was,” Macklem said.
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BOJ Board Member Noguchi Raises Expectations for Rate Hike
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Bank of Japan policy board Member Asahi Noguchi suggested increased pressure to raise interest rates, adding fuel to expectations for central bank action in October.
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Fed's Favorite Inflation Gauge Rose in August
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The Federal Reserve's preferred inflation measure stayed stubbornly above the central bank's 2% target last month, a challenging backdrop for policymakers as the job market weakens. Consumer prices rose 0.3% in August from July, lifting personal-consumption expenditures inflation to 2.7% over the past year, up from 2.6% a month earlier, the Commerce Department said Friday.
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The Credit Market Is Humming—and That Has Wall Street On Edge
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U.S. credit markets are running hot—maybe too hot. Investors are gobbling up corporate debt like it is going out of style—even though the rewards, by some measures, are lower than they have been in decades. The frothy mood has some on Wall Street worried that the market is priced for perfection and ripe for a fall.
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Laid-Off Tech Workers Say H-1B Crackdown Won’t Help Them Get Job
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A new barrier for foreign workers could open some opportunities for U.S. tech workers, who for months have faced a dismal job market. But many aren’t expecting much help.
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Sentiment Declines in Michigan Survey
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Consumer sentiment declined this month, the University of Michigan's consumer survey found. The monthly survey's sentiment index fell to 55.1 in September, down from 58.2 in August.
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A Timeline of Key Moments in American Capitalism
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From the Declaration of Independence, to railroads, to the rise of conglomerates: Here are 51 seminal moments in the development of U.S. capitalism.
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Banks Ordered to Dig Account Closures to Find ‘Debanking’ Cases
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Photo: Julia Demaree Nikhinson/Associated Press
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Banks are racing to respond to regulators’ broad requests for information on whether they closed customer accounts or denied people service on political or religious grounds.
The sweeping demands are part of President Trump’s crackdown on alleged discrimination by banks, a practice dubbed debanking, which he has said targeted conservatives. Regulators are working with the Justice Department, which is looking for any violations of civil-rights laws including the Equal Credit Opportunity Act, according to people familiar with the matter.
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10 a.m.: Pending Home Sales Index
10:30 a.m.: Texas Manufacturing Outlook Survey
1 p.m.: SEC-CFTC Joint Roundtable on Regulatory Harmonization Opportunities
1:30 p.m.: FRB St. Louis President Alberto Musalem speaks at Washington University in St. Louis event
1:30 p.m.: Federal Reserve Bank of New York President John Williams speaks at Rochester Institute of Technology
6 p.m.: FRB Atlanta President Raphael Bostic moderates conversation with Delta Air Lines CEO
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9 a.m.: S&P CoreLogic Case-Shiller Indices
9:45 a.m.: Chicago Business Barometer - ISM-Chicago Business Survey - Chicago PMI
7 p.m.: Economic Club of New York event with U.S. Trade Representative Jamieson Greer
7 p.m.: Federal Reserve Bank of New York President John Williams visits Syracuse
7:15 p.m.: FRB Dallas President Lorie Logan speaks at Dallas Fed Survey Participants' Appreciation Reception
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Commodities Catch Strength From Rate Cut
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The 25 basis point rate cut by the Federal Reserve, along with comments suggesting that more may soon come, propelled commodity futures to a strong month, particularly in precious and industrial metals, says Ole Hansen of Saxo Bank in a note. "The single most important tailwind for commodities this month has been the renewed easing cycle by the U.S. Federal Reserve," says Hansen. Expectations of more rate cuts before the year is out is buoying strength in commodities. But balancing out gains in metals is weakness in soft commodities like cocoa, coffee, and sugar, along with agricultural commodities like soybeans- where China's absence from the U.S. export market has been a pressure point. — Kirk Maltais
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Canada’s economy is on track to eke out tepid growth for the latest quarter, avoiding a second consecutive contraction.
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Businesses in the eurozone became less gloomy about their prospects in September after an agreement between the U.S. and the European Union removed some uncertainty around the level of tariffs they will face when exporting to the world’s largest economy.
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Consumer prices picked up pace in Spain, further cementing expectations that the European Central Bank will continue to hold off on any further cuts to interest rates.
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Moody’s and Fitch Ratings both raised Spain’s sovereign credit rating citing an improving economy and a better labor market.
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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 Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.
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