Good day. Judy Shelton's path for approval to the Federal Reserve Board narrowed Tuesday, as Senate Republicans failed to marshal enough votes to clear a procedural hurdle on confirming President Trump's nominee. And Fed Chairman Jerome Powell warned that the months ahead could be challenging as the spread of the new coronavirus intensifies. And inflation expectation readings, hard hit by the economic downturn caused by the coronavirus pandemic, are starting to perk up.

Now on to today’s news and analysis.

Senate Republicans failed to secure enough votes Tuesday to advance the confirmation of Judy Shelton to a seat on the Federal Reserve’s board of governors as two GOP senators were absent because of coronavirus-related health precautions.

The five-year break-even inflation rate—a bet on where traders and investors see future inflation rates—has been rising steadily for months, data from the St. Louis Fed show. It has moved up to around 1.6% since crashing to 0.14% in March as the crisis took hold in the U.S. That is still short of the Fed’s 2% inflation target. But it comes as other inflation expectation readings are also moving up. Read More.

Bank of Japan Gov. Haruhiko Kuroda said Wednesday that the central bank would continue to buy exchange-traded stock funds for the time being to keep the markets stable amid the pandemic. "We need to prevent any market instability to cause worsening of business and household confidence," Mr. Kuroda told a parliamentary committee. He added the BOJ would continue stock purchases as part of its monetary easing framework. (Dow Jones Newswires) 

Sweden's central bank said that it would start buying corporate bonds via auctions. The Riksbank launched a bond-purchase program this year as part of its efforts to shore up markets amid the pandemic. The central bank's purchases of corporate bonds have so far been made through a bilateral purchase procedure, but from Dec. 2 it also will begin purchasing corporate bonds via auctions. (DJN)

Hungary's central bank held its base rate at 0.60%, its overnight deposit rate at -0.05% and its overnight and one-week collateralized loan rates both at 1.85%. The forint's decline at the end of October prompted speculation that the bank would raise rates, but since then there has been evidence that price pressures have eased, Capital Economics said. (DJN)

High debt levels can be sustained when interest rates are low, former Bank of Canada governor Stephen Poloz said. Mr. Poloz said low interest rates will make it easier for Canada to finance its pandemic-related debt burden. "What we should be focusing on is doing everything we can to maximize the trend line of economic growth," Mr. Poloz said. "That will pay for it." (DJN) 

India's central bank has proposed to merge Lakshmi Vilas Bank with the Indian unit of Singapore-listed DBS Group Holdings Ltd. The Reserve Bank of India has placed Lakshmi Vilas Bank under moratorium, saying that the financial position of the bank has undergone a steady decline with the bank incurring continued losses over the last three years. (DJN) 

President Trump formally tapped Brian Brooks to become the Comptroller of the Currency, a role he has already filled in an interim capacity since May, overseeing big national banks such as JPMorgan Chase and Bank of America. His pathway through the Senate in the lame-duck session of Congress is uncertain and he would almost certainly be replaced shortly after Joe Biden's inauguration in January. (andrew.ackerman@wsj.com)

8:15 a.m.: Bank of Canada’s Wilkins speaks at virtual Women’s Forum Global Meeting
8:30 a.m.: U.S. Commerce Department releases October housing starts
10 a.m.: Chicago Fed’s Evans speaks at virtual summit on regional competitiveness
11:30 a.m.: Bank of England’s Bailey speaks in online conversation with U.S. Rep. Langevin at Carnegie Institute for World Peace
12:15 p.m.: New York Fed’s Williams speaks at Society for Advancing Business Editing and Writing virtual event
1:20 p.m.: St. Louis Fed’s Bullard speaks online on economy and monetary policy to Rotary Club of Hot Springs National Park
7 p.m.: Atlanta Fed’s Bostic, Richmond Fed’s Barkin speak at Federal Reserve education webinar

Time N/A: Central Bank of the Republic of Turkey releases policy statement; Bank Indonesia releases policy statement; South African Reserve Bank releases policy statement; Bangko Sentral ng Pilipinas releases policy statement
3 a.m.: European Central Bank’s Lagarde speaks via videoconference at hearing of Committee on Economic and Monetary Affairs of the European Parliament
5 a.m.: European Central Bank’s Lagarde speaks via videoconference at hearing of Committee on Economic and Monetary Affairs of the European Parliament
8:30 a.m.: Cleveland Fed’s Mester speaks at online Cleveland Fed financial stability conference
10 a.m.: National Association of Realtors releases October U.S. existing-home sales
10:15 a.m.: European Central Bank’s Lagarde speaks at virtual Women’s Forum Global Meeting
11 a.m.: European Central Bank’s Schnabel speaks on panel at online Cleveland Fed financial stability conference
12:30 p.m.: Cleveland Fed’s Mester speaks at online Cleveland Fed financial stability conference
1 p.m.: Boston Fed’s Rosengren speaks with Vermont Gov. Phil Scott for Vermont Working Communities Challenge Awards online announcement

A swifter-than-expected recovery, even as the coronavirus pandemic rages on, has been attended by a swift drop in the unemployment rate, which was at 6.9% in October, compared with 14.7% in April. But there is still a long way to go, as Fed officials routinely note, in terms of getting people back to work. New research from the San Francisco Fed holds out hope. “Temporary layoffs accounted for essentially the entire increase in unemployment to its historically high rate in April 2020,” bank economists write in a new note, adding, “There is little evidence that temporary layoffs are becoming permanent at a higher rate than in the past.” That’s the good news, and now here’s the bad: “The continuation of the health and economic crisis poses a risk that a growing share of unemployment will consist of people in persistent categories of joblessness, thereby slowing the overall recovery.” (Michael S. Derby)

• Americans' credit-card balances declined by $10 billion to $810 billion, even as household debt overall rose, the New York Fed said. 
• U.S. industrial production rose last month, as output continued its slow climb back from deep declines last spring due to pandemic-related shutdowns, the Fed reported.
• Falling real yields are driving investors to junk bonds. 
• Top Democrats sent a letter to U.S. Senate Majority Leader Mitch McConnell requesting that negotiations on another coronavirus relief bill restart this week after months of stalemate.
• U.K. consumer prices rose 0.7% on year in October, compared with a 0.5% rise in September, official data showed. Economists polled by WSJ had expected inflation to rise by 0.5%. (DJN) 
• A new framework to resolve debt crises in developing countries, meant to ensure that Chinese and private creditors share the burden of providing relief, faces a key test after Zambia became the first African nation to default during the coronavirus pandemic.
• To narrow the gulf between China’s urban rich and rural poor, President Xi Jinping is trying to populate rural towns with entrepreneurs and consumers.
• The Philippine central bank will keep its key borrowing rate at 2.25% on Thursday, predicted five of seven economists polled by WSJ. Two two expect a rate cut. (DJN) 

This newsletter is compiled by James Christie in San Francisco and Ed Ballard in London. 

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