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After Another Surge for U.S. GDP, Delta Variant Brings Risks
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Good day. The U.S. economy grew rapidly in the second quarter and exceeded its pre-pandemic size, but the outlook has turned cloudier due to the fast-spreading Delta coronavirus variant. For now, forecasters generally don’t expect the spread of Delta to make a major dent in the economy, but it could derail the recovery if restrictions are reimposed on businesses and consumers curtail spending. Economists estimate that Commerce Department data due today will show personal-consumption expenditures—a measure of household spending on goods and services—increased 0.7% last month, before the upswing of Delta variant cases.
Now on to today’s news and analysis.
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U.S. Economy’s Prospects Looked Bright, Until Delta Variant Surged
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Gross domestic product, the broadest measure of U.S. goods and services produced, grew at a 6.5% annual rate in the second quarter, up slightly from a 6.3% growth rate in the first three months of the year, the Commerce Department said Thursday. The reading was below economists’ estimates but pushed the size of the economy above its pre-pandemic level, a milestone that underscores the speed of the recovery that began in May 2020.
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Glynn's Take: RBA Will Choose the Path of Least Regret and Delay QE Taper
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It’s been said that conducting monetary policy at the best of times is like driving at night in torrential rain with a fogged and cracked windscreen. The headlights are also out and windshield wipers were an option that you just couldn’t afford. It’s like that at the moment for the Reserve Bank of Australia. A fierce storm has been whipped up by the sudden shutdown of Sydney due to a significant outbreak of Covid-19 cases. Read More.
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Key Developments Around the World
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Jobless Claims Resumed Decline Last Week
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New jobless claims dropped slightly to 400,000 for the week ended July 24 from a revised 424,000 the week before, and their four-week moving average, which smooths out volatility in the weekly figures, edged higher to 394,500.
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Biden Asks Congress to Extend Federal Eviction Moratorium
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The Biden administration won’t move to extend a federal moratorium on the evictions of tenants who have fallen behind on their rent during the Covid-19 pandemic but is asking Congress to authorize such an extension.
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China Reassures Global Banks and Investors After Market Rout
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China moved to ease investor concerns about crackdowns on listed companies, with a top regulator privately telling global financial firms that Beijing will consider the market impact before introducing future policies.
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Financial Regulation Roundup
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U.S. Crypto Traders Evade Offshore Exchange Bans
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A report released Friday found that hundreds of Americans are trading risky crypto derivatives on offshore exchanges such as FTX and Binance. The report sheds light on an open secret in the industry: U.S. crypto enthusiasts can easily bypass measures that seek to block them from offshore exchanges.
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London Stock Exchange Suffers Indigestion From Refinitiv Deal
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London Stock Exchange Group PLC’s acquisition of Refinitiv Holdings Ltd. is proving harder to integrate than expected, and shareholders of Europe’s biggest exchange operator by market value are paying an early price.
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Credit Suisse Failed to Act on Archegos Risks, Report Says
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Credit Suisse Group knew Archegos Capital Management was a massive risk and didn’t take actions to fix it, according to an investigation the bank commissioned into the collapse of the family investment firm.
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Friday, July 30 (all times ET)
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8:30 a.m.: U.S. Commerce Department releases June personal income and outlays
9 a.m.: St. Louis Fed’s Bullard speaks at a European Economics and Financial Centre Virtual Event
10 a.m.: University of Michigan releases final July U.S. consumer sentiment
1 p.m.: European Central Bank releases stress test results for ECB-supervised banks
8:30 p.m.: Fed’s Brainard speaks during annual meeting of the Aspen Economic Strategy Group
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7 a.m.: Bank of England releases monetary policy report, summary and minutes
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West Embraces State Subsidies, a Policy Throwback, to Counter China
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President Biden on Thursday called for state and local governments to make $100 payments to every newly vaccinated American as authorities race to stem the newest wave of Covid-19 cases.
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U.S. pending home sales fell in June after rising in May, according to the National Association of Realtors, whose Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, decreased 1.9% on month to 112.8. (Dow Jones Newswires)
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Eurozone business and household confidence increased for the sixth consecutive month in July, lifting the European Commission’s economic sentiment indicator from 117.9 in June to a record 119.0. Economists polled by The Wall Street Journal expected a 118.9 reading. (DJN)
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German jobless claims fell more than expected in July, the Federal Employment Agency said, noting claims decreased by 91,000 on the month after declining by a revised 39,000 in June. July’s adjusted unemployment rate was 5.7%, compared with 5.9% in June. (DJN)
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German consumer prices rose strongly in July, according to preliminary data from statistics office Destatis, which showed prices increased 3.8% on year measured by national standards and 3.1% on year by European Union-harmonized standards.
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Belgium’s gross domestic product grew in the second quarter thanks to the gradual easing of coronavirus restrictions, expanding by 1.4% from the previous quarter, the National Bank of Belgium said. (DJN)
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Spain’s unemployment rate declined to 15.26% in the second quarter from 15.98% in the first quarter, Spanish statistics office INE said, adding that jobless claims fell by 110,100 in the quarter to a total of 3.54 million unemployed. (DJN)
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China said it would increase export tariffs on some steel products while scrapping tax rebates for steel exports, a further step to tame soaring commodity prices. The changes will take effect Sunday. (DJN)
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The Turkish central bank said Thursday it now expects inflation to be at 14.1% at the end of 2021 and 7.8% at the end of 2022. In April, the bank said it expected inflation at 12.2% at the end of 2021 and 7.5% at the end of 2022. (DJN)
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This newsletter is compiled by James Christie in San Francisco and Ed Ballard in London.
Send us your tips, suggestions and feedback. Write to:
Jon Hilsenrath, Michael Derby, Nell Henderson, Nick Timiraos, Jason Douglas, Paul Hannon, Harriet Torry, Kate Davidson, David Harrison, Kim Mackrael, Tom Fairless, Megumi Fujikawa, Michael Maloney, Paul Kiernan, James Glynn
Follow us on Twitter:
@WSJCentralBanks, @NHendersonWSJ, @michaelsderby, @NickTimiraos, @PaulHannon29, @wsj_douglasj, @HarrietTorry, @KateDavidson, @d_harrison, @kimmackrael, @TomFairless, @megumifujikawa, @mikemaloneyny, @pkwsj, @JamesGlynnWSJ
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