|
The Inflation Dichotomy; China Considers Tightening Its Monetary Policy; RBA Defends QE Program
|
|
|
|
|
|
Good day. Inflation is near a decade low, yet anxiety about it is at a fever pitch. Behind this dichotomy is a clash of economic and political forces, WSJ's Greg Ip writes. Meanwhile, Fed Gov. Lael Brainard said fragilities remain in short-term funding markets, and Richmond Fed President Thomas Barkin said the risks facing the U.S. economy have eased. Elsewhere, China's top banking and insurance regulator said interest rates in the country will likely rise this year, and Australia's central bank defended its quantitative easing program.
Now on to today’s news and analysis.
|
|
|
Is Inflation a Risk? Not Now, but Some See Danger Ahead
|
|
In the near term, plentiful unused capacity and decades of habits are likely to keep inflation low. After years of undershooting 2%, the Fed would like inflation to slightly overshoot. That, it hopes, would banish the specter of deflation and stagnation that has haunted advanced economies for a decade. But in the longer term, some economists and investors see a shifting political climate more conducive to inflation rising well past 2%.
|
|
|
Brainard Urges Addressing Short-Term Funding Markets Weaknesses
|
|
Regulators should continue to advance reforms to the financial system to address vulnerabilities revealed by the coronavirus-induced market turmoil a year ago, Fed Gov. Lael Brainard said Monday.
|
|
|
Fed’s Barkin Says Downside Economic Risks Have Fallen
|
|
Federal Reserve Bank of Richmond President Thomas Barkin said the negative risks associated with the economic outlook have fallen, and he cautioned markets not to get hung up on when the central bank would change monetary policy.
|
|
|
|
Derby's Take: After Bond-Market Tumult, Some See Need for Stronger Fed Response
|
|
|
|
|
|
Some economists and market participants believe the Federal Reserve needs to speak more directly to a bond market that has seen yields surge amid uncertainty about the monetary policy outlook. Read More.
|
|
|
Key Developments Around the World
|
|
|
China Considers Tightening Its Monetary Policy
|
|
Guo Shuqing, head of the China Banking and Insurance Regulatory Commission, said interest rates in China will likely rise this year, a signal that authorities plan to tighten monetary policy after controlling the spread of Covid-19.
|
|
|
RBA Says Quantitate-Easing Program Can Be Extended if Needed
|
|
The Reserve Bank of Australia defended its quantitative easing program, saying it remains committed to keeping government bond yields low to support the economy, and will use its firepower to achieve its goals if required.
|
|
|
|
U.S. to Take Hard Line on Chinese Trade Practices, White House Says
|
|
Releasing its first trade agenda, the Biden administration said it is committed to using tariffs and other tools to combat alleged unfair trade practices by China, including unfair subsidies to favored industries.
|
|
|
|
Biden, Senate Press Relief Package Without Pay Boost
|
|
President Biden and Democratic allies worked to iron out differences over the coronavirus relief package they hope to push through the Senate, despite left-wing frustrations over the exclusion of a minimum-wage increase.
|
|
|
|
Millions of Tenants Fall Further Behind on Rent
|
|
Tenants behind on their rent are still waiting for $25 billion in assistance Congress appropriated in December, as millions of households and landlords fall deeper into debt and many states still work on how to distribute money.
|
|
|
|
Financial Regulation Roundup
|
|
|
New York Attorney General Warns on Cryptocurrencies
|
|
New York Attorney General Letitia James warned investors to use “extreme caution” when buying cryptocurrencies and to watch out for scams following a recent run-up in bitcoin’s price.
|
|
|
Greensill Faces Possible Insolvency After Credit Suisse Suspends Investment Funds
|
|
Specialty finance firm Greensill Capital headed toward a rapid unraveling after Credit Suisse suspended $10 billion of investment funds that fueled the SoftBank Group-backed startup.
|
|
|
Ant Group Boss Tries to Quell Employee Discontent With Promise of Eventual IPO
|
|
Facing discontent among employees, Ant Group Co.’s leader said the Chinese financial-technology giant would eventually go public and that the company would look for ways to help workers monetize some of their shares.
|
|
|
Hong Kong’s Hang Seng Index Gets a Facelift
|
|
The flagship stock index, a key gauge of Hong Kong’s $6 trillion-plus stock market, is getting a major overhaul that will expand the number of companies it covers and give more sway to fast-growing technology stocks.
|
|
|
|
|
8:40 a.m.: European Central Bank’s Panetta gives speech at webinar on monetary policy and the pandemic organized by Bocconi University
1 p.m.: Fed’s Brainard speaks on economy and monetary policy at Council on Foreign Relations virtual meeting
2 p.m.: San Francisco Fed’s Daly speaks virtually to Economic Club of New York
|
|
|
Time N/A: National Bank of Poland releases policy statement
12:00 a.m.: European Central Bank’s Panetta gives opening remarks at ECB, Deutsche Bundesbank and Chicago Fed conference on central counterparty clearinghouse risk management
10 a.m.: European Central Bank’s de Guindos speaks at webinar on interplay of monetary and fiscal policy and structural reforms in Europe organized by Berenberg Bank
11 a.m.: Bank of England’s Tenreyro speaks on negative rates at webinar organized by International Monetary Fund and Institute for Monetary and Financial Stability at University of Frankfurt
12 p.m.: Atlanta Fed’s Bostic speaks on how inclusion powers the economy at virtual event
1 p.m.: Chicago Fed’s Evans speaks on economy and monetary policy at CFA Society Chicago virtual event
1:30 p.m.: European Central Bank’s Schnabel speaks on online panel on central banking and climate change organized by Cleveland Fed
2 p.m.: Federal Reserve releases beige book report on U.S. economic conditions
|
|
|
Paper Flags Challenges to Making Financial System Greener
|
|
As the Federal Reserve turns toward bank oversight work aimed at reducing climate change risk, a new paper published by the National Bureau of Economic Research says that some of the companies most valued in asset markets are the worst polluters. “We find a widespread carbon premium—higher stock returns for companies with higher levels of carbon emissions (and higher annual changes)—in all sectors over three continents, Asia, Europe, and North America,” write Patrick Bolton and Marcin Kacperczyk. That suggests challenges in transitioning away from activities that exacerbate climate change, the paper says, adding that “raising investor awareness about climate change amplifies the level of transition
risk.”
—Michael S. Derby
|
|
|
China Manufacturing Stumbles as U.S. Takes Off
|
|
If China’s export orders don’t recover in March and April, that could signal the nation’s economy is cooling more quickly than many anticipated, Nathaniel Taplin and Justin Lahart write.
|
|
|
|
-
U.S. manufacturers grew in February at their fastest pace since the onset of the pandemic and are increasingly optimistic about the economy, the Institute for Supply Management said, noting its manufacturing index climbed to a two-year high of 60.8% last month from 58.7% in January. (Dow Jones Newswires)
-
The prices index of the U.S. ISM manufacturing survey increased to 86 in February, the highest reading since May 2008, according to data from ISM. (DJN)
-
U.S. construction spending increased 1.7% in January from the previous month, to a seasonally adjusted annual rate of $1.497 trillion, after an upwardly revised 1.1% gain in December, the Commerce Department said. (DJN)
-
Canada’s current-account deficit in the fourth quarter narrowed to a seasonally adjusted 7.26 billion Canadian dollars, or the equivalent of $5.70 billion, Statistics Canada said Monday. (DJN)
-
The Business Council of Canada, a group representing blue-chip CEOs, warned Finance Minister Chrystia Freeland about using the 2021 budget plan for wealth redistribution, saying the plan’s focus should be on rebuilding economic capacity lost during the pandemic. (DJN)
-
Brazil’s trade balance moved to a surplus of $1.2 billion in February as exports rose and imports declined, after a deficit of $1.1 billion in January, the economy ministry said Monday. (DJN)
|
|
|
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
|
|