Good day. New York Fed President John Williams stressed that further fiscal support from the government is important to keep the economic recovery going. But he added that news of effective coronavirus vaccines gives him hope for the economic outlook. On that topic, investors may expect the vaccines to give the recovery a boost, but they aren't betting that will cause a surge in inflation. Outside the U.S., the Turkish central bank hiked its key interest rate after a shake-up in Turkey's government signaled a change in approach on economic policy. Meanwhile, the central banks of the Philippines and Indonesia both cut rates. 

Now on to today’s news and analysis.

New York Fed President John Williams said if elected leaders don’t deliver new aid for the economy, the path of the recovery likely will be slower than if help were provided. Fiscal aid has “been a critical part of why the economy has recovered as well as it has,” Mr. Williams said. “When that money runs out and some of these programs expire, I think that cuts off some of the support that small businesses and households were getting, and that’s going to slow the economy over coming months.”

Optimism about Covid-19 vaccines is raising hopes the economy will recover faster than expected. Investors are betting a rebound won’t come with a bout of inflation. Investors began exiting 10-year Treasury inflation-protected securities, or TIPS, after the U.S. election, as hopes for a large fiscal stimulus package began receding and worries about inflation abated.

In an environment where some political figures have tried to portray reporters as some sort of enemy, at least one high-ranking Federal Reserve official feels quite differently about the journalists he deals with. Read More.

• China Shifted Some Borrowing to Companies as It Fought the Pandemic

A Bank of England digital currency would potentially ease constraints related to the zero lower bound on interest rates, the central bank's chief economist, Andy Haldane, said. One of the most pressing issues for policy makers is the zero lower bound, which arises from a "technological constraint" on the ability to pay or receive interest on physical cash, Mr. Haldane said at a conference. "A widely used digital currency could mitigate, if not eliminate, that technological constraint by enabling interest rates to be levied on retail monetary assets." (Dow Jones Newswires)

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

3:15 a.m.: European Central Bank’s Lagarde gives speech at online Frankfurt European Banking Congress
4:45 a.m.: European Central Bank’s de Guindos speaks on panel at online forum on finance and the economy

Prospects of a double-dip recession are rising but have yet to become an inevitability, TD Securities says. “The data suggest significant slowing in growth, rather than a double-dip, which is in contrast to the pattern in Europe,” the bank says. “However, momentum looks downward, and we expect monthly indicators to show at least modest contraction over coming months,” with flat fourth-quarter GDP and a 2% decline likely for the first quarter. TD Securities expects to see some additional fiscal stimulus and says “double-dip fears should help the case for more Fed easing; we expect officials to make QE more accommodative by lengthening the average maturity of purchases, probably in December.” JPMorgan also sees the Fed making that move with asset buying as of the December Federal Open Market Committee meeting. (Michael S. Derby)

• New U.S. unemployment claims likely held relatively steady at a seasonally adjusted 710,000 last week, economists surveyed by WSJ forecast. 
• U.S. housing starts increased by 4.9% in October compared with September, to a seasonally adjusted annual rate of 1.53 million, exceeding a the prediction of 2.5% growth of economists surveyed by WSJ. (Dow Jones Newswires) 
• The coronavirus destroyed jobs. It also created entrepreneurs.
• China’s appetite for imported meat is starting to wane, as domestic pork prices fall and consumer worries grow about the coronavirus lingering on food.
• Backers of a major expansion to the child tax credit are increasingly optimistic about the anti-poverty proposal’s chances in the next Congress, no matter which party controls the Senate.

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

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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

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