|
Powell Says Fed Committed to Improving Diversity, Culture; Green Groups Want Fed Out of Energy Bonds; Record GDP Declines in U.S., Europe
|
|
|
|
|
|
Good day. Jerome Powell said the Federal Reserve is committed to improving its workplace diversity and culture after a former staff economist wrote a blog post arguing that there is a toxic culture in the economics profession, including at the Fed. Meanwhile, environmental groups are calling on the Fed to stop buying energy bonds, saying supporting the sector exposes the central bank to losses and contributes to climate change. And the U.S. economy contracted at a record rate last quarter, while activity in the eurozone declined even more. U.S. consumer spending data is in focus this morning.
Now on to today’s news and analysis.
|
|
|
Powell Says Fed Committed to Improving Workplace Diversity, Culture
|
|
|
Jerome Powell says the Fed needs to be a place ‘where people can disagree but must do so respectfully.’ PHOTO: ANDREW HARRER/BLOOMBERG NEWS
|
|
|
Fed Chairman Jerome Powell said the central bank was deeply committed to fostering a diverse and inclusive work environment after a former staff economist published a blog post critiquing the treatment of women and minority economists in academic and policy-making circles. “There’s been a lot of pain and injustice and unfair treatment that women have experienced in the workplace, not just among economists, but among economists and at the Fed,” Mr. Powell said at a news conference Wednesday. Mr. Powell said he hadn’t read the post by Claudia Sahm, a Ph.D. economist who now works for the Washington Center for Equitable Growth, a liberal think tank.
|
|
Environmental Groups Urge Fed to End Energy Bond Buying
|
|
Environmental groups are pressing the Federal Reserve to end its purchases of energy sector corporate bonds as part of its effort to support financial markets.
|
|
|
|
U.S. Economy Posts Record Slump; Jobless Claims Up to 1.43 Million
|
|
The Commerce Department said U.S. gross domestic product fell at a seasonally and inflation adjusted 32.9% annual rate in the second quarter, or a 9.5% drop compared with the prior quarter. The figures were the steepest declines in more than 70 years of record-keeping. Also, the number of workers applying for initial unemployment benefits rose for the second straight week—by 12,000 to 1.43 million in the week ended July 25.
|
|
|
|
|
Lawmakers Spar on Unemployment Aid, Coronavirus Package
|
|
Dueling partisan efforts at responding to the coronavirus pandemic were both blocked in the Senate Thursday, as congressional leaders remained at an impasse over the next relief package.
|
|
|
|
Key Developments Around the World
|
|
|
Eurozone Economy Contracts by Record 40%
|
|
The eurozone’s gross domestic product fell 40.3% annually in the three months through June, but the continent’s strategy of coronavirus containment coupled with aggressive stimulus is fanning hopes of a robust recovery.
|
|
|
Turkey Runs Low on Ammunition to Combat Lira’s Slide
|
|
After months of staying relatively stable because of the central bank’s intervention, the lira has fallen sharply this week. Since Monday, the currency has fallen by about 2% to trade at about 6.99 lira to the dollar, its weakest level since May 12 and approaching its record low.
|
|
|
China-Backed Infrastructure Bank Seeks to Win Over Countries
|
|
The Asian Infrastructure Investment Bank is placing China at the center of its own global lending effort and casting itself as a champion of multilateralism even as China’s diplomats stake out a more assertive position on Beijing’s overseas interests.
|
|
|
Mexican Economy Suffers Record Drop in Second Quarter
|
|
Gross domestic product, a broad measure of output in goods and services, contracted 17.3% in seasonally adjusted terms from the first quarter, and was down 18.9% from the second quarter of 2019, the National Statistics Institute said Thursday.
|
|
|
|
Financial Regulation Roundup
|
|
|
Fannie, Freddie Earnings Improve Amid Signs of Housing Recovery
|
|
Government-controlled mortgage giants Fannie Mae and Freddie Mac said their earnings improved in the second quarter, adding to evidence of a rebound in the U.S. housing market. Sales of previously owned homes rose 20.7% in June over the prior month.
|
|
|
Affirm Prepares IPO That Could Value Fintech Firm at Up to $10 Billion
|
|
Point-of-sale lender Affirm Inc. was valued at $2.9 billion in April 2019, but its target has risen since then—to more than $5 billion and possibly as high as $10 billion. Depending on market conditions and how quickly the company decides to move, its shares could begin trading this year.
|
|
|
British Banks Have Worries Beyond Coronavirus
|
|
The coronavirus pandemic pummeled British banks in the second quarter as many companies struggled to reopen and individuals reduced spending and deferred payments on loans. The industry is also grappling with Brexit and the increasing likelihood of negative interest rates as the Bank of England has shifted its tone in recent months toward possibly using negative rates, which can squeeze bank profitability.
|
|
|
|
|
8:30 a.m.: U.S. Commerce Department releases June personal income and outlays
10 a.m.: University of Michigan releases final July U.S. consumer sentiment
|
|
|
12:30 a.m.: Reserve Bank of Australia releases policy statement
|
|
|
GDP Hole Dug Mainly by Consumers
|
|
Spending on services, the biggest expenditure category, fell an annualized 43.5%, reflecting how spending on many services categories, such as eating in a restaurant, was simply impossible for many Americans, Justin Lahart writes at The Wall Street Journal.
|
|
|
|
-
China’s official manufacturing purchasing managers index rose to 51.1 in July from 50.9 in June, beating economists’ expectations and marking the fifth consecutive month that the measure of factory activity topped the 50 mark that separates expansion from contraction.
-
The yield on the 10-year U.S. Treasury note settled at 0.540%, compared with 0.578% Wednesday and its lowest close except for one extremely volatile day in early March when the yield settled at 0.501%.
-
Eurozone consumer price inflation ticked up in July as energy prices rose, offsetting decreases in food prices. The EU's statistics agency's estimate of consumer prices was 0.4% higher in July compared with same month a year earlier, up from June's 0.3% increase. (Dow Jones Newswires)
-
The French economy contracted 13.8% during the second quarter, or 19% on an annualized basis, statistics agency Insee said. Economists polled by the Journal had forecast a 15.4% contraction. (DJN)
-
Italian GDP declined 12.4% quarter-on-quarter in the second quarter, taking the economy back to its size in the early 1990s. (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
|
|