|
Daly Says Fed Can't Ignore Climate Change, as Brainard Says Issue May Have Implications for Neutral Rate
|
|
|
|
|
|
Good day. San Francisco Fed President Mary Daly and Fed governor Lael Brainard stressed the need for the U.S. central bank to consider climate change when evaluating the economic outlook, as Ms. Daly's bank hosted a conference on the issue Friday. Also last week, Atlanta Fed chief Raphael Bostic discussed how his district is on the front lines of dealing with climate change.
Now on to today’s news and analysis.
|
|
|
Officials Say Fed Can't Ignore Climate Impacts on Economy, Policy
|
|
|
Mary Daly, president of the Federal Reserve Bank of San Francisco. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
|
|
|
Fed officials increasingly believe climate-change issues are factors the U.S. central bank must consider when weighing the outlook for the economy and watching over banks. “Climate change is an economic issue we can’t afford to ignore,” San Francisco Fed President Mary Daly said in a speech Friday at the start of a conference at her bank about the issue.
|
|
Fed governor Lael Brainard said at the conference the Fed is ramping up its efforts to understand the implications of climate change for monetary policy and noted that it may have consequences for interest rates.
|
|
|
Atlanta Fed President Raphael Bostic, meanwhile, talked about his approach to climate adaptation and mitigation with reporters at a separate event in New York. He also discussed why he would have dissented from the Fed's latest rate cut if he had an FOMC vote and laid out a case for keeping rates steady well into the future. Here is a transcript.
|
|
“As policies are implemented to mitigate climate change, they will affect prices, productivity, employment and output in ways that could have implications for monetary policy.”
|
— Fed governor Lael Brainard
|
|
|
|
|
|
Other Developments Around the World
|
|
|
Canada Job Creation Stalls in October
|
|
Job creation in Canada unexpectedly stalled in October after two straight strong showings, as declines in the country’s manufacturing and construction sectors were offset by hiring in the government sector.
|
|
|
Bank of Canada Could Lean Toward Cut Based on Jobs Report
|
|
Underlying elements in Canadian jobs data for October could push the Bank of Canada closer to a rate cut, says Bank of Nova Scotia economist Derek Holt. Canada shed nearly 2,000 jobs, although the unemployment rate was unchanged at 5.5% and average hourly wages surged from a year ago. Mr. Holt warns a string of strong wage gains is powered by previous-year base effects. The current trend, he reckons, isn't sustainable. "It is important to look at evidence at the margin versus relying on the year-ago wage growth," he says. He adds that hours worked are "tracking very softly," which could push GDP growth lower than the BOC forecast. (Dow Jones Newswires)
|
|
India’s Divided Economy—and a Manufacturing Slump—Slow Its Rise
|
|
A critical goal for India has been to enlarge the more-modern economy and shrink the informal one, but now progress is stalling. A deepening economic slump that started in the informal economy is hitting the more-developed parts hardest. Whether India manages the economic transition matters far beyond its shores. It is projected to become the world’s most populous country in 2024 and by then will also likely be the fifth-largest economy.
|
|
|
Financial Regulation Roundup
|
|
|
WeWork Was Wrestling With SEC Just Before It Scrapped IPO
|
|
Weeks before WeWork expected its stock to start trading, the startup was still wrangling with the Securities and Exchange Commission over a controversial financial metric and other concerns about its planned IPO.
|
|
|
JPMorgan Deal Shows Possible Path to Smaller Fannie and Freddie
|
|
A move by JPMorgan Chase to shed risk on some of its mortgage loans is stirring hope that the tactic could help reduce the government’s role in the $11 trillion mortgage market.
|
|
|
He Thought His Phone Was Secure; Then He Lost Millions to Hackers
|
|
Security researchers agree that for most people, adding text-message authentication is a big step up from only using a password. But that can leave you open to a harmful, relatively new attack called SIM swapping.
|
|
Jury Finds Former Alstom Executive Guilty of Foreign Bribery
|
|
A jury found a former Alstom executive guilty of helping orchestrate a bribery scheme in Indonesia, a verdict that reinforces the reach of a U.S. law prohibiting bribes to foreign government officials.
|
|
|
Executives Convicted in Long-Running Italian Banking Scandal
|
|
A Milan court convicted 13 former and current executives of Banca Monte dei Paschi di Siena, Deutsche Bank and Nomura International of a number financial crimes, in a long-running judicial saga tied to losses at the Italian bank.
|
|
|
|
|
10 a.m.: University of Michigan releases preliminary November U.S. consumer sentiment
11:45 a.m.: San Francisco Fed’s Daly speaks at research conference on the economics of climate change at her bank
1:30 p.m.: Bank of Canada’s Beaudry speaks at his bank in Ottawa
8 p.m.: New York Fed’s Williams speaks in New York
8:35 p.m.: Fed’s Brainard speaks at San Francisco Fed research conference on the economics of climate change
|
|
|
The Co-Movement of Bank Payments and Reserves
|
|
Researchers find a striking correlation between banks’ Fedwire transfers—a method banks use to wire money to each other—and their reserves. Thomas Eisenbach, Kyra Frye and Helene Hall explain the co-movement of reserves and transfers in a New York Fed Liberty Street Economics post. A main driver is the interest on reserves, they write. “All depository institutions with accounts at the Federal Reserve receive interest on their account holdings. However, since there are many financial market participants who do not have access to interest on reserves, several money market interest rates, including the federal-funds rate, have remained below IOR for most of the period since
2008.” They find this “provides an opportunity for banks to borrow from other financial market participants at a rate below IOR, hold the funds as reserves, and earn the interest rate difference. Each of these loans leads to two payments on Fedwire—the transfer of the initial loan amount to the bank and, later, the repayment from the bank. Further, the aggregate scope of this ‘IOR arbitrage’ activity...is proportional to the aggregate level of reserves. IOR arbitrage activity is therefore a prime candidate for driving the co-movement between payments and reserves.”
|
|
|
Consumers Could Spread Some Holiday Cheer
|
|
"Americans aren’t as chipper heading into the holidays as they were last year. That may not mean they are unwilling to spend, though," writes Justin Lahart of the Journal. He says recent consumer sentiment readings haven't signaled that "spending is going into hibernation, but they do show that moods have cooled." However, "when it comes to thinking about the holiday shopping season, it is probably better to pay attention to how people are doing rather than how they are feeling. And they are doing pretty well." Mr. Lahart points to gains in the labor market and wages, lower gas prices, and a higher saving rate as reasons to be optimistic, concluding: "However people think they feel,
here’s guessing the spirit is about to move them to spend."
|
|
|
|
-
U.S. consumer confidence ticked slightly higher in early November, although a gauge of current economic conditions trended downward, according to the University of Michigan's preliminary index of November consumer sentiment. (Dow Jones Newswires)
-
Oman’s oil minister said Monday that current production curbs in OPEC are likely to be extended until the end of 2020, but won’t be deepened in the short term.
-
A barometer of economic expectations is encouraging investors to take risks again. Yields on longer-term U.S. government debt climbed above those on shorter-term Treasurys in recent weeks—a sign investors expect no immediate pullback in growth and inflation.
-
The U.K. economy returned to growth in the third quarter, expanding by 0.3% after shrinking in the second, banishing fears of recession as the country heads toward a general election. (Dow Jones Newswires)
-
Beaten-up assets from commodities to emerging-market stocks are rallying, reflecting a brightening outlook for the global economy.
-
Financial stress in the Farm Belt is mounting, pushing growers to take on high-interest loans outside traditional banks to stay in business.
-
Embattled Bolivian President Evo Morales fled the capital La Paz and resigned after the head of the armed forces, Gen. Williams Kaliman, suggested that he leave power in the wake of an Oct. 20 presidential vote that electoral monitors said was marred by fraud.
|
|
|
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
|
|