Good day. Federal Reserve leader Jerome Powell said the economic outlook has remained favorable this year largely because the central bank quickly adjusted its policy stance and cut interest rates, following last year's rate increases. The New York Fed is close to filling two top markets jobs that have been open since June. And new Fed research found that bank branch closures have hit rural communities hard in recent years.

Now on to today’s news and analysis.

Fed Chairman Jerome Powell said the central bank cut interest rates this year in part because officials concluded the economy wasn’t as strong as anticipated when the Fed lifted rates last year. “Monetary policy is now well positioned to support a strong labor market and return inflation decisively to” the Fed’s 2% target, said Mr. Powell. “If the outlook changes materially, policy will change as well.”

A majority of U.S. counties lost bank branches in recent years, and rural communities with poorer residents or large minority populations have been particularly hard hit, according to new Federal Reserve research. A little more than half—51%—of the 3,114 counties in the U.S. saw net declines in the number of bank branches between 2012 and 2017, said the report, a result of industry consolidation in the wake of the financial crisis.

The New York Fed added $93.5 billion in temporary liquidity to the financial system Monday. The intervention came in two parts. In overnight repurchase agreements, or repos, eligible banks offered for $55.5 billion in Treasurys and $13 billion in mortgage securities, and the central bank took all that was offered. The second transaction was from a $25 billion 42-day repo operation in the form of Treasury and mortgage securities, less than what was offered.

In a report to assess risks in the nation's financial system, the People's Bank of China said it would resolve risks to some financial institutions in a gradual manner. It said it would in the following year focus on resolving risks from small and midsize financial institutions. It also said it would resolve risks in the shadow banking sector and push ahead with a deleveraging campaign with a focus on hefty debt levels in state-owned enterprises. (Dow Jones Newswires)

• RBA Deputy Gov. Says Gradual Rise in Wages Would Be Welcome

Central banks have limited ability to mitigate the negative fallout from global trade conflicts, Bank of Canada Gov. Stephen Poloz said. "There is a role for monetary policy, but it is a very narrow one," he said in an interview with the U.K.-based Central Banking publication. "Monetary policy can cushion the blow briefly, and then we will all have to take a lower standard of living." (Dow Jones Newswires)

When Chinese leader Xi Jinping touted blockchain technology in October, the price of bitcoin surged, searches for “blockchain” on one of China’s biggest search engines soared and shares of related companies jumped. A month later, the euphoria is over.

10 a.m.: U.S. Commerce Department releases September new-home sales
1 p.m.: Fed’s Brainard speaks on Fed’s strategic review in New York

3:50 a.m.: ECB’s Enria speaks on bank stress testing in Paris
4:30 a.m.: ECB’s Lane speaks at economic conference in Luxembourg
8:30 a.m.: Commerce Department releases second estimate of third-quarter GDP, October durable-goods data
10 a.m.: Commerce Department releases October personal income, outlays
2 p.m.: Fed releases beige book report on U.S. economic conditions

"China-U.S. tensions may not matter for global trade as much as investors seem to think," writes WSJ's Nathaniel Taplin. "Talk of a Sino-American trade war has dominated newspaper headlines, market reports and corporate boardroom discussions for the past 18 months. But, in some ways, what the escalating tariffs have shown most clearly is how difficult it is for one country—even one as central to the global economy as the U.S.—to reorder global trade on its own." He adds: "Whatever happens with the purported deal between Chinese President Xi Jinping and [U.S. President] Trump, it seems likely Sino-U.S. trade tensions will persist. What determines the fate of China’s trading empire may ultimately depend less on that, though, than on the policy choices it makes—or fails to make—to deal with its own structural economic problems. The same, most likely, applies to America as well."

• China’s Commerce Ministry said Chinese and U.S. officials reached consensus on resolving relevant problems in a phone call on Tuesday and agreed to maintain communications on remaining issues related to the phase-one deal.
• House Speaker Nancy Pelosi, facing criticism from Republicans for not embracing a renegotiated trade agreement with Canada and Mexico, said Monday she is awaiting final written commitments from the Trump administration.
• Mexico’s economic activity was flat in the third quarter following three quarters of negative output, putting the economy on track for its worst yearly performance in a decade.
• Mexico signed a new two-year flexible credit arrangement with the IMF for around $61 billion, down from $74 billion previously. "The lower level of access is appropriate and consistent with the authorities' strategy to gradually phase out Mexico's use of the facility," the IMF said. (Dow Jones Newswires)
• Brazil's current-account deficit widened in October to $7.9 billion, compared with a $3.5 billion deficit reported in September, as the country's yearly trade surplus shrunk, the central bank said Monday. (Dow Jones Newswires)

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