Good day. Richmond Fed leader Thomas Barkin appears to be among those officials questioning the wisdom of rate cuts. He said Tuesday he is unsure if lowering rates helps much when uncertainty is the main thing holding the economy back. The Fed had another active day adding liquidity to financial markets. Meanwhile, San Francisco Fed research takes stock of productivity trends and market concentration. 

Now on to today’s news and analysis.

Richmond Fed President Thomas Barkin said an uncertain economic and political environment may be making central bank monetary policy choices less effective right now.

Uncertainty can “dampen the impact we might expect from any policy stance,” Mr. Barkin said in the text of a speech to be delivered in Baltimore on Tuesday. “Accommodative monetary policy stimulates the economy. But in the presence of high uncertainty—nearly all of which is generated by forces extraneous to what the FOMC does—we risk not getting the same ‘bang for the buck.’”

The New York Federal Reserve added $102.14 billion in temporary liquidity, and it also added permanent liquidity with more Treasury bill purchases. The Fed’s intervention came via $71.05 billion in overnight repurchase agreements and $31.1 billion in 14-day repos. Both operations saw eligible banks offer fewer Treasury and mortgage securities than the Fed was willing to take.

China sold bonds in euros for the first time in 15 years, a move that could encourage Chinese companies to follow suit, helping reduce their reliance on dollar funding. On Tuesday, China issued €4 billion ($4.45 billion) of bonds due in seven, 12 and 20 years. The deal was split between €2 billion of seven-year debt with a yield of 0.197%, €1 billion of 12-bonds yielding 0.618%, and another €1 billion of 20-year bonds that offer a yield of 1.078%, bankers working on the deal said. 

Romania's central bank on Wednesday kept its benchmark interest rate on hold at 2.5%, according to the Mediafax news agency. The central bank board also decided to maintain rates for deposit and lending facilities unchanged at 1.5% and 3.5%, respectively. (Dow Jones Newswires) 

Canada's weak September trade report and worries about a strong currency make a Bank of Canada rate cut appear more likely, Bank of Nova Scotia economist Derek Holt says. The trade report may reduce the central bank's tolerance for appreciation of the Canadian dollar, which tends to weigh on exports. The Bank of Canada's decision to hold its rates steady while the Federal Reserve resulted in "tightening conditions for exporters at an inopportune moment," Mr. Holt says. (Dow Jones Newswires)

New Zealand's ASB Bank expects a 25 basis-point rate cut at next week's meeting of the Reserve Bank of New Zealand, and a further cut in February, after unemployment data showed a small increase to 4.2% in the third quarter. ASB thinks unemployment in the country will continue to rise and peak at around 4.5% late next year. "This, combined with a 'neutral' unemployment rate of around 4%, means the Reserve Bank of New Zealand has more work to do to ensure employment remains around its 'maximum sustainable' level," ASB says. (Dow Jones Newswires)

The California Department of Insurance said Tuesday that California Insurance Co., one of the insurance companies owned by workers’ compensation insurer Applied Underwriters, has been placed under state conservatorship. The regulator said the move came “in response to the company’s willful violation of state law and established pattern of continually flouting California’s regulatory processes.”

8 a.m. Chicago Fed’s Evans speaks at Council on Foreign Relations in New York; European Central Bank’s Enria speaks on panel at ECB banking supervision forum in Frankfurt
9:30 a.m. New York Fed’s Williams speaks at The Wall Street Journal “Future of the Workforce” event in New York
12:40 p.m. Dallas Fed’s Kaplan speaks in Dallas
3:15 p.m. Philadelphia Fed’s Harker speaks on rethinking workforce investments in Philadelphia
6:30 p.m. New York Fed’s Williams speaks at global risk forum at his bank

7 a.m. Bank of England releases policy statement, minutes, inflation report
1:05 p.m. Fed’s Kaplan speaks in Dallas
3 p.m. Federal Reserve releases September U.S. consumer-credit data
5:30 p.m. Atlanta Fed’s Bostic speaks on monetary policy in N.Y.

Productivity gives, and sometimes, it takes. New research from the Federal Reserve Bank of San Francisco says a surge of computer-fueled productivity up until 2005 allowed large businesses to expand and concentrate industries. But after 2005, competition thinned margins and cut into investment in innovation, which in turn lowered productivity. “On the one hand, curbing the expansions of large firms can be detrimental to growth in the short run because large firms may be able to provide goods and services at a lower cost. However, curbing their expansions may also sustain profit margins that provide incentives for innovation and stimulate long-run growth,” write authors Peter J. Klenow, Huiyu Li and Theodore Naff.

"Asia’s Regional Comprehensive Economic Partnership, billed as a mammoth that could be China’s alternative to the Trans-Pacific Partnership, is shaping up to look more like a mouse," Mike Bird writes for Heard on the Street. "It became even less impressive on Monday as the second-biggest economy involved, India, bailed out. Even the modest tariff-related liberalizations at stake were too much for policy makers in Delhi."

Ten countries involved in the RCEP already have very low tariff rates as members of the Association of Southeast Asian Nations. Some are also in a trade partnership with Australia, New Zealand and Japan, and there are also many bilateral and supplementary agreements. India, meanwhile, has higher average tariffs than the other big countries involved.

"Since the RCEP won’t meaningfully expand trade cooperation for nations that already have low bilateral tariff rates and now no longer includes the nation with the most scope to reduce tariffs, it will have a limited impact," Mr. Bird concludes. "Adjust your expectations downward."

• U.S. imports of goods such as cellphones, toys and apparel fell sharply in September, the latest sign that slowing global growth may be spilling into the domestic economy.
• Canada’s trade deficit of goods narrowed in September as imports and exports declined.
• The eurozone remained "close to stagnation" in October, according to IHS Markit, whose Composite Purchasing Managers Index rose to 50.6 from 50.1 in September. (Dow Jones Newswires) 
• Saudi Arabia is set to push the Organization of the Petroleum Exporting Countries to make deeper oil-production cuts by pressuring laggard members ahead of its state-run oil company’s massive initial public offering.
• OPEC said it expects its oil supplies to fall continuously over the next five years, suggesting the cartel may need to keep cutting output to stabilize prices amid a bigger-than-expected U.S. production boom and sluggish oil demand.
• German manufacturing orders rose by 1.6% on the month in September, outpacing economists' forecast for a 0.1% increase in The Wall Street Journal's survey. (Dow Jones Newswires) 
• The price of Western Canadian Select crude oil is reeling as Canadian oil producers struggle with the continuing shutdown of TC Energy’s Keystone pipeline. 

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