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Powell Speaks Today at WSJ's Future of Everything Festival; Bond Market Volatility Doesn't Trouble New York Fed's Williams
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Good day. Jerome Powell is due to speak today at The Wall Street Journal’s Future of Everything Festival. While the Federal Reserve chairman has outlined his hope that the central bank can curtail high inflation without spurring a large rise in unemployment, he has said pulling that off will be difficult. WSJ subscribers can watch the festival online free of charge — see below for more details. Meanwhile, New York Fed President John Williams said yesterday that the churn in government bonds in recent weeks is more or less in line with what you would expect given general uncertainty over the economic outlook and the shift in Fed policy. “I’m not seeing signs of market dysfunction in the Treasury market,” he added.
Now on to today’s news and analysis.
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Powell to Take WSJ Questions on Inflation and Economic Outlook
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Federal Reserve Chairman Jerome Powell is scheduled to speak at The Wall Street Journal’s Future of Everything Festival. PHOTO: LIU JIE/ZUMA PRESS
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Federal Reserve Chairman Jerome Powell is set to take questions Tuesday on the U.S. economic outlook and its implications for the labor market, inflation and central-bank policies.
Mr. Powell, who was confirmed to a second four-year term last week by the Senate with a large bipartisan majority, is scheduled to speak at The Wall Street Journal’s Future of Everything Festival for a 35-minute interview beginning at 2 p.m. Eastern time. The appearance comes as the central bank is raising interest rates as part of its most aggressive effort in decades to curb upward price pressures.
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Fed’s Williams Says Bond Market Functioning Well in Uncertain Times
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Federal Reserve Bank of New York leader John Williams said bond market volatility doesn’t look problematic to him, in comments that reiterated his view that the Fed must forcefully tighten monetary policy to contain inflation.
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Powell at the Future of Everything Festival
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After a two-year break from in-person events, the Future of Everything Festival is back this week in New York and online. Listen to interviews with experts, CEOs and policy makers, including Fed Chairman Jerome Powell, who will discuss the impact of rising interest rates on the U.S. economy at 2 p.m. ET today on wsj.com. WSJ subscribers can watch the festival online for free by registering here.
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Economists Expect U.S. Retail Sales Grew in April
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U.S. shoppers increased retail spending in April for the fourth straight month, economists say, as inflation held close to its highest level in four decades.
Economists surveyed by The Wall Street Journal estimated that retail sales—a measure of spending at stores, online and in restaurants—rose a seasonally adjusted 1% in April from the prior month. Excluding spending on vehicles, economists think that sales rose 0.4% from March.
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U.S. and EU Boost Trade Ties to Remedy Supply Shortages
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Senior U.S. and European Union officials agreed to expand cooperation on supply chains for critical technologies, they said at a high-level gathering about shared concerns surrounding high-tech international commerce.
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Key Developments Around the World
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China’s Economic Distress Deepens as Lockdowns Drag On
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Consumer spending and factory output tumbled in April, while growth in infrastructure investment—which Beijing has been counting on to prop up growth this year—slowed sharply, China’s National Bureau of Statistics reported.
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U.N. Seeks to Ease Russian Blockade of Ukraine Grain Shipping
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United Nations Secretary-General António Guterres is pursuing a high-stakes deal with Russia, Turkey and other nations to open up Ukrainian food exports to world markets and stave off a potential global food shortage.
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Financial Regulation Roundup
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Judge Strikes Down California Law Mandating Women on Boards
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A state judge struck down a California law requiring companies in the state put female directors on their boards, the second legal setback in as many months for efforts to mandate board diversity.
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White House Pushes Back Against Jeff Bezos’ Biden Inflation Criticism
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The White House on Monday pushed back against Amazon.com Inc. founder Jeff Bezos after he criticized the Biden administration in two tweets over the weekend for tying the corporate tax structure to rising inflation.
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SEC Official Decries Delay Tactics Used by Some Defense Lawyers
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A senior Securities and Exchange Commission official called on lawyers to work more cooperatively with the agency, noting recent incidents in which defense counsel for public companies used delay tactics to stymie probes.
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Fight Brews Over Cost of SEC Climate-Change Rules
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The cost of proposed rules on climate disclosure is emerging as a key battleground as businesses and politicians fight over a plan to require companies to tally their environmental impact and the risks they face from climate change.
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8 a.m.: St. Louis Fed’s Bullard speaks at Energy Infrastructure Council Investor Conference
8:30 a.m.: U.S. retail sales for April
9:15 a.m.: U.S. industrial production for April; Philadelphia Fed’s Harker speaks to Stern Future Healthcare Workforce Summit
10 a.m.: NAHB/Wells Fargo Housing Market Index for May
1 p.m.: ECB’s Lagarde speaks at event organized by Soroptimist International - Club Darmstadt in Darmstadt, Germany
2 p.m.: Federal Reserve’s Powell speaks at Wall Street Journal Future of Everything Festival
2:30 p.m.: Cleveland Fed’s Mester speaks at Cleveland Fed Conversations on Central Banking
6:45 p.m.: Chicago Fed’s Evans speaks to Money Marketeers
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Time N/A: ECB’s Lagarde and Panetta at G7 finance ministers and Central bank governors meeting
4 a.m.: ECB’s McCaul at 2nd edition of Sustainable Finance Summit organized by Finance Montreal
8:30 a.m.: Canada consumer-price index for April; U.S. housing starts for April
10 a.m.: ECB’s Enria speaks at Associazione Bancaria Italiana - Comitato Esecutivo in Rome
4 p.m.: Philadelphia Fed’s Harker speaks at Mid-Size Bank Coalition of America CEO Talk
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Work From Home Surge a Big Reason for Rising Home Prices
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The work-from-home revolution that followed the onset of the coronavirus pandemic two years ago proved to be a major driver of home prices, new research says. “The shift to remote work explains over one half of the 23.8 percent national house price increase” seen since 2019, John Mondragon of the Federal Reserve Bank of San Francisco and Johannes Wieland of the University of California, San Diego write in a paper published on Monday by the National Bureau of Economic Research. They add that, “Our results imply a fundamentals-based explanation for the recent increases in housing costs over speculation or financial factors, and that the evolution of remote work is likely
to have large effects on the future path of house prices and inflation.”
—Michael S. Derby
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An Earnings Recession Looms
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An earnings recession wouldn’t be as bad as an actual recession, but for investors it wouldn’t be much fun, especially if the Federal Reserve keeps raising rates, so the stock market might not be a happy place, Justin Lahart writes.
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Factory activity in New York state declined in May, reversing a rebound in April, led by a contraction in the regional demand for goods, according to data from the Federal Reserve Bank of New York. Its Empire State Manufacturing Survey’s general business conditions index decreased to minus 11.6 from 24.6 in April, the second negative reading in the past three months and well below the 16.5 consensus forecast of economists polled by The Wall Street Journal. (Dow Jones Newswires)
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Existing home sales in Canada dropped in April to a roughly 20-month low, as interest rate rises by the Bank of Canada began to squeeze the residential real-estate market. The Canadian Real Estate Association said sales of existing homes fell 12.6% from March. On an adjusted basis, sales fell 26% from year-earlier levels. (DJN)
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Canadian housing starts rose in April from March as construction of condominium units picked up steam. Housing starts for April came in at a seasonally adjusted annualized rate of 267,330 units, up 8% from the previous month, Canada Mortgage and Housing Corp. said. (DJN)
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Reserve Bank of Australia minutes of the May 3 policy meeting show the central bank appeared more open to a 40 bps tightening move than a 15 bps move. In that sense, the minutes seem hawkish, says Andrew Ticehurst, chief economist at Nomura. The option of delivering a normal 25bp increase in the midst of a heated election campaign was likely the easiest, he adds. (DJN)
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Australian regional house prices boomed through the worst of the pandemic as interest rates fell, employment remained strong and changes in work practices prompted people to depart major cities. But CoreLogic data shows that the pace of gains has begun to slow as the pandemic eases and interest rates have started to rise. (DJN)
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The Reserve Bank of New Zealand is likely to raise its cash rate by another 50 bps at its meeting next week, ANZ's New Zealand chief economist, Sharon Zollner, says in a report. A 50bp increase on May 25 is fully priced by markets after being "well set up" by the April meeting, at which RBNZ increased the cash rate to 1.5% from 1.0%. (DJN)
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The eurozone posted a trade deficit for the fifth straight month in March as the surge in energy prices amid the war in Ukraine caused a rise in the value of imports, data from the European Union’s statistics agency showed. The trade deficit in goods stood at 16.4 billion euros ($17.08 billion) in March, compared with a EUR22.5 billion surplus a year earlier, Eurostat said, noting imports rose 35.4% on year, compared with a 14% on-year rise in exports. (DJN)
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This newsletter is compiled by James Christie in San Francisco.
Send us your tips, suggestions and feedback. Write to:
James Christie, Jon Hilsenrath, Michael S. Derby, Nell Henderson, Nick Timiraos, Paul Hannon, Kim Mackrael, Tom Fairless, Megumi Fujikawa, Perry Cleveland-Peck, Michael Maloney, Paul Kiernan, James Glynn
Follow us on Twitter:
@WSJCentralBanks, @NHendersonWSJ, @michaelsderby, @NickTimiraos, @PaulHannon29, @kimmackrael, @TomFairless, @megumifujikawa, @pkwsj, @JamesGlynnWSJ, @cleveland_peck
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