Good day. President Biden’s selection of the next Federal Reserve chair is likely to be a choice between keeping the current chief, who enjoys broad support in markets and among lawmakers from both parties, or replacing him with one of his well-regarded colleagues. Meanwhile, the monthslong decline in bond yields exemplifies investors’ belief that inflation likely isn’t the biggest problem facing the U.S. and global economy. And the recovery in the U.S. labor market has resulted in workers finding themselves besieged by unlikely suitors, including companies that never bothered to reply to their job applications years ago.

Now on to today’s news and analysis.

Fed Chairman Jerome Powell, whose term expires in February, is viewed by some inside and many outside the administration as likely to continue in the role. But if Mr. Biden decides he would prefer his own pick, rather than the Republican chosen by President Trump, Fed governor Lael Brainard is the most likely candidate to succeed him.

“The president will engage with his senior economic team in a careful and thoughtful process to appoint a Federal Reserve chair in a timely manner,” a White House official said.

The White House declined to comment on specific names that may be under consideration both for Fed chair and other vacancies on the seven-member board of governors. “The president will appoint the candidates who he thinks will be the most effective in managing monetary policy,” the White House official said.

Monday’s sharp selloff in major U.S. stock indexes highlighted investors’ mounting concern that the biggest risk to markets right now is underwhelming growth, rather than the runaway price increases feared earlier in the year. At the same time, many investors think inflation readings may run hot for some period, then subside on their own or lead the Federal Reserve to raise interest rates and slow the recovery.

• Full Rankings for WSJ/Realtor.com’s Emerging Housing Markets Index

• Japanese Leader Yoshihide Suga Says Country Is Safe for Olympics

Time N/A: Bank Indonesia releases policy statement; South African Reserve Bank releases policy statement
4:30 a.m.: Bank of England’s Broadbent gives speech
7:45 a.m.: European Central Bank releases policy statement
8:30 a.m.: European Central Bank’s Lagarde holds press conference
10 a.m.: National Association of Realtors releases June U.S. existing-home sales

6:30 a.m.: Bank of Russia releases interest-rate decision and medium-term forecast

In the wake of Monday’s official ruling that the pandemic-induced recession lasted only two months last year, the forecasters at Capital Economics are offering some lessons learned about the recovery. In a note Tuesday, they wrote that those who had above-consensus recovery expectations had the better call. They also wrote that consumption patterns altered by the pandemic now appear to be returning to normal, although that is less the case on the trade front. And as for supply chain bottlenecks, Capital Economics said supply constraints “have limited output most in economies that have reopened quickly and had large amounts of stimulus. Supply constraints seem to have been behind recent disappointing data from both China and the U.S.”

—Michael S. Derby

• China will ease financial burdens and social restrictions associated with child-rearing, seeking to encourage births as it loosens decades-old family-planning restrictions.
• The U.S. Senate barreled toward a pair of Wednesday deadlines for advancing much of President Biden’s multitrillion-dollar economic agenda, with lawmakers bracing for a procedural vote on a still-forming $1 trillion infrastructure plan to fail if no bipartisan agreement is reached.
• Construction of new homes in the U.S. increased in June for the second consecutive month amid rising material and labor costs, according to the Commerce Department, whose data showed housing starts rose 6.3% compared with May, to a seasonally adjusted annual rate of 1.643 million. (Dow Jones Newswires)
• Germany’s index of producer prices for industrial products increased 8.5% in June compared with the prior year, the highest on-year increase since January 1982, Destatis said. (DJN)
• Swiss watch exports reached a total value of almost 2 billion Swiss francs ($2.18 billion) in June, around 12.5% above June 2019 and 71% higher than the same month last year, when the global pandemic weighed on the sector, the Federation of the Swiss Watch Industry said. (DJN)

This newsletter is compiled by James Christie in San Francisco and Ed Ballard in London. 

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