Good day. Senior Federal Reserve officials are now subject to
sweeping personal-investing restrictions that will hold them to
trading broad-based investment vehicles such as mutual funds,
according to new rules imposed by Chairman Jerome Powell following
a stock-trading controversy that prompted two regional Fed bank
presidents to resign. Some in Congress seized on the questionable
trading, first reported last month by The Wall Street Journal, to
criticize Mr. Powell, who they think is too friendly to Wall Street
on bank regulation. The controversy has dented but not derailed Mr.
Powell's chances for a second term. Elsewhere, Turkey's central
bank cut its benchmark interest rate amid rising inflation. The
move followed President Recep Tayyip Erdogan last week dismissing
three top bank officials.
Now on to today's news and analysis.
Fed Imposes New Restrictions on Officials' Investment
The Federal Reserve building in Washington. PHOTO: JOSHUA
Federal Reserve Chairman Jerome Powell imposed sweeping
personal-investing restrictions on senior officials in a bid to
address a stock-trading controversy that prompted the resignation
of two reserve bank presidents and hurt his prospects of being
reappointed to lead the central bank next year.
The Fed said the new rules will restrict senior officials'
trading to broad-based investment vehicles such as mutual funds.
They also will require any trades to be preapproved and
pre-scheduled, removing the potential for any appearance that
officials were benefiting from inside information to bolster their
Investors Bet Inflation Pressures Will Linger
As of Wednesday, the gauge known as the 10-year break-even rate
suggested that the consumer-price index will rise by an annual
average of 2.57% over the next decade, according to Federal Reserve
Economic Data, or FRED. That is up from a recent low of 2.28% in
late September and the highest level since 2013. Rising break-even
rates worry some investors because the move suggests current
inflation pressures could last longer than previously expected.
Derby's Take: As Fed Balance Sheet Grows, Questions About Its
By Michael S. Derby
The Federal Reserve's newest governor this week pointed to an
uncomfortable truth about the central bank's multitrillion-dollar
balance sheet: Policy makers don't know for sure how it affects the
"We have no economic theory of how large the central bank's
balance sheet should be. I've never seen it," Christopher Waller
said during a virtual appearance. Read more.
Jobless Claims Fall to Pandemic Low as Labor Market Remains
Filings for initial unemployment benefits decreased to 290,000
last week from a revised 296,000 a week earlier, the Labor
Department said. Claims are holding well below a recent peak of
424,000 in mid-July but remain above 2019's weekly average of
New York Lost Most Wall Street Jobs in 2020 Since 2008
U.S. Home Sales Jumped 7% in September
Existing-home sales rose 7% in September from August to a
seasonally adjusted annual rate of 6.29 million, the highest pace
since January, the National Association of Realtors said Thursday.
September sales fell 2.3% from a year earlier.
Democrats Weigh Tax Alternatives to Fund $2 Trillion Package
Democrats worked to quickly find new sources of revenue to pay
for their roughly $2 trillion social-policy and climate package,
seeking to target businesses and wealthy individuals in novel ways
after proposed rate increases ran aground in talks.
Key Developments Around the World
Turkish Central Bank Cuts Benchmark Interest Rate to 16%
Turkey's central bank on Thursday cut its benchmark interest
rate from 18% to 16% after President Recep Tayyip Erdogan last week
fired three top officials. Turkey's inflation rate accelerated on
an annual basis in September, as the consumer price index rose
19.58% on year in the month compared with 19.25% in August. (Dow
RBA Moves to Defend Yield Curve Target; More Action Likely
The Reserve Bank of Australia has defended its yield curve
target of 0.10% after several days of inaction, tamping down
speculation that it was preparing to signal an earlier start to
RBA Wants BNPL Firms to Scrap No-Surcharge Rules
Supply Bottlenecks Curb Eurozone Growth to Six-Month Low
Eurozone business activity growth slowed sharply to a six-month
low in October amid increasing supply bottlenecks and ongoing
pandemic concerns, flash purchasing managers index data by IHS
Markit showed. The eurozone flash composite PMI fell to 54.3 in
October from 56.2 in September, posting a decline for the third
consecutive month. (Dow Jones Newswires)
Financial Regulation Roundup
CFTC Issues Its Largest Whistleblower Award, of Nearly $200
The Commodity Futures Trading Commission issued its largest
whistleblower award of roughly $200 million to a tipster who helped
regulators bring successful enforcement actions. Tips to the CFTC
have resulted in more than $3 billion in monetary sanctions.
Consumer Protection Agency Probes Apple, Facebook and Amazon
The Consumer Financial Protection Bureau said it had launched an
inquiry on consumer data practices at Amazon.com Inc., Apple Inc.,
Alphabet Inc.'s Google and Facebook Inc. and other firms. The move
opens a new front in Washington's scrutiny of the companies.
Turkey Censured Over Money Laundering, Terrorist Financing
A global watchdog on Thursday added Turkey to its list of
countries requiring special regulatory oversight for failing to
stop money laundering and terrorist financing, a designation
analysts say will rattle Ankara's already shaky economy.
Bitcoin Back Near Record Highs, and a Houston Pension Plan Dives
Houston's pension fund for its firefighters said it bought $25
million worth of bitcoin and ether for its defined-benefit plan's
portfolio, the latest move by an institutional investor into
digital assets. The move comes as bitcoin powered back to a record
above $66,000 earlier this week.
Crypto Exchange FTX Reaches $25 Billion Valuation
Cryptocurrency exchange FTX reached a valuation of $25 billion
in a new funding round of just over $420 million that includes
heavyweights from traditional finance, such as the Ontario
Teachers' Pension Plan and funds managed by BlackRock Inc.
Friday (all times ET)
10 a.m.: San Francisco Fed's Daly speaks on climate change risk
at American Enterprise Institute event
11 a.m.: Fed's Powell speaks on panel at virtual Bank for
International Settlements-South African Reserve Bank conference
America's Housing Boom Will Keep Builders and Agents Busy
Until America has more homes available for sale, the housing
market will look unusually strong in what used to be the slow part
of the year without satisfying pent-up demand that has been years
in the making, Justin Lahart writes.
Evergrande Is Struggling to Sell Homes -- and Its Assets
It's never a good sign when a company struggles to sell much of
anything, even its best assets, and that is now roughly the
position troubled Chinese property developer Evergrande finds
itself in, Jacky Wong writes.
The Conference Board's Leading Economic index, a gauge of U.S.
business cycles, rose 0.2% to 117.5 in September from August, below
a 0.4% rise economists polled by The Wall Street Journal had
forecast. The index suggests the U.S. economy remains on a more
moderate growth trajectory compared with the first half of the
year, Conference Board Senior Director of Economic Research Ataman
Ozyildirim said. (Dow Jones Newswires)
Businesses in the Federal Reserve Bank of New York's region see
no signs of improvement in supply disruptions, as a survey by the
NY Fed's Liberty Street Economics found 80% of service firms and
95% of manufacturers reporting difficulty obtaining supplies.
Manufacturing activity in the Philadelphia area continued to
expand in October, albeit at a slower pace compared with the
previous month amid severe shortages related to global supply-chain
problems, according to a Federal Reserve Bank of Philadelphia
survey. Its index for current general activity fell from 30.7 in
September to 23.8, a reading broadly matching the 24.5 economists
polled by The Wall Street Journal expected. (DJN)
China Evergrande Group made an overdue interest payment to
international bondholders, the state-owned Securities Times
reported Friday, an unexpected move that allows the property
company to stave off a default.
Sentiment in the French manufacturing sector remained stable in
October, the French national statistics office said, noting its
sentiment measure was unchanged from September at 107. Economists
polled by The Wall Street Journal expected a reading of 105.
Canada's Liberal government will begin winding down the bulk of
emergency-income benefits it issued at the onset of the pandemic
now that the economic recovery has shifted into a higher gear,
Finance Minister Chrystia Freeland said. (DJN)
Canadian new house prices notched another gain in September,
continuing an upward trend that began in the spring of 2020 with a
0.4% rise from August, Statistics Canada. Prices advanced 11.3%
from a year earlier. (DJN)
(END) Dow Jones Newswires
October 22, 2021 08:43 ET (12:43 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.