The surge in inflation could put pressure on the Fed to raise rates next summer; Investors are finally taking notice of inflation


Good day. Federal Reserve officials recently backed down from labeling price pressures “transient.” The Department of Labor report on Thursday that inflation hit a three-decade high in October, leading to widespread and significant price increases for households for everything from groceries to cars, could cause officials to distance themselves even more of this description. Additionally, with evidence that the labor market is recovering quickly – job vacancies continue to rise and workers’ UI claims continue to decline – it seems the Fed is more likely to increase prices. interest rate next year, maybe as soon as the summer.

Now on to today’s news and analysis.

Top news

Rising inflation makes Fed more likely to hike rates next year

The latest rise in inflation helps explain why investors are increasingly wondering not if the Federal Reserve will raise interest rates next year, but rather by how much and how quickly it could.

The Labor Department reported on Wednesday that consumer prices rose sharply in October, up 0.9% on a seasonally adjusted basis from the previous month. Over the last 12 months, inflation is 6.2%. So-called basic prices, which exclude food and energy products, rose 4.6% over the past year. These are the two largest annual increases in over 30 years.

While senior central bank executives still believe inflation could slow as supply chain problems ease, they are now seeing this process take longer than expected earlier this year, until 2022.

US inflation hit 31-year high in October

Where inflation is highest in the United States

Tax brackets will be higher in 2022 due to faster inflation, IRS says

Massive sales indicate inflation fears are heating up

For months, there was relatively little investor angst about rising prices. On Wednesday, there were signs that could change as stocks sold off and longer-term Treasuries fell.

American economy

Unemployment claims fall to pandemic low, continuing downward trend

Workers’ claims for unemployment insurance fell to 267,000 last week, from 271,000 revised the week before, continuing their long trajectory to pre-pandemic levels as the labor market improves.

Home prices rose in the United States in the third quarter

The median selling price of existing single-family homes was higher in the third quarter compared to the previous year in 182 of 183 metropolitan areas tracked by the National Association of Realtors, the association said on Wednesday.

United States, China Jointly Commit to Intensify Efforts to Address Climate Change

The United States and China jointly pledged at the United Nations climate summit to step up actions to tackle climate change over the next decade, injecting talks here with a surprise display of cooperation between the two. rivals and the two largest emitters of greenhouse gases in the world.

Key developments around the world

China Weights Moderating Ownership Restrictions to Help Struggling Developers

Chinese regulators, worried about the spread of financial risks following their crackdown on home loans, are considering relaxing the rules to allow struggling developers to sell assets to avoid defaults and impacts on lending. economy in the broad sense.

China’s plan to deal with Evergrande: slowly dismantle it

Some investors feared that China Evergrande Group, the world’s most indebted real estate company, could collapse dramatically. Instead, the Chinese state is slowly dismantling the giant developer behind the scenes.

Chinese developers rally on political hopes as Evergrande avoids default

UK economic growth slowed in the third quarter

The UK economy lost momentum over the summer as the reopening rebound after the Covid-19 lockdown wore off, while persistent supply chain bottlenecks and the downturn consumer spending is expected to continue to dampen growth for the remainder of the year.

Overview of financial regulation

Credit Suisse legal issues weigh on overhaul plan

As Credit Suisse Group vows to end reckless risk-taking, the cost of past misdeeds is expected to continue to weigh for years, weighing on the scandal-prone Swiss lender’s efforts to put the past behind it.

McKinsey partner accused of securities fraud in deal with Goldman

Federal prosecutors in New York have indicted a former partner of McKinsey & Co. with securities fraud for allegedly exchanging insider information related to the Goldman Sachs group’s acquisition of specialist lender GreenSky.

SEC Considering New Rules on Private Fund Fees, Gensler Says

The main Wall Street regulator is considering new rules to bring sunshine to the private funds market, including more disclosure about fees and conflicts of interest.

SEC suspends registration of two digital tokens

The Securities and Exchange Commission is suspending the registration as securities of two digital tokens issued by the U.S. CryptoFed DAO LLC due to allegedly insufficient and misleading information on their registration form, the agency said on Wednesday.

Google loses appeal of $ 2.8 billion fine for Shopping ads in EU

The General Court of the European Union broadly upheld a $ 2.8 billion antitrust ruling against Google by EU competition regulators on Wednesday, adding new impetus to the bloc‘s assault on big tech companies.

Forward-looking indications

Thursday (every hour ET)

7:45 a.m .: Lane of the European Central Bank gives an introductory speech at the New York Fed-ECB conference on expectations surveys

11:00 a.m .: Schnabel from the European Central Bank speaks during a series on women in the economy

2 p.m .: Bank of Mexico issues policy statement


8:50 a.m .: Lane from the European Central Bank speaks at a panel on the future of the EU’s fiscal governance framework

10 a.m .: US Department of Labor releases September Job Openings and Workforce Turnover Survey; University of Michigan releases preliminary US consumer sentiment data in November

10:30 a.m .: Bank of Canada releases survey of senior loan officers

12:10 p.m .: New York Fed’s Williams speaks to his bank on heterogeneity in macroeconomics


Prepare for even more inflation

The big question about resuming inflation is whether it will persist, and the big problem is that the answer won’t be clear until early next year at the earliest, writes Justin Lahart.

Biden’s economic agenda was not designed for shortages and inflation

President Biden’s bipartisan infrastructure framework and what the White House calls the “Build Back Better” social and climate plan weren’t meant to fight inflation, but it now frames them that way, writes Greg Ip .

Base points

The U.S. government recorded a deficit of $ 165 billion in October, a smaller gap from the previous year, as the government collected higher tax and other revenues and cut spending. (Dow Jones Newswires)

Australia’s unemployment rate jumped in October as the number of people looking for work increased with the easing of Covid-19 lockdowns in the country’s most populous state.

China sold around $ 4.6 billion in euro-denominated bonds, taking advantage of very low eurozone yields to raise short-term funds at negative rates for the second year in a row.

Chinese banks issued more new loans in October than expected, according to the People’s Bank of China, as the world’s second-largest economy showed more signs of weakness. New yuan loans amounted to 826.2 billion yuan ($ 129.24 billion) last month, lower than CNY 1.6 trillion in September but more than CNY 700 billion expected by economists surveyed by the Wall Street Journal. (DJN)

Inflation in Brazil accelerated in October compared to September and a year earlier, as fuel prices rose and a weaker real pushed up the prices of imported goods. Consumer prices rose 1.25% in October, the fastest pace of the month since 2002, and 10.67% from the previous year, said the Brazilian Institute of Geography and Statistics. . In September, prices rose 1.16% on the month and 10.25% compared to the previous year. (DJN)

German consumer prices rose sharply in October, confirming preliminary data, said statistical office Destatis. Prices rose 4.5% year-on-year according to national standards and 4.6% year-on-year according to harmonized European Union standards, both in line with forecasts by economists surveyed by the Wall Street Journal. (DJN)

Industrial production in Italy edged up in September after falling the previous month despite mounting supply bottlenecks. Production rose 0.1% in September from the previous month, in line with the expectations of economists polled by FactSet, after falling 0.3% in August. (DJN)


(END) Dow Jones Newswires

November 11, 2021 09:38 am ET (14:38 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.


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