Good day. Federal Reserve officials are preparing to speed up
the pace of the so-called "taper" of the central bank's bond-buying
program so they can wrap it up in March, which would open the door
to the Fed raising interest rates next spring rather than later in
2022. The Fed would then be able to focus more on restraining
inflation and less on helping the U.S. economy spur job growth. Fed
Chairman Jerome Powell recently told lawmakers the central bank
doesn't want to bet the farm on an outlook for inflation easing
next year. "Almost all forecasters do expect that inflation will be
coming down meaningfully in the second half of next year," he said.
"The point is we can't act as though we're sure of that." The
economic recovery is certainly making it easier for the Fed to
shift its attention to inflation, with Friday's jobs report
suggesting the labor market is growing tighter, even if recent job
gains weren't as strong as in previous reports. Employers added
210,000 jobs in November while the unemployment rate fell to 4.2%
from 4.6% in October and 6.7% a year earlier.
Now on to today's news and analysis.
Top News
High Inflation, Falling Unemployment Prompted Powell's Fed
Pivot
Fed Chairman Jerome Powell's turnabout accelerated over the past
month as new data showed price pressures rising and broadening amid
a robust economic recovery.
PHOTO: AL DRAGO/BLOOMBERG NEWS
Just four weeks ago, the Federal Reserve set in motion carefully
telegraphed plans to gradually wind down a bond-buying stimulus
program by June. Officials are making plans to accelerate the
process at their policy meeting next week, ending it by March
instead.
The abrupt shift opens the door to the Fed raising interest
rates next spring rather than later in the year to curb inflation,
marking a significant policy pivot by Chairman Jerome Powell
shortly after President Biden offered him a second four-year term
leading the central bank.
Declining Jobless Rate Keeps Fed on Track to Accelerate
Taper
Another decline in the unemployment rate in November keeps the
Federal Reserve on track to quicken the wind-down of its stimulus
programs at its meeting later this month, paving the way to raise
interest rates in the first half of next year to curb
inflation.
Bullard Upbeat on Jobs Data, Presses for Hawkish Monetary
Policy
Federal Reserve Bank of St. Louis President James Bullard said
Friday that November hiring data looks quite strong, as he again
made a case for speeding the withdrawal of central-bank stimulus
for an economy he believes is now in full recovery.
U.S. Economy
U.S. Added Just 210,000 Jobs in November
The U.S. economy added 210,000 jobs in November, marking a
slowdown in hiring, but a tight labor market showed an early sign
of loosening as almost 600,000 people joined the workforce. The
slower pace of hiring last month -- the smallest monthly gain since
last December -- followed an upwardly revised gain of 546,000 jobs
in October. The jobless rate fell to 4.2% as more people joined the
labor force.
Wages Shoot Up in Travel, Food and Other In-Demand
Industries
Average hourly earnings were 4.8% higher in November compared
with a year ago for all private industries, and 13.7% higher for
leisure and hospitality and 8.9% higher for transportation and
warehousing, two of the sectors most affected by labor
shortages.
Retreat From Globalization Adds to Inflation Risks
While supply-chain disruptions, labor shortages and fiscal
stimulus have all been blamed for the rise in short-term inflation,
another force could also be at work: "deglobalization," as the
pandemic speeds up a retreat from globalization that has been under
way for several years.
Nasdaq Is On Track to Beat NYSE in Record Year for IPOs
Nasdaq Inc.is poised to beat the New York Stock Exchange in
initial public offerings this year, far outpacing its crosstown
rival during a record year for capital raised in U.S. public
markets, writes Alexander Osipovich.
High-Income Business Owners Escape $10,000 Tax Deduction Cap
Congressional Democrats are debating whether increasing the
$10,000 cap on the state and local tax deduction would benefit the
rich too much, but some of America's top earners are legally
circumventing the cap on much of their income.
Inflation Pressure Hits New Warehouse Leases
Rental rates to replace expiring multiyear warehouse leases are
rising at a sharp pace, according to a new report, as real-estate
firms look to incorporate the higher prices they have taken during
the pandemic into new contracts, Lydia O'Neal writes.
Key Developments Around the World
Canada Delivers Stellar Job Gain, Putting Spotlight on Central
Bank
Canada's economy added a net 153,700 jobs in November, following
a gain of 31,200 in the previous month, while the unemployment rate
dropped to 6.0% from the previous month's 6.7% reading. The rate is
now approaching the pre-pandemic -- or February 2020 -- mark of
5.7%.
Turkey's Economic Turmoil Sends Desperation and Inflation
Soaring
The two-decade economic boom that lifted millions of Turks into
the middle class is beginning to unravel, threatened by a currency
crisis that has people lining up for subsidized bread, cutting back
on meat and fleeing for a better life in Europe.
China's Central Bank Cuts Reserve Requirement Ratio for
Banks
China's central bank said Monday it would lower the amount of
funds banks have to set aside, replenishing liquidity into the
financial system in a bid to support the economy and cut financing
costs for businesses.
Chinese Tariffs Fuel Boom in U.S. Trade With Tech Exporter
Taiwan
U.S. trade with Taiwan is booming, as the island cashes in on
demand for its computer chips and lures factories back from China,
where many exports to the U.S. like electronics are subject to 25%
tariffs. Taiwan is now ranked No. 8 globally in trade with the
U.S., just behind the U.K.
Financial Regulation Roundup
Biden Struggles to Win Backing From Democrats for Wall Street
Posts
The White House's desire to appease both liberal and moderate
Democrats has left several top Wall Street regulatory posts
unfilled, slowing President Biden's agenda and potentially forcing
tough votes for Democrats ahead of next year's midterm
elections.
Calls for Tougher Private Equity Rules Against Money
Laundering
Public-policy groups have urged the Biden administration to
expand anti-money-laundering rules to cover private investment
advisers, calling private-equity vehicles and hedge funds a
vulnerability in efforts to prevent criminals accessing the U.S.
financial system.
U.S. to Urge Democracies to Sanction Corrupt Foreign
Officials
The U.S. will levy sanctions against foreign-government
officials and people it accuses of corruption and human-rights
abuse, and urge other nations to join its pressure campaign at its
coming Summit for Democracy, administration officials said.
China Evergrande Requests Help From Government
Chinese authorities on Friday said they would step in to help
China Evergrande Group deal with its crisis, after the highly
indebted property giant warned it risked defaulting on a large
financial obligation and sought help from its provincial
government.
Forward Guidance
Monday (all times ET)
6:30 a.m.: Bank of England's Broadbent gives speech on outlook
for growth, inflation and monetary policy at Leeds University
10:30 p.m.: Reserve Bank of Australia releases policy
statement
Wednesday
8:30 a.m.: U.S. Commerce Department releases October
international trade data
3 p.m.: Federal Reserve releases October U.S. consumer-credit
data
Research
J.P. Morgan Sees Inflation Cooling Next Year With Supply Chain
Relief
There won't be any immediate relief from "quite elevated" price
pressures but they should start easing next year, J.P. Morgan
economists Bruce Kasman and Bennett Parish wrote in a report on
Friday. The outlook "banks on a fading of supply constraints that
promotes a growth pickup alongside a cooling of inflation
pressure," they wrote. The pair added that "absent new shocks
related to the Omicron variant, this easing looks likely to gather
momentum in the coming months, lifting global growth and cooling
inflation."
-- Michael S. Derby
Commentary
Pressure to Grow on RBA to Exit QE Entirely by February
Pressure is set to grow on the Reserve Bank of Australia to exit
its government bond-buying program entirely by February, as other
major central banks hasten the scaling back of their own bond
purchases, while the Australian economy surges back, James Glynn
writes.
Jobs Report Gets a Participation Trophy
(END) Dow Jones Newswires
December 06, 2021 10:07 ET (15:07 GMT)
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