MARKET WRAPS

Watch For:

New Commercial Vehicle Registrations in Europe statistics; GfK consumer climate survey; ECB accounts of its last monetary policy discussions; U.S. Thanksgiving Day. Financial markets closed.

Opening Call:

Stocks should open higher taking gains on Wall Street. Markets in Asia were mixed in early trading. Strong economic data strengthens dollar, euro falls against the dollar, 10-year Treasury yields fall. Oil and gold edge higher.

Equities:

European stocks should open higher, taking cues from U.S. stock gains as investors shrugged off concerns about elevated inflation.

A rebound in shares of technology companies helped push the S&P 500 and Nasdaq Composite higher Wednesday.

U.S. stocks have swung between gains and losses this week as investors have digested a slew of data in a trading week shortened by the Thanksgiving holiday.

On Wednesday, new figures showed that household spending rose 1.3% in October from a month earlier, while personal income increased 0.5%. Weekly jobless claims, meanwhile, fell sharply to the lowest level in 52 years.

Meanwhile, minutes released Wednesday from the Federal Reserve's November meeting provided fresh context about how central bankers are assessing the inflation situation. The minutes signaled that while officials generally anticipate that the inflation rate will diminish significantly during 2022, some also highlighted that price increases had become more widespread.

"Many participants pointed to considerations that might suggest that elevated inflation could prove more persistent," the minutes said.

"We have had fantastic earnings; the bond market is behaving itself; inflation is up, but rates are very low. As I sit here with five to six weeks left to the year, I have a hard time not being optimistic," said Tim Holland, chief investment officer at Orion Advisor Solutions. "As long as rates are low and earnings are growing, I think it's very difficult not to lean into stocks."

Wall Street markets are closed Thursday for the Thanksgiving holiday. They reopen Friday for a shortened trading session.

Forex:

The dollar strengthened broadly and the WSJ Dollar Index was trading at highs not seen since July 2020. Spectacular economic data releases are keeping the dollar supported, Karl Schamotta at Cambridge Global Payments said.

The dollar's moves today add to earlier gains this week after President Biden nominated Jerome Powell for a second term as Fed chairman and Lael Brainard to vice chairman, the chief market strategist said.

"In comments after the announcement, both officials appeared to execute a decisive pivot, emphasizing their determination to fight inflation, softening the labor-market rhetoric that has characterized policy communications since the onset of the pandemic."

Asian currencies consolidate against the dollar ahead of the U.S. Thanksgiving holiday. There's probably little to expect from financial markets today given U.S. equity and bond markets will be closed, UOB

said.However, with the dollar maintaining a strong backdrop and the euro falling to 1.12 against the dollar, Asian currencies may remain weak for today, UOB said.

EUR/GBP has "remained tied to the 0.8400 level," but it may move below this level if investors perceive the U.K. and eurozone economies are diverging, says ING.

"A decisive move below that mark [0.8400] may signal investors are starting to price in diverging contagion/growth paths for the U.K. and the eurozone, something similar to what we saw at the beginning of the vaccination program in 1Q21," it said.

Bonds:

Deutsche Bank expects the Fed to double the monthly reduction of asset purchases so the central bank can raise rates starting in June, from a previous forecast of July, as policy makers show more concern about inflation.

"Beyond liftoff, we continue to anticipate that the Fed will raise rates at a quarterly pace, and pause in Q3 2023 to begin passive rundown of the balance sheet," DB said, keeping its forecast for the tightening to end at 2.1% by 2024. The revision comes after Fed minutes and as the 10-year yield declines 0.021 percentage point to 1.644%.

The European Central Bank ramped up corporate bond purchases in November so far, with net purchases totaling around EUR5.5 billion, said ING's Timothy Rahill citing official data. Net purchases increased up to a little over EUR2 billion last week under the central bank's Corporate Sector Purchase Program (CSPP).

Nine new bonds were added to the CSPP and Pandemic Emergency Purchase Program holdings last week, of which nine were picked up in the primary market or as a recent issue, he said. "With another week and a half left in November, we will likely see above average monthly net purchases this month," he adds, adding that the ECB is likely front purchasing before the slowdown in activity in December.

Energy:

Oil edges higher in the early Asian session amid hopes that OPEC+ may not increase its planned monthly production in December. There's growing speculation that OPEC+ may not deliver the planned 400,000 bbl a day supply increase in December, in order to offset the releases of strategic reserves by major consuming nations such as the U.S., TD Securities said.

Prior to the reserve releases, OPEC+ cautioned that it would respond to coordinated reserve releases, TD Securities noted.

Metals:

Gold rose in early Asian trade amid concerns over how Europe's renewed Covid-19 measures could impact the global economic recovery.The strength of the greenback and U.S. Treasury yields will also be closely watched by investors amid recent rises. Oanda expects that the precious metal may be weighed down in the near term should yields remain firm this week.

Base metals were broadly higher amid continued signs of supply tightness across the industrial-metals complex, ANZ said. Better-than-expected U.S. economic data on consumer spending and new home sales are also supporting prices, it added.

ING said some optimism for China's recovering real-estate sector is lending support for base metals.

   
 
 

TODAY'S TOP HEADLINES

Fed Officials Debated Inflation Concerns, Taper Pace at November Meeting

Federal Reserve officials expressed greater concern at their meeting earlier this month about how long inflation would stay elevated and discussed whether they should prepare to raise interest rates in the first half of next year to cool off the economy.

The Fed closed a chapter on its aggressive pandemic policy response when it approved plans at the Nov. 2-3 meeting to shrink its $120-billion-a-month asset purchases by $15 billion each in November and December, a pace that would end the program by next June. They want to end the asset purchases before they lift interest rates, which they held near zero.

   
 
 

Bank of Korea Raises Rate, Tightens Policy to Curb Inflation

South Korea's central bank has raised its base rate for the second time in three months as it seeks to curb accelerating inflation and soaring household debt.

The Bank of Korea increased its benchmark seven-day repurchase agreements rate by 25 basis points to 1.00% on Thursday. The bank had raised the rate to 0.75% from a record-low 0.50% in August.

   
 
 

OPEC Weighs Shift in Oil Policy After Crude Release

Top oil producers Saudi Arabia and Russia are considering a move to pause their recent efforts to provide the world with more crude, according to people familiar with those discussions, after Washington and other countries said they would release a slug of stored oil in an effort to lower prices.

Riyadh and Moscow have led OPEC and a group of other oil-producing countries in coordinating output closely amid a demand shock last year caused by the pandemic. Other members of that cartel, including the United Arab Emirates, aren't convinced a pause is necessary, according to these people.

   
 
 

More Chips Will Be Made in America Amid a Global Spending Surge

SEOUL-Investment in U.S. chip production is on the rise. But so too, is semiconductor spending elsewhere.

Samsung Electronics Co.'s planned $17 billion chip factory in Texas is expected to crank out top-end semiconductors that are essential to 5G cellular networks, self-driving cars and artificial intelligence. It follows hefty bets on U.S. soil by Intel Corp., Taiwan Semiconductor Manufacturing Co. and Texas Instruments Inc.

   
 
 

U.S. Recovery Accelerates on Spending, Labor Market Growth

The U.S. economy showed broad-based signs of acceleration heading into the end of the year, with consumers ramping up spending, businesses stepping up investment and jobless claims falling to historic lows.

Household spending rose 1.3% in October from a month earlier, while personal income increased 0.5% last month, the Commerce Department said Wednesday. Consumers are benefiting from a strong labor market. And they are spending at a faster pace than inflation, which recently hit a three-decade high.

   
 
 

U.S. Jobless Claims Reach 52-Year Low

Weekly jobless claims fell sharply to the lowest level in 52 years, reflecting the labor market's tightening as the economy recovers from the effects of the pandemic.

Worker filings for initial unemployment benefits, a proxy for layoffs, dropped 71,000 to 199,000 last week, the lowest level since November 1969, the Labor Department reported Wednesday.

   
 
 

Big-Ticket Product Orders Fell for Second Straight Month Amid Supply Constraints

Orders for long-lasting goods such as appliances, cars and computers decreased for the second straight month in October as U.S. manufacturers continued to confront higher material and shipping costs as well as labor and parts shortages.

New orders for products meant to last at least three years decreased 0.5% to a seasonally adjusted $260.1 billion in October when compared with September, the Commerce Department said Wednesday.

   
 
 

Europe Health Agency, in Shift, Urges Faster Covid-19 Booster Rollout as Cases Surge

The head of the European Union's public-health agency recommended governments accelerate their campaigns to roll out Covid-19 booster shots as case numbers rise rapidly across parts of the bloc.

Andrea Ammon, head of the European Centre for Disease Prevention and Control, said on Wednesday that Covid-19 boosters should be offered to everyone over 18 years old, six months after they were first fully vaccinated, with priority given to those ages 40 and older.

   
 
 

27 Migrants Drown in the English Channel

French authorities recovered the bodies of 27 migrants who they said drowned in the English Channel trying to reach the U.K., one of the area's deadliest migrant crossings in recent years.

A fisherman saw bodies floating in the sea on Wednesday and alerted French authorities around 2 p.m. local time, officials said. French Interior Minister Gerald Darmanin said five women and a little girl were among the dead. He said only two migrants had been rescued alive so far, and both remain in critical condition. Rescue operations are continuing, he said.

   
 
 

Israel Warns White House Over Striking Partial Nuclear Deal with Iran

Israeli officials are urging the White House not to strike a partial nuclear deal with Iran, warning it would be a gift to the new hard-line government in Tehran and stoking a growing public rift with the Biden administration over Iran's nuclear program.

Senior Israeli officials say they fear that Washington is setting the stage for a "less-for-less" deal that would offer Tehran partial sanctions relief in exchange for freezing or winding back parts of their nuclear work. The tension comes as nuclear talks are set to resume on Monday, with expectations low that the 2015 nuclear deal-which the Trump administration withdrew from-can be fully revived.

   
 
 

OPEC Weighs Shift in Oil Policy After Crude Release

Top oil producers Saudi Arabia and Russia are considering a move to pause their recent efforts to provide the world with more crude, according to people familiar with those discussions, after Washington and other countries said they would release a slug of stored oil in an effort to lower prices.

Riyadh and Moscow have led OPEC and a group of other oil-producing countries in coordinating output closely amid a demand shock last year caused by the pandemic. Other members of that cartel, including the United Arab Emirates, aren't convinced a pause is necessary, according to these people.

   
 
 

Germany's Scholz Vows to Overhaul Economy as Next Chancellor

BERLIN-Germany's Olaf Scholz is on course to succeed Angela Merkel as chancellor after the victors of the September election reached a policy agreement focused on overhauling the country's economy, investing in infrastructure and combating climate change, the negotiators said Wednesday.

Under the policy program-which Mr. Scholz's center-left Social Democrats, the environmentalist Greens and the pro-business Free Democratic Party unveiled on Wednesday afternoon-the country's first three-party coalition would also aim to update the country's patchy digital infrastructure, reduce bureaucracy and drive greater integration of the European Union.

   
 
 

U.N. Nuclear Chief Leaves Iran Without a Deal on Factory Inspection, Diplomats Say

BERLIN-The head of the United Nations atomic watchdog agency left Iran late Tuesday after failing to reach a deal to allow inspectors access to a factory making equipment for Tehran's nuclear program, diplomats said Wednesday, casting a fresh shadow over international nuclear talks set for next week.

The Wall Street Journal reported last week that the factory, in Karaj, Iran, had resumed producing key parts for centrifuges, which are used to enrich uranium, without any monitoring by the International Atomic Energy Agency. The diplomats said talks between the IAEA and Iran were continuing.

   
 
 

Turkey's Erdogan Looks to Regional Rival for Investment Amid Currency Crisis

ANKARA, Turkey-Turkish President Recep Tayyip Erdogan hosted the de facto leader of the United Arab Emirates on Wednesday, and Emirati officials promised investments worth billions of dollars that could help ease Turkey's economic crisis after the local currency's sharp slide.

Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al Nahyan's visit to Ankara marks a recent thaw in ties after years of animosity between the two countries, which have competed for influence in the Middle East. Turkey has been seeking much-needed foreign investment, while the meeting offers the oil-rich U.A.E. potential support in a broader struggle against its other main regional rival, Iran.

   
 
 

Chinese Property Developer Kaisa Proposes $400 Million Debt Swap

Kaisa Group Holdings Ltd., which in 2015 became one of the first Chinese developers to default abroad, warned it risked reneging on its international debts again unless creditors agreed to a $400 million bond swap.

The Shenzhen-based company is one of the sector's biggest offshore borrowers after China Evergrande Group, with about $10.9 billion of dollar bonds outstanding as of end-June.

   
 
 

Lee Enterprises Enacts Poison Pill to Guard Against Alden Takeover

Lee Enterprises Inc. said its board has approved a shareholder rights plan, also known as a poison pill, that would prevent hedge fund Alden Global Capital LLC from acquiring more than 10% of the company as it considers Alden's hostile bid for the newspaper publisher.

The plan will be in effect for a year, the company said Wednesday. Lee Enterprises Chairman Mary Junck said the plan would give the company's board and its shareholders time to assess the acquisition proposal without undue pressure.

   
 
 

Instagram Boss to Testify in Congress on Child Safety Issues

The head of Instagram is scheduled to testify before Congress next month to respond to mounting questions about the app's effects on younger users sparked by a Wall Street Journal investigation, an aide to Sen. Richard Blumenthal said on Wednesday.

Adam Mosseri, who has run Instagram for a little more than three years, is due to appear before the Senate's consumer protection subcommittee during the week of Dec. 6. Mr. Mosseri previously led the news feed team for Facebook. Both apps are now part of Meta Platforms Inc., the new name for parent Facebook Inc.

   
 
 

AT&T, Verizon Propose 5G Limits to Break Air-Safety Standoff

AT&T Inc. and Verizon Communications Inc. said they would limit some of their fifth-generation wireless services for six months while federal regulators review the signals' effect on aircraft sensors, an effort to defuse a conflict that has roiled both industries.

The cellphone carriers detailed the proposed limits Wednesday in a letter to the Federal Communications Commission. The companies said they would lower the signals' cell-tower power levels nationwide and impose stricter power caps near airports and helipads, according to a copy reviewed by The Wall Street Journal.

   
 
 

Jamie Dimon Apologizes for Joke About JPMorgan Outlasting China's Communist Party

Jamie Dimon apologized Wednesday for joking that JPMorgan Chase & Co. would outlast China's Communist Party.

Mr. Dimon said on Wednesday morning that he regretted remarks he made Tuesday during an event at Boston College, in response to an audience question about doing business in China.

   
 
 

Ray Dalio's Bridgewater Raises $1.25 Billion for Its Largest China Fund Yet

Bridgewater Associates LP has raised the equivalent of $1.25 billion for its third investment fund in China, according to a person familiar with the matter, catapulting the hedge-fund firm into the ranks of the biggest foreign managers of private funds in the world's second-largest economy.

Founded by longtime China bull Ray Dalio, Bridgewater began rolling out private funds in the country in 2018 after a wholly owned unit of the American asset manager was awarded a license to raise money from high-net-worth individuals and institutional investors in China and invest it in domestic yuan-denominated securities.

   
 
 

Write to sarka.halas@wsj.com

   
 
 

Expected Major Events for Thursday

07:00/GER: 3Q GDP - Detailed breakdown

07:00/EU: Oct New Commercial Vehicle Registrations in Europe statistics (EU27 + EFTA3)

07:00/DEN: Oct Retail sales index

07:00/NOR: Sep Labour force survey SA, incl unemployment

07:00/GER: Dec GfK consumer climate survey

08:00/SPN: Oct PPI

08:30/SWE: Swedish repo rate announcement

08:30/SWE: Oct PPI

09:00/ICE: Oct PPI

09:00/POL: Oct Unemployment

09:00/ITA: Oct Foreign Trade non-EU

09:00/ICE: Oct Labour Force Survey

09:00/ICE: Nov CPI

09:30/UK: Oct Capital issuance

10:00/LUX: Sep Trade

11:00/IRL: 3Q Labour Force Survey

11:00/UK: Nov CBI Distributive Trades Survey

14:00/BEL: Nov Business Confidence Survey

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This article is a text version of a Wall Street Journal newsletter published earlier today.

 

(END) Dow Jones Newswires

November 25, 2021 00:24 ET (05:24 GMT)

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