Good day. Federal Reserve Chairman Jerome Powell will field questions about the central bank's outlook for economic growth, employment and inflation after next week's policy meeting, but questions about whom President Biden will name to lead the Fed next year will persist. Meanwhile, central banks around the world were busy, with the Bank of Canada saying it will end quantitative easing, the Central Bank of Brazil raising its benchmark interest rate and the Bank of Japan lowering its growth forecast. Today, the European Central Bank releases its latest policy statement.

Now on to today's news and analysis.

Top News

Fed Leadership Uncertainty Muddies Rate-Policy Outlook

When Federal Reserve Chairman Jerome Powell steps to the microphone at a news conference next week, he may be unable to answer one of investors' most pressing questions: Will he return for a second four-year term in February?

Uncertainty over whom President Biden will name to lead the Fed next year hangs over the central bank's looming policy decisions on what to do if the recent rise in inflation turns out to be more persistent than anticipated.

Fed Bankers Could Face Penalties for Ethical Breaches

A group of Senate Democrats plans to introduce legislation that would penalize Federal Reserve officials who fail to adhere to a new ethics code made public last week. The bill would make the Fed responsible for administering its provisions.

U.S. Economy

Orders for Big-Ticket Products Fall Amid Supply Constraints

New orders for products meant to last at least three years decreased 0.4% to a seasonally adjusted $261.3 billion in September when compared with August. Orders last fell in April, followed by four months of gains.

Democrats Drop Paid Leave From $1.75 Trillion Proposal

Democrats abandoned plans for a paid-leave program in their social spending and climate-change bill, as the White House attempted to quickly smooth over differences on policy and tax measures.

U.S. Bans China Telecom Over National Security Concerns

The Federal Communications Commission revoked the license allowing China's largest telecom operator to do business in the U.S., citing national security concerns, the latest blow against a major Chinese business in the country.

Key Developments Around the World

Bank of Canada Ends Quantitative Easing

The Bank of Canada said it would end quantitative easing and could raise its benchmark overnight interest rate sooner than it previously anticipated as policy makers tried to ward off concerns about high inflation.

Brazil's Central Bank Raises Benchmark Rate to 7.75%

The Central Bank of Brazil raised its benchmark lending rate by 1.5 percentage points as inflation continues to climb amid growing concern about government spending, and it expects to raise the Selic again in December.

BOJ Lowers Outlook for Japan Growth, Inflation

The Bank of Japan lowered its growth forecast, reflecting supply-chain constraints that have weighed on exports and production, and said it didn't see significant inflation coming.

U.K., Canada Lead West in Weaning Economies Off Covid-19 Support

The U.K. dialled back government stimulus for the fast-growing British economy, one of the first big Western economies to step away from emergency policies put in place to tackle the pandemic as concerns over inflation intensify.

Singapore Economy to Continue on Expansion Path, MAS Says

Singapore's economy is likely to continue on its expansion path in the coming quarters as movement restrictions are eased in line with government reopening plans, the Monetary Authority of Singapore said. Singapore's economy is expected to grow 6% to 7% in 2021. It is expected to post a slower but still-above trend pace in 2022, barring the materialization of downside risks arising from the coronavirus or global economic developments. Underlying inflation is expected to pick up next year on stronger domestic sources of inflation. Import price pressures could persist into 2022 as supply bottlenecks take time to ease. (Dow Jones Newswires)

Europe's Push to Loosen Russian Influence on Gas Prices Bites Back

European energy ministers met to address the gas shortage, which is stinging homeowners and lifting prices for goods from metals to fertilizers. But there is little they can do to boost supplies immediately, and Russia isn't helping.

China's Climate Goals Collide With Reality, Imperiling Global Efforts

China's climate pledges are bumping up against realities on the ground. The world's No. 2 economy is so large and still growing so quickly it might not be technically possible or politically palatable for its leaders to move faster.

What Is COP26 and Why Does the Climate Change Summit Matter?

Financial Regulation Roundup

Regulators Back Tougher Rules to Keep Criminals From Using Crypto

Cryptocurrency firms could be forced to take greater steps to combat money laundering under new guidelines released on Thursday by the Financial Action Task Force, an international body that coordinates government policy on illicit finance.

CFTC Chief Says Recent Crypto Cases Are 'Tip of the Iceberg'

The acting head of the Commodity Futures Trading Commission said he plans to continue aggressively policing cryptocurrency markets and called on Congress to consider expanding his agency's authority to do so.

SEC Won't Approve Leveraged Bitcoin Fund

The Securities and Exchange Commission asked at least one asset manager not to proceed with plans for a leveraged bitcoin exchange-traded fund, according to a person familiar with the matter.

Justice Department Probes Visa's Relationships With Fintech Firms

Antitrust investigators are looking into financial incentives Visa gave Square Inc., Stripe Inc. and PayPalHoldings Inc. to see if the deals kept the payments firms from using other card networks or money-movement technologies.

Libor Transition Vexes Collateralized Loan Obligations Market

The global $1 trillion market for collateralized loan obligations is lagging behind in the transition away from the London interbank offered rate, the scandal-marred interest-rate benchmark.

U.K. Audit Regulator Says Companies Need to Improve Disclosures

The U.K. audit and accounting regulator said it questioned nearly 100 companies about their reporting in areas including revenue and cash flows and asked 15 of them to restate their accounts as part of an annual review of financial filings.

Forward Guidance

Thursday (all times ET)

7:45 a.m.: European Central Bank releases policy statement

8:30 a.m.: European Central Bank's Lagarde holds press conference; U.S. Commerce Department releases first estimate of third-quarter GDP


8:30 a.m.: U.S. Commerce Department releases September personal income and outlays

10 a.m.: University of Michigan releases final October U.S. consumer sentiment


American Appetites Power Through Inflation

Strong earnings from McDonald's, Kraft Heinz and Coca-Cola reported Wednesday show America's food and beverage giants have what it takes to overcome inflationary pressures, Aaron Back and Charley Grant write.

The Risks and Rewards of Playing Chicken With China

A little arm-twisting here and there could help slow the cycle of speculation and contagion, and buy time for some of Beijing's own modest property easing measures to take effect, Nathaniel Taplin writes.

Basis Points

U.S. steelmakers said demand for steel will remain strong deep into next year, keeping prices high for customers such as auto and appliance makers and stoking continued investments in new mills.

This U.S. holiday shopping season is expected to post record activity, with sales for November and December, excluding restaurants, gas stations and auto dealers, forecast up to between 8.5% and 10.5% over 2020 and reaching between $843.4 billion and $859 billion, the National Retail Federation said. (MarketWatch)

Oxford Economics's eurozone recovery tracker rose 0.5 points to 87.7 during the two weeks ending Oct. 10, remaining close to its highest point during the pandemic as financial and labor market conditions improved, offset slightly by weaker mobility. (Dow Jones Newswires)

The Belgian economy grew in the third quarter thanks to the easing of coronavirus restrictions, and exceeded its precrisis levels of economic activity, the National Bank of Belgium said. GDP grew 1.8% compared with the previous quarter. Compared with the third quarter of 2020, the economy grew 4.7%. (DJN)

The surprise 1.6% drop in Mexico's August economic activity makes it "almost a given" GDP will have contracted in the third quarter from the second quarter, Bank of Mexico Deputy Governor Jonathan Heath said, adding that 6% growth for the full year is still feasible. (DJN)

Mexico ran up a $2.4 billion trade deficit in September with imports up sharply from a year earlier and export growth limited by supply problems in the automotive industry. Exports rose 8.2% from a year earlier, with petroleum exports up 64% on higher crude oil prices and manufactured goods exports up 6.1%, the National Statistics Institute said. (DJN)

Brazil's unemployment rate declined in the three months through August to 13.2% from 13.7% in the three months through July as employers, including households, rehired many workers shed during the worst part of the coronavirus pandemic, the Brazilian Institute of Geography and Statistics said. (DJN)


(END) Dow Jones Newswires

October 28, 2021 09:44 ET (13:44 GMT)

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