Commodities Rally Reflects a Better Economy, but Also Poses Inflation Risks

Commodities Rally Reflects a Better Economy, but Also Poses Inflation Risks By Bob Henderson

Surging raw materials prices suggest a strengthening economy and increasing inflation risk. Meanwhile, the U.S. job market is running hottest in Mountain West and Sunbelt cities and the Biden administration proposes slashing student debt for nearly 30 million Americans.

Top News Commodities Rally Reflects a Better Economy, but Also Poses Inflation Risks

A surge in prices for the raw materials that power manufacturing and transportation shows investors betting on a prolonged expansion-and a potential rebound in inflation. An index of global commodities prices, the S&P GSCI, has outpaced the S&P 500 this year.

U.S. Economy Utah's Tech Hub Powers America's Hottest Job Market, WSJ Ranking Finds

Salt Lake City was the country's hottest job market in 2023 , followed by three cities in Florida: Jacksonville, Orlando and Tampa. Miami also made the top 10, making Florida the top state last year. The Mountain West and Sunbelt cities bucked the trend in a year marked by layoffs in the technology, manufacturing and financial sectors.

Timiraos's Take Why the March CPI Is Looming So Large for the Fed

Inflation reports have become the most widely watched economic indicator since prices first surged three years ago. But Wednesday's consumer-price index for March has taken on outsize importance because Federal Reserve officials appeared willing to look past firmer-than-anticipated readings for January and February.

Financial Regulation Biden's Student-Loan Plan Seeks to Slash Debt for 30 Million Americans

The Biden administration is proposing a sweeping initiative to slash student debt for nearly 30 million Americans, a plan likely to face legal challenges from Republicans who helped kill an earlier White House attempt at large-scale loan cancellation.

Forward Guidance Wednesday (all times ET)

8:30 a.m.: U.S. consumer-price index for March

9:45 a.m.: Bank of Canada interest rate decision and monetary policy report

Thursday

8:15 a.m.: ECB interest rate decision

8:30 a.m.: U.S. weekly jobless claims

8:30 a.m.: U.S. producer-price index for March

Research Small business optimism declining

Pessimism is likely to keep dogging small businesses in the U.S. as inflation runs hot and the jobs market stays tight, Wells Fargo economists Sam Bullard and Patrick Barley say. The National Federation of Independent Business's monthly survey showed further deterioration in firms' outlook amid continued cost and labor pressures and worsening sales expectations, taking overall optimism to its lowest level in more than a decade. And there is little chance of a rapid recovery in outlook, Bullard and Barley say, with prices still rising more rapidly than the Fed's target and unemployment remaining low. "Small-business optimism will likely remain suppressed going forward as firms continue to face difficulties stemming from rising prices, a strong labor market and uncertain demand outlook," they write in a note. - Joshua Kirby

Basis Points Australian consumer confidence remains in an extended slump , but more worrying is that inflation expectations are also nudging higher, something that will alarm the Reserve Bank of Australia. - James Glynn The Philippines central bank kept its policy rate unchanged as widely expected, extending its pause as a recent pickup in inflation resurfaces concerns about price pressures in the country.- Kosaku Narioka and Fabiana Negrin Ochoa Thailand's central bank kept its policy rate at a decade high e despite a slow economic recovery and weak inflation, saying it expects growth to accelerate going forward. - Kosaku Narioka The Bank of Japan would consider a policy response if the yen's weakness causes inflation to rise sharply higher, Gov. Kazuo Ueda said Wednesday. - Megumi Fujikawa The Reserve Bank of New Zealand left its official cash rate steady at a policy meeting on Wednesday, but signaled that the rate will need to remain restrictive for some time yet given that inflation remains high. - James Glynn The Bank of Canada is expected on Wednesday to keep its main interest rate unchanged , with suspense tied to what hints, if any, the central bank will give about future rate cuts. - Paul Vieira Fitch cut China's outlook, revising its A+ credit rating from stable to negative while also affirming the rating. - Matthew Thomas About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Bob Henderson in New York. Send your tips, suggestions and feedback to [[e-mail]].

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

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04-10-24 0716ET