Fed Chair Powell Speech in Focus; Bank of Korea to Boost Liquidity; Investors Watch French Budget Mess

Fed Chair Powell Speech in Focus; Bank of Korea to Boost Liquidity; Investors Watch French Budget Mess By Vicky Ge Huang

Federal Reserve Chair Jerome Powell is about to deliver his final publicly scheduled comments on the state of the economy before the central bank's last rate-setting meeting this year.

The FOMC has lowered the federal-funds rate by 0.75 percentage point since September, leaving it at a target range of 4.5% to 4.75%. Interest-rate futures market pricing on Tuesday implied a roughly 72% likelihood of another quarter-point decrease on Dec. 18.

On Tuesday, Fed governor Adriana Kugler credited the U.S. economy's ability to maintain solid growth with cooler inflation and slower hiring this year to a boost in both immigration and worker productivity.

Last week's major economic updates offered new details but no consequential surprises, leaving big questions hanging over the economy's trajectory heading into the final month of the year.

Meanwhile, stocks fell this morning in South Korea, where President Yoon faces possible impeachment after briefly enforcing martial law. The country's government promised "unlimited" liquidity to keep its financial markets stable.

And in France, the price Paris must pay to sell its debt rose early Wednesday as the market remained wary of French sovereign bonds ahead of a no-confidence vote expected later today that may bring down the government.

Top News Fed's Powell Is Speaking in Last Chance to Signal Next Move on Rates

Federal Reserve Chair Jerome Powell will be interviewed by Andrew Ross Sorkin at the New York Times DealBook Summit on Wednesday, beginning at 1:40 p.m. ET. That will give investors another look at his views before a quiet period ahead of the Federal Open Market Committee's Dec. 17-18 meeting begins on Saturday.

"The economy is not sending any signals that we need to be in a hurry to lower rates," Powell said during his most recent public appearance, on Nov. 14. "The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully."

Officials are contending with stubborn inflation readings and a foggy picture of what is happening in the labor market as they weigh what to do next in terms of monetary policy. Data to be released later this month may well make the outlook clearer.

The November employment report is scheduled for Friday, while the November consumer price index lands on Dec. 11. A stronger-than-expected jobs report or hotter-than-forecast inflation could nudge Fed officials to support a rate-cut pause. (Barron's)

Data Keep Markets in Suspense About Fed Cuts Fed's Kugler Credits 'Positive Supply Shocks' for Solid Economy

In remarks prepared for delivery Tuesday, Federal Reserve governor Adriana Kugler implied that any changes that reverse those two "positive supply shocks" or that create offsetting "negative supply shocks" could make it harder for the Fed to bring down inflation .

Positive supply shocks in the form of higher workforce growth and the ability of those workers to increase their output per hour have helped the Fed after earlier negative supply shocks, including early retirements of workers, reduced immigration, and supply-chain bottlenecks, contributed to higher inflation in 2021 and 2022, Kugler said.

Bank of Korea to Boost Liquidity to Help Stabilize Markets

The Bank of Korea said Wednesday that it will deploy measures to expand short-term liquidity temporarily to address market volatility following the brief declaration of martial law in the country.

The central bank said it started to buy extra repurchase agreements, or repos, from more financial institutions to increase liquidity available in markets.

The BOK's move followed Finance Minister Choi Sang-mok's announcement earlier in the day to offer an unlimited supply of liquidity, if needed, to stabilize markets that had been rattled by President Yoon Suk Yeol's surprise declaration of martial law late Tuesday night.

Volatility in financial and foreign-exchange markets had increased significantly right after the declaration of martial law, the BOK said in a statement.

The markets have stabilized somewhat since the martial law was lifted by President Yoon after the parliament voted against it hours later, the statement said. (Dow Jones Newswires)

French Govt Faces Key No-Confidence Vote Amid Budget Standoff

French Prime Minister Michel Barnier faces a pivotal no-confidence vote Wednesday that risks toppling his government and derailing France's efforts to get its public finances back on track.

Bond-market participants in the U.S. and abroad are assessing whether this could turn into a sovereign-debt crisis for the country. Although there are few to no signs of contagion in the broader European bond market, traders, investors and analysts are weighing the extent to which a crisis in France could spill over into other countries. U.S. Economy Breaking Down Trump's Tariffs on China and the World, in Charts

Trump is poised to ratchet up the pressure on China and other trading partners again, recently proposing an additional 10% tariff on all products from China and a 25% tariff on all Mexican and Canadian imports. That could upend the U.S.-Mexico-Canada Agreement he signed in 2020 that maintained largely duty-free trade between the three North American countries.

U.S. Job Openings Increased in October

Job openings in the U.S. increased in October , bucking a trend of falling vacancies for most of the past two years. The number of openings on the last day of October was 7.7 million, up from a revised 7.4 million in September, the Labor Department said Tuesday in its latest job openings and labor turnover survey, or Jolts.

Working-Class Blacks in the U.S. Make Gains While Whites Fall Back

A big shift is under way in American life: The prospects for working-class and poor white Americans are declining, while they are improving for Black Americans in the same economic tier. That reversal of fortunes was documented in a landmark study published earlier this year by Harvard University researchers.

Global Test Scores Show U.S. Students Still Struggling After Pandemic

American students' math scores took a bigger hit from the pandemic than their peers overseas, according to a closely watched international exam.

Financial Regulation What Trump's Views on Too-Big-To-Fail Mean for Your Bank Account

President-elect Donald Trump disapproved of federal bailout for Silicon Valley Bank customers. That should be a warning for uninsured depositors at most banks.

Founder of Failed Crypto Lender Celsius Pleads Guilty to Fraud

Alex Mashinsky, the founder and former CEO of defunct cryptocurrency lender Celsius Network, pleaded guilty to two counts of fraud on Tuesday in one of the highest-profile criminal cases to emerge from the 2022 collapse of the crypto markets.

Forward Guidance Wednesday (all times ET)

8:15 a.m.: ADP National Employment Report

9:45 a.m.: US Services PMI

10 a.m.: ISM Report On Business Services PMI

2 p.m.: U.S. Federal Reserve Beige Book

Thursday

8:30 a.m.: U.S. International Trade in Goods & Services

8:30 a.m.: Unemployment Insurance Weekly Claims Report - Initial Claims

2 p.m.: U.S. Securities and Exchange Commission Closed Meeting

Research Jolts Data Undercut Labor-Market Concerns

Solid data from the October Jolts report help refute a narrative that the labor market has been weakening, Eric Wallerstein of Yardeni Research tells The Wall Street Journal. Declines in the rates of quits and hires from pandemic-era highs are to be expected and don't necessarily reflect a concerning slowdown, he says. "It's very natural for people to eventually settle into their jobs, but there's definitely still a shortage of workers with various skills in various parts of the economy," Wallerstein says. He suggests the pace of hiring could be seen picking up in the coming months as more recent data come to reflect businesses' post-election optimism. - Matt Grossman

Basis Points The global economy is set to grow at slightly a faster pace next year as inflation continues to cool, but could falter if tariffs rise and governments fail to narrow wide budget deficits, the Organization for Economic Cooperation and Development said Wednesday. An estimated 197 million people shopped online or in stores from Thanksgiving through Cyber Monday, according to preliminary estimates from the National Retail Federation, a retail trade group. That is nearly 14 million more than the group initially projected. (Barron's) In his first public comments about his dinner last week with President-elect Donald Trump, Canadian Prime Minister Justin Trudeau said he addressed trade issues related to steel, aluminum, energy and softwood. Canadian Finance Minister Chrystia Freeland offered no assurances that the Liberal government would be able to unveil a fall economic update, as per the country's parliamentary tradition. Inflation in the U.K. has fallen more rapidly than the Bank of England had expected, but there is some way to go before it has been tamed, Gov. Andrew Bailey said Wednesday. A private gauge of China's services activity suggests that the sector has continued to expand, with firms' optimism at a seven-month high as Beijing's policy support boosted market confidence. Australia's economy would have contracted sharply in the third quarter had it not been for a wave of state and federal government spending keeping it afloat, Treasurer Jim Chalmers said Wednesday. Saudi Arabia's sway over the Organization of the Petroleum Exporting Countries long meant unquestioned dominance of the global oil market. Those days are over , at least for now. 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 Vicky Ge Huang 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.

(END) Dow Jones Newswires

12-04-24 0715ET