Fed Debate to Center on Fall Rate Moves; Bullard Steps Down From St. Louis Fed; Bullock Steps Up at RBA By James Christie
Good day. From what we have been hearing from Federal Reserve officials recently, it appears they are poised to approve a quarter-percentage-point increase this month that lifts interest rates to a 22-year high, in part because overall hiring and economic activity since May have been stronger than anticipated. So the real debate at the Fed's meeting this month will be about rate moves at subsequent meetings. In other Fed developments, St. Louis Fed President James Bullard said he would step down to assume a position in academia. The longest serving of the 11 regional Fed bank presidents, Bullard said he would serve as a senior adviser at the bank until next month but will recuse himself from any involvement with monetary policy. Bullard dissented from the Fed's first move to raise interest rates from near zero in March 2022, preferring the central bank lift them by a half-percentage point instead of a quarter point. He then pressed for a more rapid effort to raise rates throughout the year. Meanwhile in Australia today, Reserve Bank of Australia Deputy Governor Michele Bullock has been given the top job at the RBA for a seven-year term. Read James Glynn's take on the move, below.
Now on to today's news and analysis.
Top News The Real Fed Debate: What Would Prompt a Rate Hike This Fall
The outcome of the Federal Reserve's July meeting appears to be all but decided: Many officials signaled in recent speeches and interviews that they support a quarter-percentage-point increase that lifts interest rates to a 22-year high.
The real debate at the July 25-26 gathering is likely to center on what it would take to prompt another rate hike in September or in the fall. Inflation broadly slowed last month, raising the prospect that the July increase will be the Fed's final upward move in its inflation fight.
St. Louis Fed President James Bullard Steps Down
James Bullard, a vocal advocate over the past two years for stronger moves to fight inflation , resigned as the leader of the Federal Reserve Bank of St. Louis to become the dean of Purdue University's business school.
Fed's Daly Says Too Early to Declare Victory on Inflation
The Federal Reserve is still focused on raising interest rates despite the good news from June's inflation readings, San Francisco Fed President Mary Daly said on Thursday. "It is really too early to declare victory on inflation," Daly said in an interview on CNBC. The June data was very positive and it would be good if it was a downward trend, but Daly said she was in a "wait-and-see" mode. At the beginning of the week, before the inflation data was released, Daly said two more interest-rate increases were likely needed this year. Asked if she has changed her stance, Daly said two increases was "a reasonable projection" that preserved the option for the Fed to move. (MarketWatch)
U.S. Economy Producer Inflation Fades
U.S. wholesale prices rose a meek 0.1% in June and no longer appear to be rising, suggesting inflation is likely to continue to slow. Economists polled by the Wall Street Journal had forecast a 0.2% increase in the producer-price index. The increase in wholesale prices over the past 12 months slowed to 0.1% from 1.1% in the prior month, the lowest reading since September 2020. (MarketWatch)
The Luxury Tower Built for New York's Elite Still Sits Half Empty
At the luxury glass-and-limestone tower 35 Hudson Yards in Manhattan, approximately 50% of the units were still unsold as of the last week of June, more than four years after sales launched.
Key Developments Around the World Yellen Seeks to Woo China's Neighbors Without Provoking Beijing
Treasury Secretary Janet Yellen is visiting two of China's neighbors where she has pushed firms to move their operations -a week after she reassured officials in Beijing that the U.S. wasn't out to sever trade and investment ties.
As Concerns About China Grow, Germany Loosens Its Embrace
On Thursday, Germany released its first-ever "China strategy," an attempt to balance the relationship's huge economic benefits with the need to manage risks posed by Beijing's increasing authoritarianism and assertiveness.
Iran's Drone Industry Is Harder to Sanction Amid Sales to Russia
Iran is now replicating parts for deadly drones being used by Russia in Ukraine, helping its military evade international sanctions with domestically made components once sourced from overseas, according to a new analysis.
Australia Appoints Michele Bullock as Next RBA Governor
Australian Treasurer Jim Chalmers on Friday appointed Michele Bullock as the next governor of the Reserve Bank of Australia for a seven-year term. The decision elevates Bullock from her current role as deputy governor.
Glynn's Take: New RBA Governor Arrives at Critical Time for Economy By James Glynn
The appointment of Michele Bullock as the ninth governor of the Reserve Bank of Australia represents continuity for financial markets around the evolving narrative for monetary policy, but it will also bring her career background in financial stability to the fore with household budgets teetering near collapse due to soaring interest rates. Read more .
Financial Regulation Roundup Crypto Lender Celsius CEO Arrested, Sued by Regulators
Celsius Network founder Alex Mashinsky was arrested in New York early Thursday morning and charged with securities fraud , Three federal agencies also filed civil lawsuits against him or the collapsed crypto lender.
Ripple Wins Early Dismissal of Some Claims in SEC Lawsuit
Cryptocurrency company Ripple Labs has won early dismissal of some regulatory allegations related to its sale of more than $1.4 billion worth of a digital token developed to facilitate cross-border payments and known as XRP .
Small Businesses Turn to Customers to Raise Money
As it gets harder for small businesses to land conventional loans, more are turning to a new funding source: their customers. Businesses are able to sell bonds to customers and community members-with some investing as little as $10.
Forward Guidance Friday (all times ET)
Time N/A: ECB's de Guindos in Ecofin meeting in Brussels
8:30 a.m.: U.S. imports and exports for June
10 a.m.: University of Michigan consumer survey, preliminary for July
11 a.m.: New York Fed's U.S. economy in a snapshot report
Monday
8:30 a.m.: New York Fed's Empire State Manufacturing Survey
11 a.m.: New York Fed's SCE Credit Access Survey
Research Eurozone Industry Is Stagnating
Eurozone industrial production looks on track for a notable contraction in the second quarter, Barclays economist Mark Cus Babic writes in a note after output growth in May fell short of expectations. The bloc's industrial production grew 0.2% in May, missing forecasts after a steep decline in March and highlighting a broad trend of stagnation, Cus Babic writes. "Recent manufacturing surveys point to downside risks," he adds.
-Joshua Kirby
Commentary If You Find the Economy Confusing, Don't Worry: It Is
Contradictory economic gauges are telling different stories, standard leading indicators are in question, and markets appear to be prepping for both boom and bust.
Confusion should be the default state for anyone trying to predict where the economy or markets are heading. Overconfidence and inflexibility spell doom for investors, and I'm rarely sure about what to do. Still, these are unusual times, writes James Mackintosh.
The three most perplexing divergences are in finance, the structure of the economy and the way economic data is measured.
As Inflation Goes Down, Soft Landing Odds Improve
Underlying inflation has been edging lower, even though the labor market has yet to weaken significantly, suggesting the odds of inflation returning close to the Fed's 2% target without a recession are improving, Greg Ip writes.
Banks Can't Shortchange Savers Forever
Digital platforms have made it easier for savers to shop around for higher-yielding products and shift their money accordingly , be it into money-market funds or the offerings of new online and fintech players, Jon Sindreu writes.
Executive Insights
Editor's Note: Each week, we will share selections from WSJ Pro that provide insight and analysis we hope are useful to you. The stories are unlocked for The Wall Street Journal's subscribers.
The dearth of accountants has now become visible in several financial reports, with companies pleading difficulty in finding and retaining skilled people.
AI technology is developing fast, but the physical computing infrastructure that powers the models is still racing to keep up.
Business insurance has been roiled by the same forces disrupting home insurance markets in catastrophe-prone areas , with firms facing tougher conditions as they try to insure properties.
FDA approval of Alzheimer's drug Leqembi is expected to encourage venture funding for treatments of brain diseases , a field that has long thwarted drugmakers.
Sweetgreen Chief Brand Officer Nathaniel Ru Speaks to WSJ Pro
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07-14-23 0716ET
