Extending the short-term debt limit on the table; Inflation concerns in the UK

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Good day. A proposal by Senate Republicans would extend the US debt ceiling until December, provided Democrats set a dollar amount at the debt level. Treasury Secretary Janet Yellen has warned her department will likely exhaust its cash conservation measures by October 18 if Congress does not act. At a White House meeting on Wednesday, she said the United States was “rushing into disaster.” Meanwhile, dramatic swings in UK bond markets show rising inflation expectations. And the European Central Bank will release today the minutes of its September meeting, in which President Christine Lagarde signaled that the bank will maintain loose monetary policy for some time.

Now on to today’s news and analysis.

Top news

Democrats assess GOP offer for short-term debt ceiling extension

Senate Democrats were set to accept a GOP proposal to postpone the debt ceiling showdown until the end of the year, lawmakers said, as administration officials and business leaders were issuing serious warnings about the dangers of a possible government default.

How the United States could tackle the debt ceiling

American economy

How the tax bill could hit two US companies

The proposed tax increases on domestic and foreign profits would raise rates for Agilent and Advance Auto, but in different ways.

Forgiving student loans to include more public sector workers

The planned changes to the civil service loan forgiveness program will help about 550,000 borrowers of the 1.3 million enrolled in the program move closer to loan forgiveness, the education ministry said.

Key developments around the world

Inflation worries hit UK markets as energy prices skyrocket

Soaring energy costs have raised concerns among investors in recent weeks that inflation will not go away. One of the places where the tensions are most felt is the UK, where the bond markets have shown wild moves.

Coal shortages drive up prices and strain economies

Coal supply shortages are pushing fuel prices to record highs and laying bare the challenges of weaning the global economy from one of its most important – and polluting – energy sources.

China’s foreign exchange reserves fell in September

China’s foreign exchange reserves fell $ 31.5 billion in September from the previous month, official data showed Thursday, as capital inflows increased and other currencies entered the country’s reserves. ‘weakened due to the appreciation of the dollar. The country’s foreign exchange reserves, the largest in the world, stood at $ 3,200 billion at the end of September, against $ 3,232 billion at the end of August, according to the People’s Bank of China. (Dow Jones Newswires)

Blocking of European Union expansion plans in the Balkans

Officials in the Biden administration and many Europeans fear that blocking EU expansion in the Western Balkans could open up the region to rivals and adversaries, including Russia and China, who have concerns there. interests.

Johnson says poorly paid migrants are not an answer to labor shortages

British Prime Minister Boris Johnson has said he will continue his government’s commitment to end the influx of low-paid migrant workers despite labor shortages in the country, describing it as a radical change for the UK economy.

Overview of financial regulation

US steps up efforts to tackle white-collar crime

A Justice Department official gave a first look at the Biden administration’s approach to white-collar crime, saying the agency aims to root out wrongdoing by businesses and their executives that undermine the national security.

Justice Department Sets Up Cryptocurrency Enforcement Team

The Justice Department is in the process of establishing a National Cryptocurrency Enforcement Team to investigate and prosecute criminal cryptocurrency abuses and to recover the illicit proceeds of these crimes, the said. Deputy Attorney General Lisa Monaco.

Biden’s antitrust candidate receives warm reception in Senate

President Biden’s candidate for the Justice Department’s antitrust division has gone through his Senate confirmation hearing, receiving bipartisan support from lawmakers concerned about corporate dominance.

Forward-looking indications

Thursday (every hour ET)

7:30 a.m .: European Central Bank publishes meeting reports from September 8 to 9

8:40 am: Williams of New York Fed speaks at conference on inflation and business cycle dynamics

9 a.m .: Lane from the European Central Bank speaks at the Central Bank of Ireland webinar on the importance of data; Schnabel of the European Central Bank delivers a speech at the joint ECB-Cleveland Fed inflation conference; Bank of Israel issues policy statement

11:45 am: Lane of the European Central Bank speaks at joint ECB-Fed Cleveland inflation conference

12 p.m .: Bank of Canada’s Macklem delivers a speech on the global financial architecture

3 p.m .: Federal Reserve releases August US consumer credit data

Friday

Time N / A: Reserve Bank of India issues policy statement

5:30 a.m .: Bank of England publishes financial policy summary and brief

8 a.m .: European Central Bank’s Panetta speaks at a conference on global trade and finance hosted by the Bank of England and the British Treasury

8:30 am: US Department of Labor releases September employment report

Research

Catastrophic warnings by economists on deadlock over US debt limit

As Congress continues to fight to raise the US government’s debt ceiling, economists are sounding the alarm bells once again on this dangerous impasse. Joe Brusuelas, chief economist at consultancy firm RSM, wrote on Wednesday that “the front end of the Treasury curve flashes red” on the possibility of a public debt default on October 18. “Investors began to shed their safe haven assets in favor of holding cash, causing interest rates on Treasuries with maturities of mid-October to rise,” he wrote. time, Gregory Daco, an economist at Oxford Economics, predicted that if the United States ceases to be able to borrow, a resulting reduction in government revenues “would amount to at least 7% of GDP, pushing the United States economy into a self-inflicted recession, if The economy would lose more than 5 million jobs and the unemployment rate would rise to 8%.

– By Michael S. Derby

Remark

As central banks shrink, investors should take shelter

As the world’s two major central banks prepare to turn off the taps, financial markets are warned and asset managers will need all the downside protection they can get, writes Dimitris Valatsas.

Mr. Valatsas is Chief Economist at Greenmantle, a macroeconomic and geopolitical consultancy firm.

U.S. trade policy adapts to a China that will never change

U.S. Trade Representative Katherine Tai’s fatalistic view echoes a popular school of thought in the Trump administration and among some in Biden’s orbit: Engagement was always doomed to fail, writes Greg Ip .

China’s Fantasia property turns into a nightmare

Chinese property developer Fantasia’s dollar debt investors who feasted on hefty returns a year ago now find themselves without their principal. Many more may soon find themselves in a similar position, writes Jacky Wong.

Base points

Employment in the US private sector increased by 568,000 in September, according to the ADP’s National Economic Report. The gain was the largest since June and well above forecasts by economists polled by the Wall Street Journal who expected an increase of 425,000 jobs. (Dow Jones Newswires)

Eurozone retail sales rose 0.3% in August compared to July, European Union statistics agency Eurostat said, adding that the volume of retail sales in July fell by 2 , 6% revised downwards. Economists polled by the Wall Street Journal expected an increase of 0.8% for the month of August. (DJN)

German manufacturing orders fell 7.7% on the month in August in adjusted terms, after a revised 4.9% increase in July, according to the federal statistics office Destatis. Economists polled by the Wall Street Journal expected orders to drop 1.5% in August. (DJN)

Retail sales in Brazil fell 3.1% seasonally adjusted in August and fell 4.1% from the previous year, said the Brazilian Institute of Geography and Statistics, after buyers took advantage of the July sales, then bought less as rapidly rising prices reduced their purchasing power. Sales in July climbed 2.7% revised on the month, more than double the originally reported 1.2% increase, and were up 5.7% from a year earlier. (DJN)

 

(END) Dow Jones Newswires

October 07, 2021 09:17 ET (13:17 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

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