Inflation Expectations in U.S. Still Climbing; Dodd and Frank Urge Second Fed Chair Term for Powell

Good day. The Federal Reserve Bank of New York said its August Survey of Consumer Expectations found Americans' expectations of future inflation hit a record high last month and are blasting through the Fed's 2% inflation target. Meanwhile, former Sen. Chris Dodd (D., Conn.) and former Rep. Barney Frank (D., Mass.), the main sponsors of the 2010 financial-regulatory legislation bearing their names, are backing Jerome Powell for a second term at the helm of the Fed, in contrast to some liberal Democrats disappointed by measures to ease financial regulations under Mr. Powell.

Now on to today's news and analysis.

Top News

Inflation Expectations Continue to Climb, New York Fed Survey Shows

Americans' expectations of future inflation hit a record high last month, according to a new report from the Federal Reserve Bank of New York, potentially challenging the central bank's confidence that inflation pressures will ebb over time.

In its August Survey of Consumer Expectations, the bank said Monday that respondents see inflation a year from now at 5.2%, up from expectations of 4.9% last month. Three years from now, it is expected to be at 4%, up from the 3.7% expected in July. Both readings mark record-high readings for data that goes back to 2013.

Chris Dodd, Barney Frank Back Fed Chairman Powell for Second Term

The two main sponsors of the 2010 financial-regulatory legislation that bears their names said Monday that President Biden should reappoint Federal Reserve Chairman Jerome Powell to a second term atop the central bank.

U.S. Economy

White House Works to Keep Moderate Democrats' Backing

With talks over a $3.5 trillion antipoverty bill heating up among Democrats, the White House is trying to ensure inflation fears don't drive moderates away from supporting the plan as Republicans argue it will speed a surge in prices.

Democrats Release Details of Proposed Tax Increase

U.S. Budget Deficit Narrowed to $2.7 Trillion

The U.S. budget deficit narrowed to $2.7 trillion during the first 11 months of the fiscal year from $3 trillion a year earlier, with the gap between spending and revenue declining as the recovery from a pandemic-induced slump boosted taxes.

Key Developments Around the World

RBA's Lowe Pours Cold Water on Early Rate-Increase Speculation

Reserve Bank of Australia Gov. Philip Lowe on Tuesday moved to strongly push back on current market pricing suggesting the central bank could raise interest rates as early as late 2022, saying the bank's desired wages and inflation targets remain a long way off.

Global Oil Demand to Exceed Pre-Pandemic Levels Next Year

In its closely watched monthly market report, OPEC raised its forecast for global oil demand for 2022 by just under a million barrels a day to 100.8 million barrels a day, higher than 2019's demand level of 100.3 million barrels.

Struggle to Reverse a Shrinking Population Hits Some Nations Harder

From Portugal to Singapore and across most of the Americas, birthrates are falling, and population growth in the industrialized world has stalled or reversed, bringing the specter of a shrinking labor force and stagnant growth.

Financial Regulation Roundup

Biden Moves to Fill CFTC Vacancies

President Biden said he plans to nominate Rostin Behnam as chairman of the Commodity Futures Trading Commission and announced two additional picks to fill vacancies at the derivatives regulator.

Pre-IPO Marketplace Forge Global to Go Public in SPAC Deal

Forge Global Inc., an online marketplace for buying and selling shares of private firms, plans to go public by merging with a special-purpose acquisition company, Motive Capital Corp., that values the resulting company at $2 billion.

Alvaro Bedoya Set to Be Nominated to FTC Post

The White House is preparing to nominate Alvaro Bedoya, an academic who has criticized facial-recognition and other digital technologies that can be used for surveillance, to a seat on the Federal Trade Commission.

Companies Tied to Chinese Exile to Pay $539 Million Over SEC Action

Three media companies tied to exiled Chinese businessman Guo Wengui have agreed to pay $539 million to settle regulatory claims they violated investor-protection laws when they raised money from over 5,000 investors.

Forward Guidance

Tuesday (all times ET)

8:30 a.m.: U.S. Labor Department releases August CPI

Wednesday

8:30 a.m.: European Central Bank's Schnabel gives welcome remarks at ECB bond market contact group online conference

9:15 a.m.: Federal Reserve releases August U.S. industrial production

11 a.m.: European Central Bank's Lane speaks at Institute for Monetary and Financial Stability webinar on ECB's monetary policy strategy

Research

Fed Stock Trading Emboldens Central Bank Critics, Report Says

News last week that leaders of the Dallas and Boston Federal Reserve banks were actively trading stocks and other investments while setting monetary policy continues to reverberate. "Once it might have been acceptable for Fed officials to own lots of stocks and bonds as long as none was issued by the banks that directly executed monetary policy and were also regulated by the central banks," Karen Petrou of Federal Financial Analytics wrote Monday in a report to clients. "Now, of course, none of this makes sense." Ms. Petrou believes the situation, as well as other factors, calls into question why quasi-private regional Fed banks operate under government control. She also believes the situation will empower critics of the Fed. "Alleged conspiracies based on assertions that top Fed officials profited at the expense of what's left of the middle class are very, very easy to understand when most Americans are very, very angry about economic inequality," she wrote.

-- Michael S. Derby

Commentary

DeFi Is Crypto's Wall Street, Without a Safety Net

"Trade. Earn. Win." The happy bunny flipping a pancake and the double- or triple-digit interest rates on offer are closer to the marketing style of Las Vegas than Wall Street, James Mackintosh writes. But PancakeSwap and its decentralized finance competitors are bringing casino capitalism to the crypto masses.

Basis Points

A sudden slowdown in wind-driven electricity production off the coast of the U.K. in recent weeks has whipsawed through regional energy markets, lifting natural-gas prices, already boosted by the pandemic recovery and a lack of fuel in storage caverns and tanks, to all-time highs.

North American shipping costs jumped last month as freight volumes and rates increased in a tight transport market, according to Cass Information Systems, which said freight expenditures rose 42.2% in August from a year earlier and increased 9.2% from July. (Dow Jones Newswires)

India's benchmark consumer-price index increased 5.3% in August from a year earlier, following a 5.6% rise in July, according to government data. The inflation rate is in line with the Reserve Bank of India's target of 2% to 6%. The urban consumer-price index for July rose 5.32% on year while the rural reading increased 5.28%, the data showed. (DJN)

Turkey's current-account deficit for July stood at $683 million compared with a deficit of $1.13 billion for June, according to the country's central bank. The deficit narrowed by $1.3 billion from the same month a year earlier while the 12-month rolling deficit was $27.83 billion, the central bank added. (DJN)

New Zealand house prices hit a record high again in August as strong demand continued despite measures intended to cool the market, with the median house sales price up 25.5% from a year earlier to 850,000 New Zealand dollars ($ 605,000), the Real Estate Institute of New Zealand said. (DJN)


  (END) Dow Jones Newswires
  09-14-21 0830ET
  Copyright (c) 2021 Dow Jones & Company, Inc.

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