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Barkin Open to Fed Taper; China's GDP Growth Slows; No Break Seen From Supply-Chain Troubles

10/18/2021 | 08:47am EST

Good day. Federal Reserve Bank of Richmond President Thomas Barkin said Friday that the Fed is fast approaching a decision on reducing its $120 billion a month in asset purchases. "I do think we've come a long way on both the labor market and certainly on inflation against our goals since December, so I'm supportive of beginning the process of normalization," he said on CNBC. Elsewhere, China's economic growth slowed sharply in the third quarter, reflecting a range of factors, including policy makers' decision to pare back stimulus enacted in the immediate aftermath of the pandemic last year. Disruptions to supply chains also restrained growth in China and they are expected to keep upward pressure on prices and, increasingly, curb output in the U.S. well into next year, according to economists surveyed this month by The Wall Street Journal.

Now on to today's news and analysis.

Top News

Fed's Barkin Says He Is Open To Taper Debate

Richmond Fed President Thomas Barkin declined to say when he would like the central bank to pull back on its asset-buying stimulus effort, but said that time is drawing closer.

"We're going to have a discussion in November on tapering," Mr. Barkin said on CNBC on Friday, in reference to the early November rate-setting Federal Open Market Committee meeting.

U.S. Economy

Supply-Chain Bottlenecks, Elevated Inflation to Last Well Into 2022

Uncomfortably high inflation will grip the U.S. economy well into next year, as constrained supply chains keep upward pressure on prices and, increasingly, curb output, according to economists surveyed by The Wall Street Journal.

Retail Sales Rise, Showing Resilient U.S. Consumers

Retail sales rose a seasonally adjusted 0.7% in September from August, the Commerce Department said, as households shrugged off supply constraints, the Delta variant and the end of enhanced unemployment benefits.

Unions Push Companies as Workers Stay Scarce

Union leaders are pressing to increase their ranks and secure gains for their members as workers demand more from their employers and companies struggle with labor shortages and snarled supply chains.

What's Driving America's Workers to Leave Jobs in Record Numbers

In August, a seasonally adjusted 4.3 million resignations were handed in, according to the Bureau of Labor Statistics. Though August is a traditionally high turnover month, in part because many teens and 20-somethings leave jobs to go back to school, the figure sets a record since the BLS started tracking it in 2000.

Largest Cities Had Some of the Lowest U.S. Inflation in September

While prices in the U.S. rose across the board for the year ended last month, the degree of change varied among different geographic regions and populations. Among the metropolitan areas surveyed, the largest and most urban places had some of the lowest price increases.

Glynn's Take: Australian Immigration Push Might Meet Solid Opposition

By James Glynn

Australia's economic growth has long been reliant on high immigration, but as Covid-related lockdowns end and the country looks to throw open international borders, there is a growing debate about accepting more immigrants that could reshape the economy's outlook. Read more.

Key Developments Around the World

China's Third-Quarter Economic Growth Slows Sharply to 4.9%

China's economy grew 4.9% in the third quarter from a year earlier, slowing from the previous quarter's 7.9% growth, as power and supply-chain problems added to the impact from efforts to rein in the real estate and technology sectors.

Inflation Sets Off Alarms Around the World

More than a dozen central banks have raised interest rates in response to sharp consumer-price increases, but two that haven't are those that loom largest over the global economy: the Federal Reserve and the European Central Bank.

Australian Bond Yields Spooked by Surging New Zealand Inflation

Bank Indonesia Likely to Stand Pat as Economy Signals Recovery

Indonesia's central bank is likely to keep its seven-day reverse repo rate unchanged at 3.5%, according to all six analysts polled by the Wall Street Journal. As Indonesia's economy is showing early signs of recovery, the pressure for more monetary policy support seems to be easing, ANZ says. Indonesia's economy is likely to continue improving as the government gradually eases coronavirus-related curbs and as commodity prices rise, the bank adds. ANZ expects Bank Indonesia to keep its policy rate unchanged for the rest of the year and to gradually raise rates in late 2022. The central bank's decision is due on Tuesday. (Dow Jones Newswires)

Italy's Tough Covid-19 Mandate for Workers Prompts Protests

Italians returned to workplaces Friday needing to show proof they received a Covid-19 vaccine, tested negative or recovered from the virus, a policy that could provide a preview of a similar mandate planned by the Biden administration.

Financial Regulation Roundup

Evergrande Spillover Risks Can Be Controlled, Central Bank Says

China's central bank sought to ease concern about potential contagion from China Evergrande Group's debt crisis, saying the risk of the developer's problems spilling over into the financial system was controllable.

Goldman Sachs Cleared to Own All of China Unit

Chinese regulators approved Goldman Sachs Group's application to take full ownership of a key local unit, another step in China's gradual opening of its financial system to major players from the U.S. and elsewhere.

Stablecoin Giant Tether Hit With $41 Million Fine

Tether Ltd., the largest stablecoin issuer, agreed to pay a federal regulator a $41 million penalty Friday, the latest result of the Biden administration's broader crackdown on cryptocurrency markets.

Data Concerns Drag Down U.S.-Listed Chinese Brokers

Shares in online brokers Futu Holdings Ltd. and Up Fintech Holding Ltd. fell sharply, after Chinese state media said the country's tough new data-privacy laws would pose challenges for the two Nasdaq-listed companies.

Bitcoin Price Reaches $60,000 as Traders Anticipate ETF

Bitcoin hit $60,000 Friday for the first time since April, as traders anticipate U.S. regulators will approve the first exchange-traded fund to track the cryptocurrency. Approval of an ETF that will buy bitcoin futures contracts -- though not the coins themselves -- would increase the cryptocurrency's legitimacy and make it easier for institutional investors to get exposure. Four applications for bitcoin futures ETFs are pending approval from the SEC.

Forward Guidance

Monday (all times ET)

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

10:30 a.m.: Bank of Canada releases business outlook and consumer expectation surveys

11:40 a.m.: Central Bank of Canada's Lane speaks on panel on harnessing innovation for the public interest

2:15 p.m.: Minneapolis Fed's Kashkari speaks at forum on minorities in banking

Tuesday

Time N/A: National Bank of Hungary releases policy statement; Bank Indonesia releases policy statement

7:10 a.m.: European Central Bank's Elderson gives keynote speech

8 a.m.: European Central Bank's Panetta speaks at ECB-Cebra conference on digital currencies and fintech

8:30 a.m.: U.S. Commerce Department releases September housing starts

10 a.m.: European Central Bank's Lane speaks on panel on central bank strategy reviews at Bank of Finland-Suerf conference

11 a.m.: San Francisco Fed's Daly speaks at the regional bankers forum

1 p.m.: Atlanta Fed's Bostic speaks at Fed event on exploring careers in economics

1:15 p.m.: Fed's Bowman speaks at Richmond Fed conference on gender diversity and leadership in the boardroom and C-suite

2:50 p.m.: Atlanta Fed's Bostic speaks in interview with the Hill's Editor-at-Large Steve Clemons

3 p.m.: Fed's Waller speaks on economy at Stanford Institute for Economic Policy Research meeting

Commentary

Heroic American Shoppers Braved High Prices, Low Inventory

There are a lot of worries about what supply-chain problems might do to the holiday shopping season, but people's willingness to spend might hinge on whether they feel the U.S. is on course to escape the pandemic, Justin Lahart writes.

Basis Points

Consumer sentiment in the U.S. fell slightly in early October as the spread of the Covid-19 Delta variant and supply-chain strains weighed on Americans' mood. The preliminary estimate of the index of consumer sentiment released Friday by the University of Michigan decreased to 71.4 from 72.8 in September. Economists polled by The Wall Street Journal expected a 73.0 reading. (Dow Jones Newswires)

U.S. manufacturing and trade inventories increased 0.6% on month in August, the Department of Commerce said. Stocks rose on month by 1.2% at wholesalers, by 0.6% at manufacturers and by 0.1% at retailers. Stockpiles remained lean relative to demand: the ratio of inventories to sales was 1.26 in August, compared with 1.25 in July and 1.35 a year earlier. (DJN)

Prices of goods imported to the U.S. rose 0.4% on month in September following a 0.3% drop in August, the Bureau of Labor Statistics said. The advance was led by higher petroleum prices, which rose 3.9% in the month after falling 3.2% in August. On an annual basis, prices for U.S. imports increased 9.2%, compared with an 8.9% rise in August. (DJN)

The median U.S. home sale price rose 14% year-over-year to $376,800 in September, the lowest growth rate since December 2020, according a Redfin report. September was the 14th consecutive month of double-digit price gains. (DJN)

(MORE TO FOLLOW) Dow Jones Newswires

10-18-21 0846ET

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