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Sen. Warren Warns on Critical Fed Nomination to Come; Herrera Won't Take Helm at Bank of Mexico

11/24/2021 | 10:55am EST

Sen. Warren Warns on Critical Fed Nomination to Come; Herrera Won't Take Helm at Bank of Mexico

Good day. Sen. Elizabeth Warren's announcement that she will vote against Jerome Powell's nomination for a second term as Federal Reserve chairman was widely expected after she assailed him in September as a dangerous man who would weaken banking rules. But she is also staking out ground on a Fed nomination to come for vice chairman of supervision, calling for an aggressive regulator, according to a person familiar with her talks with President Biden. Elsewhere, former Mexican Finance Minister Arturo Herrera said President Andrés Manuel López Obrador had decided to withdraw his nomination to lead the Bank of Mexico.

Please note the Central Banking newsletter is taking a break for the Thanksgiving holiday in the U.S. and will return to your inbox on Monday.

Now on to today's news and analysis.

Top News

Biden Pick of Powell for Fed Chairman Marks Rare Split With Warren

Sen. Elizabeth Warren's opposition to President Biden's renomination of Federal Reserve Chairman Jerome Powell marks her most public break with her one-time presidential rival, whose economic policy and personnel choices she has helped shape.

In casting her opposition to Mr. Powell, Ms. Warren is also staking out ground on a critical nomination to come: vice chairman of supervision. The Fed board role "must be filled by a strong regulator with a proven track record of tough and effective enforcement," Ms. Warren said, urging Mr. Biden to act quickly.

Mexico's Former Finance Minister No Longer to Head Central Bank

In a tweet, Arturo Herrera said that President Andrés Manuel López Obrador informed him a week ago that he had reconsidered his nomination. Mr. López Obrador has yet to announce a replacement nominee.

U.S. Economy

Strong Demand, Shortages Push Up Prices in U.S. and Europe

Higher prices in the U.S. this month matched October's record level, according to IHS Markit surveys, as firms continue to pass on increases to customers. In Europe, the rise in prices was the fastest in almost two decades.

U.S. Joins With China, Other Nations in Tapping Oil Reserves

The U.S. and five other countries will tap their national strategic petroleum reserves in an attempt to bring down gasoline prices that have become a sore spot with motorists and a big contributor to inflation, the White House said.

Treasury's 20-Year Bond Struggles to Catch On With Investors

The 20-year U.S. government bond was intended to help the government get the lowest possible long-term borrowing costs. For the past few weeks, however, investors have demanded extra payment to hold it instead of the 30-year bond.

Jobless Claims Expected to Edge Down

Filings for unemployment benefits likely continued their decline last week amid a hot labor market. Economists surveyed by the Journal estimate that weekly jobless claims fell to 260,000 from 268,000 the prior week.

U.S. Households Likely Increased Spending in October

Key Developments Around the World

Bank of Canada Raises Concerns Over High Household Debt

Canadians' high household debt levels are re-emerging as a concern despite the massive fiscal support offered by the federal government during the pandemic, a senior Bank of Canada official said Tuesday.

Turkey's Erdogan Looks to Rival for Investment Amid Currency Crisis

Turkey's President Recep Tayyip Erdogan is set to host the de facto leader of the United Arab Emirates in search of foreign investment that could help ease the country's economic crisis after the local currency extended a sharp slide.

RBNZ Raises Cash Rate, Forecasts Greater Monetary Tightening

New Zealand's central bank raised its policy interest rate for the second time in two months as it withdraws pandemic stimulus that has driven consumer price inflation to its highest point since 2010.

Chile's Presidential Election Shows Voter Support for Market Economy

After years of protests and political upheaval that seemed certain to shift Chile's politics sharply to the left, voters in the first round of a presidential election largely backed candidates who support the country's free-market economy.

Germany's Scholz on Track to Succeed Merkel as Chancellor

Germany's Olaf Scholz is on course to succeed Angela Merkel as chancellor after the victors of the September election reached an agreement to form the country's first three-party coalition, people involved in the negotiations said.

Financial Regulation Roundup

Federal Agencies Crafting Rules Around Banks and Cryptocurrencies

The Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency said they plan next year to begin delineating how banks can legally get involved in the growing field of cryptocurrencies.

Biden to Nominate Shalanda Young as Budget Director

The White House intends to nominate Shalanda Young as director of the Office of Management and Budget on Wednesday, a person familiar with the plans said.

JPMorgan, Goldman Sachs Assigned Higher Capital Buffers

Global financial regulators boosted capital requirements for JPMorgan Chase & Co., Goldman Sachs Group Inc. and BNP Paribas SA under rules intended to help avoid a repeat of the 2008 global financial crisis.

Sugar Industry Merger Challenged by Justice Department

The Justice Department filed an antitrust lawsuit challenging U.S. Sugar's proposed purchase of rival Imperial Sugar, arguing the tie-up would lead to higher prices for refined sugar and food-and-beverage staples for consumers.

Forward Guidance

Wednesday (all times ET)

8:30 a.m.: U.S. Commerce Department releases second estimate of third-quarter GDP

10 a.m.: University of Michigan releases final November U.S. consumer sentiment; U.S. Commerce Department releases October personal income and outlays

11 a.m.: European Central Bank's Schnabel speaks at University of Sofia event

2 p.m.: U.S. Federal Reserve releases Nov. 2-3 meeting minutes


Time N/A: Bank of Mexico releases November meeting minutes; Bank of Korea releases policy statement

3:30 a.m.: Riksbank releases interest-rate decision and monetary policy report

7:30 a.m.: European Central Bank releases Oct. 27-28 meeting minutes

8:30 a.m.: European Central Bank's Lagarde gives introductory remarks at ECB Legal Conference

Basis Points

Manufacturing in the central Atlantic region of the U.S. grew in November at broadly the same pace as in October, according to the Federal Reserve Bank of Richmond. Its Fifth District Survey of Manufacturing Activity's composite index came in at 11 this month, compared with 12 in October, missing the consensus forecast of 17 of economists polled by The Wall Street Journal. (Dow Jones Newswires)

Business activity in the U.K. continued to expand at a robust pace in November due to an acceleration in the growth of new business, according to IHS Markit, whose flash composite purchasing managers index came in at 57.7 for the month, broadly unchanged from October's 57.8. (DJN)

Eurozone economic growth has accelerated slightly, lifting this month's flash reading for the eurozone composite output index from 54.2 in October to 55.8, a two-month high, data from IHS Markit showed. Economists polled by The Wall Street Journal expected the purchasing managers index to decline to 53.2. (DJN)

Zambia's central bank increased its key lending rate by 50 basis points to 9%, citing inflationary pressure fears as Africa's second-largest copper and cobalt producer seeks to spur sluggish growth from coronavirus-related disruptions. (DJN)

German business sentiment worsened again in November, as supply bottlenecks and the rise in coronavirus cases clouded the short-term outlook. The Ifo business-climate index decreased to 96.5 points in November from 97.7 points in October, data from the Ifo Institute showed, the fifth consecutive decrease after a peak at 101.8 in June.

(END) Dow Jones Newswires

11-24-21 1055ET

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