Here's What Powell Had to Say About the Economy; Eurozone Inflation Falls Below ECB Target

Here's What Powell Had to Say About the Economy; Eurozone Inflation Falls Below ECB Target By Hardika Singh

Growth is in focus as a new quarter gets under way, with data on manufacturing and the U.S. jobs market coming up.

The S&P 500 and the Dow industrials both closed at fresh record highs Monday after Federal Reserve Chair Jerome Powell said the economy was in solid shape and "we intend to use our tools to keep it there." He added: "This is not a committee that feels like it's in a hurry to cut rates quickly."

Scheduled for release this morning are S&P Global and ISM purchasing managers indexes for manufacturing, due at 9:45 a.m. and 10 a.m. ET, respectively. JOLTS job openings figures are also set to go out at 10 a.m., ahead of Friday's monthly nonfarm payrolls report.

Later in the day, Fed officials including Raphael Bostic, Lisa Cook, Tom Barkin and Susan Collins are scheduled to speak at 6:15 p.m. ET. Investors are also awaiting this evening's debate at 9 p.m. ET between vice-presidential candidates for more clues on the U.S. election.

In Europe, government bonds rallied after eurozone inflation fell below the European Central Bank's target for the first time in more than three years.

Top News Powell: Rate Cuts Can Sustain Soft Landing, but No Need to Rush

Federal Reserve Chair Jerome Powell said the central bank would continue to reduce interest rates from a two-decade high to help support hiring and preserve a growing economy. But he suggested officials didn't currently see a reason to lower them as aggressively as they did at their most recent meeting.

Powell said Monday afternoon at a conference in Nashville, Tenn. that officials were focused on bringing rates down to a level that neither spurs nor slows economic activity. To lean against expectations that officials might continue making large cuts, Powell cited economic projections they released two weeks ago that showed most officials penciled in the equivalent of two more quarter-point cuts this year. The Fed has two more meetings this year.

"If the economy performs as expected, that would mean two more [quarter-point] cuts this year," Powell said during a moderated discussion. Rates could move "over time" toward a more neutral stance if economic activity remained healthy, though he said rates weren't on a preset path, meaning bigger cuts were possible if the job market shows greater deterioration.

Eurozone CPI Falls Below Target for First Time in Over Three Years

Eurozone inflation fell below the European Central Bank's target for the first time in more than three years, suggesting a lengthy struggle to bring price rises under control is nearing an end. Consumer prices increased by 1.8% on year in September across the 20 nations that make up the eurozone, falling from a month earlier.

Inflation could rise again in the year's final months as base effects in energy lessen, ECB President Christine Lagarde said Monday . But the rate should subsequently return to target promptly, a trend that the central bank will take into account at its coming policy meeting, she said.

Bonds in Western Europe gained in price, pushing yields lower . Germany's 10-year yield fell, putting it on course for its lowest end-of-day level since January.

Related: German Inflation Falls Further Below ECB Target, Raising Chance of October Rate Cut U.S. Economy Dockworkers Launch Strike at Ports From Maine to Texas

Members of the International Longshoremen's Association, which represents 45,000 dockworkers at East Coast and Gulf Coast ports, began picketing early Tuesday at cargo terminals that handle more than half of American import and export volumes as the contract with port employers expired.

That 5% CD Is a Great Deal-Until the Bank Calls It Back

The era of 5% cash returns is ending early for some investors . With the Federal Reserve cutting interest rates, some savers are learning there is fine print on their certificates of deposit.

The Big Shift From Salaries to Bonus-Based Pay

More Americans are in jobs where a chunk of their pay isn't guaranteed . In incentive pay programs, base salaries are often fleshed out with monthly or quarterly bonuses conditional on hitting certain targets.

Financial Regulation TD Securities to Pay Over $28 Million in Connection With Spoofing

TD Securities will pay more than $28 million to resolve three separate cases of spoofing, a type of fraudulent trading that involves flooding the market with fake orders in an effort to push a stock price up or down.

The Giant Hedge Fund That Hates Risk and Still Wins

The investment pros at one of the world's largest hedge funds, Millennium Management , have a strict rule: Don't lose money. Millennium's obsession with not losing money has powered $56 billion in investor gains.

Forward Guidance Tuesday (all times ET)

9:45 a.m.: S&P final U.S. manufacturing PMI

10 a.m.: ISM manufacturing

10 a.m.: Construction spending

10 a.m.: Job openings

11:10 a.m.: Fed Governor Lisa Cook speaks

6:15 p.m.: Richmond Fed President Tom Barkin, Atlanta Fed President Raphael Bostic and Boston Fed President Susan Collins on a joint panel about technology-enabled disruption

Wednesday

8:15 a.m.: ADP employment

11 a.m.: Fed Governor Michelle Bowman speaks

Research Forecasts See Wide Range of Job-Market Outcomes

On the whole economists are expecting to see in Friday's print that U.S. job growth held steady in September at 144K new jobs, compared with 142K in August, according to The Wall Street Journal's survey. But under the surface estimates vary widely. Economists at Citi project a disappointing 70K new jobs. Bloomberg Intelligence analysts, however, think payrolls grew by 270K, which would be a substantial beat. "Any number close to these extremes and we will have a dramatic move in both rates and the yield curve," writes Andy Brenner of NatAlliance Securities. A decisive acceleration or slowdown in hiring could solidify the consensus on the state of the economy and expectations for the Fed's next move. - Matt Grossman

Commentary The Surprise Market Winner of 2024: The Great British Pound

"Credit rates are going up, up, up and the British pound is the envy of the world," exclaims Mr. Banks in the 1964 classic film "Mary Poppins." For the first time since the U.K. chose to leave the European Union, there may be some truth to that statement, writes Jon Sindreu for The Wall Street Journal.

In September, sterling gained more than 1% against a broad basket of trading currencies, according to data from the Bank of England. Year-to-date, it is up 4.7%, thanks to gains of 4.7% and 4.1% against the U.S. dollar and the euro, respectively. This makes the pound the best performer among currencies issued by Group of Ten, or G-10, developed nations. It is now only a hair's breadth away from reaching its level on the day of the Brexit referendum on June 23, 2016. Read more .

Basis Points Rescuers raced to reach isolated communities cut off by devastating floods in the wake of Hurricane Helene, as the death toll surpassed 100 across six states in the Southeastern U.S. Ballooning home insurance costs and the perennial threat of violent storms hit Tampa Bay housing market hard . Defense startups developing weapons to counter China have a problem . They depend on the country for parts. China's real-estate bust left behind tens of millions of empty housing units. Now that historic glut of unoccupied property is colliding with China's shrinking population , leaving cities stuck with empty homes. Sentiment among large Japanese manufacturers held steady during the three months to September, a Bank of Japan survey showed. Australian retail sales were much stronger than expected in August as the impact of income-tax cuts in July fed through to spending, while unusually warm weather lifted clothing and cafe sales. Mexico's first female president has a big problem : her mentor's legacy. Claudia Sheinbaum's nationalist predecessor implemented changes that risk blowing up longstanding ties with the U.S. About Us

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ's global team of reporters and editors. This newsletter was compiled by markets reporter Hardika Singh in New York. Send your tips, suggestions and feedback to [hardika.singh@wsj.com].

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

October 01, 2024 07:17 ET (11:17 GMT)

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