Fed Chair Powell's Sintra Speech in Focus

Fed Chair Powell's Sintra Speech in Focus By Hardika Singh

Federal Reserve Chair Jerome Powell is set to speak this morning alongside other global central bank heads at a monetary policy conference in Sintra, Portugal, days after a promising inflation report. Meanwhile, sellers of everyday consumer goods are experiencing a growing divide in their customer base between the more and less affluent. And failed bank Silvergate Capital, which was wound down last year after a panic spread across the crypto market and led to a run on its deposits, has agreed to pay $63 million to settle regulatory probes. Read on for this news and more.

Top News Fed's Powell Takes the Stage With Other Global Bank Chiefs

The monetary-policy world has converged on Sintra, Portugal, this week for the European Central Bank's annual Forum on Central Banking. Federal Reserve Chair Jerome Powell will take part in a moderated panel discussion with ECB President Christine Lagarde and Roberto Campos Neto, governor of the Banco Central do Brasil, at 9:30 a.m. ET. ( Barron's )

U.S. Economy Why Cheap Toilet Paper Sets Off Alarm Bells Among Some Investors

Both packaged-food companies and makers of household goods such as cleansers and paper towels are describing a bifurcation whereby higher-income consumers are spending freely, but those with lower incomes are feeling increasingly pinched by the cumulative impact of years of inflation, according to Heard on the Street's Aaron Back.

Financial Regulation Failed Bank Silvergate Paying $63 Million to Settle Regulatory Probes

Silvergate Capital, formerly one of the top banks serving crypto companies, agreed Monday to pay $63 million to federal and state regulators to resolve investigations into alleged deficiencies in its anti-money laundering program.

Forward Guidance Tuesday (all times ET)

9:30 a.m.: Fed Chair speech in Portugal

10 a.m.: Job Openings & Labor Turnover Survey

Wednesday

6:30 a.m.: New York Fed president John Williams speech in Portugal

8:15 a.m.: ADP employment report

8:30 a.m.: Initial jobless claims

8:30 a.m.: U.S. trade deficit

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

10 a.m.: Factory orders

10 a.m.: ISM services

2 p.m.: Minutes of Fed's June FOMC meeting

Research Pace of Falling German Inflation Slow Enough for ECB to Pause This Month

Declining German inflation, alongside lower prints in France and Spain, will encourage the European Central Bank to go ahead with its next interest-rate cut in September, Berenberg economist Felix Schmidt says in a note. Given the pace of the slowdown, and continued price pressures in the services sector, the ECB will likely pause in July, and hold off rate cuts after September given that base effects could temporarily lift inflation later this year, he says. Some of the inflationary effect in June could be thanks to the Euro 2024 soccer tournament, if judged by data from Germany's largest state North-Rhine Westphalia, where prices for overnight stays jumped 1.9% on month, while alcoholic drinks increased 1.0%. But this effect will likely prove temporary, Schmidt adds. - Edward Frankl

Basis Points Treasury yields rose sharply Monday, with investors and analysts pinning the move largely on the fiscal implications of a potential Republican sweep in November. A basic rule of thumb for investors is that deficits are always likely to be larger if either Democrats or Republicans control both chambers of the Congress in addition to the White House. - Sam Goldfarb Construction spending dipped in May as U.S. companies and the government scaled back projects [https://www.marketwatch.com/story/construction-spending-posts-bigger-than-expected-drop-in-may-e6cc3e66#::text=Spending%20on%20construction%20projects%20fell, to%20rise%200.2%25%20in%20May.] across the nation in the face of continued high interest rates. Spending on construction projects fell 0.1% to $2.1 trillion, the Commerce Department reported Monday. The figure fell short of expectations on Wall Street. Economists were expecting construction spending to rise 0.2% in May. - MarketWatch A key barometer of U.S. factories fell in June for the third month in a row, signaling that an ongoing slump in the industrial side of the economy shows no sign of ending. The Institute for Supply Management's manufacturing index slipped to 48.5% in June from 48.7% in the prior month. Numbers below 50% signal that the manufacturing sector is shrinking. - MarketWatch New York Fed President John Williams defended the central bank's delayed response to the outbreak of inflation in 2021-saying that policymakers were grappling with extreme downside threats to the economy and financial markets in an atmosphere of tremendous uncertainty. - MarketWatch Starwood Capital Group's move to severely tighten restrictions on investor withdrawals from its $10 billion real-estate fund is rippling through the $90 billion private real-estate fund business. After the giant investment firm announced the new restrictions in May, sponsors of similar funds said they experienced a jump in redemption requests. - Peter Grant The Reserve Bank of Australia continues to sound warnings about upside inflation risks, saying in minutes of its June policy meeting that incoming data has reinforced the need for the central bank to remain vigilant , adding that the narrow policy path before it was "becoming narrower." - James Glynn The eurozone's inflation rate eased a little in June, but the rapid rise in services prices will likely reinforce the European Central Bank's cautious approach to lowering its key interest rate. Consumer prices in the bloc were 2.5% higher in June than a year earlier, the European Union's statistics agency said Tuesday. That marks a slight decrease from the 2.6% rate of inflation recorded in May. - Joshua Kirby and Ed Frankl U.K. net mortgage approvals fell in May as high interest rates lowered demand in the housing market, Pantheon Macroeconomics chief U.K. economist Rob Wood said in a note. Net mortgage approvals declined to 59,991 in May from 60,821 in April, the latest Bank of England Money and Credit report shows. "We expect transactions to pick up in the second half of the year as mortgage rates fall back," Wood said. - Miriam Mukuru A new research paper argues that the driver of a surge in post-pandemic inflation on both sides of the Atlantic was demand, not supply . - MarketWatch 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 [[e-mail]].

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

(END) Dow Jones Newswires

07-02-24 0716ET