More Rate Cuts Expected in Latin America; U.S. Mortgage Rates at Highest Level in 20-Plus Years; What's Holding India Back? By James Christie

Good day. Central banks in Latin America are leading the pack when it comes to cutting interest rates as inflation eases. Chile last month became the first major emerging-market country to reduce rates in the current cycle. The central bank of Brazil quickly followed. Central bankers from Mexico to Colombia and Peru are expected to follow soon, economists say. Some analysts add that Latin America's pivot to lower rates is an indicator of what to expect elsewhere. In the U.S., prospective home buyers, and mortgage lenders, could use a break from high interest rates, with the average mortgage rate rising to 7.09%, its highest level in more than 20 years, according to data released yesterday by mortgage giant Freddie Mac. The housing market is particularly affected by the Federal Reserve's rate moves, and has seen a slowdown in refinancing and purchase activity, battering some mortgage lenders and prompting tens of thousands of layoffs in the industry. Meanwhile, India's failure to bring more women into the labor force is complicating its ambition to capitalize on its youthful demographics as Western companies look for manufacturing alternatives to China.

Now on to today's news and analysis.

Top News Latin American Central Banks Take Lead in Cutting Rates

When global inflation surged in 2021, many of Latin America's central bankers were the first to raise interest rates, moving months before the Federal Reserve began tightening.

Recalling how hyperinflation topped 3,000% in some countries in the 1980s, central-bank economists from Brasília to Lima to Mexico City knew all too well the damage that soaring prices could cause.

Now, Latin America is again at the forefront of the cycle , cutting rates as inflation comes back down.

U.S. Economy U.S. Mortgage Rates Hit 7.09%, Highest in More Than 20 Years

The average mortgage rate rose to 7.09%, extending a lengthy stretch of high borrowing costs that has slowed the housing market-the part of the economy most directly by the Fed's high-rate policies - to a crawl.

Stock-Market Rally Makes More 401(k) Savers Millionaires

The number of people with at least $1 million in their 401(k) accounts has grown about 25% so far this year , an increase in retirement-account millionaires that coincides with the S&P 500's 16.71% surge, including dividends, since Jan. 1.

Why Child-Care Prices Are Rising at Nearly Twice the Inflation Rate

The national average price of daycare and preschool services rose 6% in July from a year before, nearly double the overall inflation rate of 3.2%, and parents could see their child-care bills climb higher this fall as providers boost tuition.

Key Developments Around the World Is China's Data Manipulated, or Flawed? Maybe Both

The unemployment rate for China's youth reached an all time record of 21.3% in June. China responded by ceasing publication of the rate, highlighting the lengths to which Beijing will go to suppress unflattering information .

Investors Fear China's 'Lehman Moment' Is Looming What's Holding Back India's Economic Ambitions?

Many countries have followed a similar economic trajectory: As they develop, women increasingly enter the workforce, further fueling the country's upward climb. India hasn't followed that path .

EU Is Set to Hit Winter Gas-Storage Targets Months Early

The European Union's gas-storage levels are on the brink of hitting their pre-winter target more than two months early, a boost for the bloc after energy ties with Russia were all but severed last year following the invasion of Ukraine.

Ship Defies Renewed Russian Blockade to Sail Out of Ukraine's Odesa

The Joseph Schulte crossed safely into Black Sea waters of NATO member Bulgaria on Thursday, a voyage Ukrainian officials said is a step toward restoring a shipping lane to and from Odesa, which is critical to world food supplies .

The Ghost Fleet Helping Russia Evade Sanctions U.S. Obsession With Weight-Loss Drugs Affects Denmark's Economy

Ozempic and Wegovy are tilting the scales of Denmark's economy, as their Danish manufacturer has generated billions of dollars of revenue and supercharged its market capitalization, leading to lower interest rates .

Financial Regulation Roundup Higher Interest Rates, Sluggish Economy Fuel European Bankruptcies

The number of European Union businesses filing for bankruptcy in the three months through June rose 8.4% from the previous quarter, reaching the highest level since 2015 . Registrations of new businesses fell 0.6%.

Why ESG Ratings Are All Over the Map

Many investors look to ESG scores as an easy way to compare firms based on environmental, social and governance practices, but so far they have largely failed to deliver as scores for the same company can vary widely .

Forward Guidance Friday (all times ET)

4:15 p.m.: Fed reports on assets and liabilities of commercial banks in U.S.

Monday

11 a.m.: New York Fed's SCE Labor Market Survey

Commentary Get Ready for a Weaker Yuan

A darkening economy probably means a weaker Chinese yuan , but don't expect a plunge.

The fundamental case for a weaker Chinese currency is quite clear. The country's trade surplus, while still massive, has begun to erode as exports weaken. Its central bank is easing more aggressively as growth hits the skids, write Jacky Wong and Nathaniel Taplin.

Executive Insights

Editor's Note: Each week, we will share selections from WSJ Pro that provide insight and analysis we hope are useful to you. The stories are unlocked for The Wall Street Journal's subscribers.

Costs to ship goods from Asia to the U.S. are turning sharply upward Plant-based plastics, the more eco-friendly option, are seeing a surge in production and use The U.S. auditing watchdog is trying to remake itself, but the going hasn't been easy Listen to a former crypto-exchange founder, Charlie Shrem [https://urldefense.com/v3/__https://open.spotify.com/episode/0hg7NmhZxvcS4meYr0ffNN__;!!F0Stn7g!BSsZM2pGe_fT5GFf-wFWoaHsj3BOD9r596BerOCZblX8YSDj5H11CeuQjpZKfwUFpphlctlq16k0yb3TCJWsPyUXBBPCHglYeXB2GQjG$ ], advocate for more compliance among crypto companies Basis Points The Conference Board Leading Economic Index fell 0.4% to 105.8 in July after declining 0.7% in June, showing its underlying components weakened. July's reading matched expectations of a consensus of economists polled by The Wall Street Journal and marked the 16th consecutive month of declines for the gauge measuring U.S. business cycles. (Dow Jones Newswires) Filings for unemployment benefits in the U.S. declined last week, a sign the labor market remains strong. Initial claims, a proxy for layoffs, decreased by 11,000 to a seasonally adjusted 239,000 in the week ended Aug. 12, the Labor Department said. It added that the four-week average for jobless claims, which smooths volatility in the weekly figures, rose slightly last week to 234,250. Claims filings averaged about 220,000 in 2019 when the labor market also was solid. (DJN) Manufacturing activity in the Philadelphia area expanded in August, snapping 11 consecutive months of contraction. The Federal Reserve Bank of Philadelphia said its index for current general activity rose to 12.0 from minus 13.5 in July. The increase suggests manufacturing activity in the region grew as the index came in above zero. (DJN) Malaysia's economy expanded at the slowest pace in nearly three years in the second quarter and missing economist forecasts. Gross domestic product grew 2.9% compared with the same period last year, supported by higher domestic demand, an improving labor market and a tourism recovery, Bank Negara said Friday. (DJN) U.K. retail sales fell more than expected in July, driven by both declining food and nonfood purchases, with clothes sales especially suffering amid unseasonably wet weather in the month. (DJN) Feedback Loop

This newsletter is compiled by James Christie in San Francisco and Perry Cleveland-Peck in Barcelona.

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08-18-23 0715ET