Fed Chair Jerome Powell Monetary Policy Report to Congress on Economy's Progress

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Bloomberg 14 July, 2021 - 10:05am 18 views

When is Powell testimony?

Powell will testify to the House Financial Services Committee at noon on Wednesday and on Thursday, he will appear before the Senate Banking Committee at 9:30 a.m. Eastern. MarketWatchPowell will stress patience in Capitol Hill testimony this week

When does Jerome Powell speak?

Powell will deliver semiannual testimony to Congress starting today, speaking in front of the House Committee on Financial Services at noon Eastern time. He will speak in front of the Senate banking committee on Thursday. Barron'sPowell to Testify in Congress Today. Look for His Take on Inflation Expectations

Inflation climbs higher than expected in June as price index rises 5.4%

CNBC 14 July, 2021 - 12:02pm

Inflation surged in June at its fastest pace in nearly 13 years amid a burst in used vehicle costs and price increases in food and energy, the Labor Department reported Tuesday.

The consumer price index increased 5.4% from a year earlier, the largest jump since August 2008, just before the worst of the financial crisis. Economists surveyed by Dow Jones had been expecting a 5% gain.

Stripping out volatile food and energy prices, the core CPI rose 4.5%, the sharpest move for that measure since September 1991 and well above the estimate of 3.8%.

On a monthly basis, headline and core prices rose 0.9% against 0.5% estimates.

Stock market futures fell following the report, while government bond yields, which have been down precipitously, were mixed.

"What this really shows is inflation pressures remain more acute than appreciated and are going to be with us for a longer period," said Sarah House, senior economist for Wells Fargo's corporate and investment bank. "We are seeing areas where there's going to be ongoing inflation pressure even after we get past some of those acute price hikes in a handful of sectors."

A separate report from the Labor Department's Bureau of Labor Statistics noted that the big monthly hike in consumer prices translated into negative real wages for workers. Real average hourly earnings fell 0.5% for the month, as a 0.3% increase in average hourly earnings was more than negated by the CPI increase.

Inflation has been escalating due to several factors, including supply-chain bottlenecks, extraordinarily high demand as the Covid-19 pandemic eases and year-over-year comparisons to a time when the economy was struggling to reopen in the early months of the crisis.

Policymakers at the Federal Reserve and the White House expect the current pressures to begin to ease, though central bank officials have acknowledged that inflation is stronger and perhaps more durable than they had anticipated.

"We think it's very important to strip out the pandemic-affected sectors," a senior White House economic advisor told CNBC.com. "We're not saying that those pandemic-related risks aren't real. We're not ignoring them, but we're also trying to put them into a longer-term perspective, because the underlying price index outside the pandemic-affected areas is quite tame."

Fed Chairman Jerome Powell likely will be asked for his views on inflation when he speaks Wednesday and Thursday to separate House and Senate panels. Powell has been steadfast that inflationary pressures are primarily transitory, though a Fed report Friday indicated that upside risks are increasing.

"This does increase some of the jitters among some [Fed] members," Wells Fargo's House said. "We already saw they were getting more worried about inflation at the June meeting. If you parse through this, there are a number of areas where inflation is picking up and likely has staying power. That's going to make some folks nervous."

Much of the price pressures have come from sectors particularly influenced by the shutdown — used car prices, air fares and transportation costs, to name three.

That was the case again last month, as used car and truck prices leaped 10.5%, accounting for more than one-third of all the price index's gains. For the 12-month period, used car and truck prices have burst 45.2% higher.

Food and energy prices also were up substantially, 0.8% and 1.5% respectively. The gasoline index rose 2.5% in June and is up 45.1% over the past 12 months. Food has increased 2.4% in the past year.

However, housing and shelter prices continue to climb, adding fuel to the belief that inflation could stick around for a while.

Shelter makes up nearly one-third of the CPI and increased 0.5% for the month and 2.6% from June 2020.

Consumers see prices overall up 4.8% in the next 12 months, according to a New York Fed survey released Monday, though a separate survey from Bank of America out Tuesday indicated that professional investors are more inclined to believe that inflation will be temporary.

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Market Coverage: Wednesdasy July 14th Yahoo Finance

Yahoo Finance 14 July, 2021 - 12:02pm

Powell Expects Inflation to Moderate, but Will Likely Remain Elevated This Year

The Wall Street Journal 14 July, 2021 - 07:30am

Pandemic-related bottlenecks and other supply constraints have led to rapid price increases for certain goods and services “which should partially reverse as the effects of the bottlenecks unwind,” Mr. Powell said in testimony prepared for delivery later Wednesday before the House Financial Services Committee.

Mr. Powell is set to present the Fed’s semiannual monetary-policy report to members of the committee on Wednesday and to members of the Senate Banking Committee on Thursday.

U.S. consumer prices continued to accelerate in June at the fastest pace in 13 years as the recovery from the pandemic gained steam. The Labor Department reported Tuesday that its consumer-price index increased 5.4% in June from a year earlier. Excluding volatile food and energy categories, prices rose 4.5% from a year earlier, the most in 30 years.

A separate inflation measure released Wednesday morning called the producer-price index, which tracks the prices businesses receive for their goods and services, increased 7.3% in June from a year earlier, versus a 6.6% increase in May. Excluding food and energy, the index climbed 5.6% in June from a year ago.

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Stocks Waver as Powell Begins Testimony

Barron's 14 July, 2021 - 05:15am

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Stocks wavered on Wednesday, as the Federal Reserve chairman began two days of Congressional testimony after another higher-than-expected inflation reading. 

By noon, the  Dow Jones Industrial Average dropped 42 points, or 0.1%, while the  S&P 500 fell 0.1% and the  Nasdaq Composite declined 0.2%.

Inflation continues to beat expectations. Data from the Bureau of Labor Statistics this morning showed that the producer-price index rose 7.3% on a yearly basis in June, beating estimates of 6.8%. Companies have been passing along those price increases, as the consumer-price index beat estimates Tuesday

Recently, stocks have kept hitting new record highs as investors have pushed through concerns that inflation is long-lasting or that the Fed will raise interest rates too soon. “But the current data has got to be getting people a little bit concerned,” says Tony Bedikian, head of global markets at Citizens Bank.

Fed chair Jerome Powell is set to begin two days of testimony on Capitol Hill, where he will deliver his semiannual report on the state of monetary policy and the economy to Congress. The central banker is expected to stress the Fed’s relaxed policy stance.

The price of WTI crude oil fell 1.6% to $74 a barrel as OPEC has indicated it intends to boost oil production.

In Asia, Tokyo’s Nikkei 225 slipped 0.4%, while Hong Kong’s Hang Seng declined 0.6%. The Shanghai Composite fell 1.1%. The FTSE 100 in London was 0.5% lower as the pan-European Stoxx 600 slipped 0.1%. The CAC 40 in Paris and Frankfurt’s DAX were flat.

The travel sector was taking a beating, led down by shares in TUI, the world’s largest tourism group and an operator of hotels, airlines, and cruises. TUI stock dropped while airlines Air France-KLM, Lufthansa, Ryanair, and IAG —the owner of British Airways—nosedived along with shares in hotels giant InterContinental Hotels Group.

Shares in major British multinationals, which do business in dollars and are sensitive to currency shifts, were broadly lower. U.K. inflation data, showing a rise in consumer prices and relative decline in producer prices, saw sterling strengthen against the dollar. Unilever, Vodafone, GlaxoSmithKline, and British American Tobacco were among the fallers in London.

Wells Fargo  & Co. (ticker: WFC) stock rose 1.7% after reporting a profit of $1.38 a share, beating estimates for 98 cents a share, on revenue of $20.3 billion, above expectations for $17.8 billion. 

Bank of America  (BAC) stock dropped 4.2% after reporting a profit of 80 cents a share, beating estimates of 77 cents a share, on revenue of $21.6 billion, below expectations for $21.8 billion. 

Citigroup  (C) stock fell 1% after reporting a profit of $2.85 a share, beating estimates of $1.96 a share, on revenue of $17.5 billion, above expectations for $17.2 billion. 

Delta Air Lines  (DAL) stock slipped 2.5% after reporting a loss of $1.07 a share, narrower than estimates of a loss of $1.38 a share, on sales of $7.1 billion, above expectations for $6.2 billion. 

Shares in Hugo Boss rose more than 2% in German trade after the luxury fashion group reported earnings before interest and taxes of €42 million ($49.5 million), crushing expectations of around €17 million.

Barratt stock rose 2% in London trade as one of the U.K.’s largest housing developers said in a trading update that it expects full-year profit before tax to be above the top end of the range of market expectations.

Peloton Interactive  (PTON) stock dropped 4.4% after getting downgraded to Neutral from Outperform at Wedbush. 

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

Stocks wavered on Wednesday, as the Federal Reserve chairman began two days of Congressional testimony after another higher-than-expected inflation reading.

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