Week InReview

Friday | Oct 20, 2023

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Powell suggests another hold.

Jerome Powell, chair of the US Federal Reserve, during an interview at an Economic Club of New York event in New York on Thursday, Oct. 19, 2023. Powell suggests the Fed will hold rates. Photo: Bess Adler | Bloomberg

Federal Reserve Chair Jerome Powell suggested the US central bank is inclined to hold interest rates steady again at its next meeting while leaving open the possibility of a future hike if policymakers see further signs of resilient economic growth. His comments effectively affirm market expectations that the Fed will skip a rate increase for a second straight meeting when officials gather on Oct. 31 and Nov. 1.

let's recap...

Benchmark 10-year Treasury yields rose 0.07 percentage points to 4.91%, the highest level since 2007. Photo: Patrick Semansky | Associated Press

Treasury yields surge to highest level since 2007 on higher rate fears

Stocks fall and gold rises as Middle East tensions push investors to haven assets. Treasury yields rose to their highest level in 16 years and global stocks sank on Wednesday as nervous investors weighed up signs of US economic resilience to higher interest rates. (Financial Times | Oct 18) see also Long-end Treasuries hit by wildest swings since 2020 pandemic (Bloomberg Markets | Oct 17)

US bond market is losing its strategic footing

Last week’s unusual turbulence in US Treasuries points to a deeper issue than just the latest reading of the runes on inflation and the interest rate intentions of the Federal Reserve. The US bond market is losing its strategic footing, whether in economics, policy, or technical aspects. Unusual volatility in yields points to longer-term challenges for the most influential segment of the world’s financial markets. (Financial Times - opinion | Oct 17)

US regulator pledges harsher punishment for Wall Street misdeeds

Wall Street firms will soon face stiffer penalties for running afoul of US derivatives rules and more often admit their misconduct when settling with the Commodity Futures Trading Commission. When US regulators, including the CFTC, agree to resolve cases, financial companies are often allowed to pay fines while not admitting to the government’s allegations. But the commission’s top enforcement attorney, Ian McGinley, said Tuesday that the watchdog will start taking a tougher stance in negotiations. (Bloomberg Markets | Oct 17)

Fiduciary rule regulatory gaps get Labor agency's attention

The US Labor Department is focusing on filling in the gaps state and federal regulations have left behind as it moves forward with rulemaking that will redefine who qualifies as a retirement plan investment advice fiduciary. Regulation Best Interest, which the Securities and Exchange Commission promulgated in 2019, and the best-interest model language dozens of states have adopted doesn’t protect all private-sector retirement plans and participants from receiving conflicted advice. (Bloomberg Law | Oct 17)

A recession is no longer the consensus

Economists are turning optimistic on the US economy. They now think it will skirt a recession, the Federal Reserve is done raising interest rates and inflation will continue to ease. In the latest quarterly survey by The Wall Street Journal, business and academic economists lowered the probability of a recession within the next year, from 54% on average in July to a more optimistic 48%. That is the first time since the middle of the year that they have put the probability below 50%. (The Wall Street Journal | Oct 15)

a little bit of cyber

Photo illustration: Cam Pollack | The Wall Street Journal, iStock

Bots are joining your meetings and they think you talk too much

Workers around the world are adopting artificial intelligence to streamline tasks ranging from email writing to product development. Now companies have begun using AI to root out another workplace inefficiency: meetings. New AI technologies count speaking time and interruptions; saying ‘absolutely’ eight times is too much.

— The Wall Street Journal

Top cyber agency pushes toward first hack reporting rule

A new US notification requirement for victims of malicious hacks could push in-house counsel to disclose cyberattacks when faced with ransomware and other network compromises. Among the first-ever cyber regulations to be enforced by the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency, the top US cyber authority, the proposed rules would require companies in 16 critical infrastructure sectors — including healthcare, energy, and finance — to report security incidents within three days and ransomware payments in 24 hours.

— Bloomberg Law

Lloyd’s finds major hack of a payments system could cost $3.5 trillion

Insurers and policymakers are increasingly worried about the threat to infrastructure from cyber attacks. Lloyd’s of London has warned that a major cyber attack on a global payments system could cost the world economy $3.5 trillion, as insurers and companies worry about the systemic threat from hackers and whether the risks are insurable.

— Financial Times

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binge reading disorder

Illustration: Alexandra Citrin-Safadi | The Wall Street Journal

Wall Street’s latest obsession is an unknowable number

Investors and Federal Reserve officials scrambling to make sense of surging US Treasury yields have a new obsession: a number that exists only in theory. Known as the "term premium," the number is typically defined as the component of Treasury yields that reflects everything other than investors’ baseline expectations for short-term interest rates set by the Federal Reserve. That could include anything from an increase in the supply of bonds to harder-to-pin-down variables such as uncertainty about the long-term inflation outlook.

— The Wall Street Journal

Influencers and CEOs take their brands to LinkedIn

Once purely a jobs board, users say the platform is now more valuable than rivals. The Microsoft-owned professional networking platform, once a home purely to job hunting and networking, has become overrun with many of its 930mn users sharing career-focused, often aspirational content, in the hope of building substantial followings.

— Financial Times

Americans’ net worth surged by most in decades during pandemic

Americans experienced a record surge in net worth propelled by unprecedented government stimulus during the pandemic, laying the groundwork for economic resilience in 2023. Inflation-adjusted median net worth jumped 37% to $192,900 from 2019 to 2022, according to the Federal Reserve’s Survey of Consumer Finances out Wednesday. That marked the largest three-year increase in data back to 1989, and it was more than double the next-largest one on record, the Fed said.

— Bloomberg Wealth

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