Finance

U.K. regulator the Financial Conduct Authority announced on Thursday that it had decided to fine Staley £1.8 million ($2.21 million) and ban him from holding a senior management or significant influence function in the sector.
Staley stepped down as CEO of the British lender in November 2021 following the findings of an initial FCA probe into his characterization of his ties with the disgraced former financier.

Jes Staley, former CEO of Barclays, arrives at the offices of Boies Schiller Flexner LLP in New York on June 11, 2023.
Bloomberg | Bloomberg | Getty Images

LONDON — Former Barclays CEO Jes Staley on Thursday was fined and banned from holding any position of influence in the U.K. financial services industry for misleading the regulator over his relationship with sex offender Jeffrey Epstein.
U.K. regulator the Financial Conduct Authority announced on Thursday that it had decided to fine Staley £1.8 million ($2.21 million) and ban him from holding a senior management or significant influence function in the sector.

The FCA found that Staley “recklessly approved” a letter sent by Barclays to the regulator that contained two misleading statements about the nature of his relationship with Epstein and the point of their last contact.
Therese Chambers, joint executive director of enforcement and market oversight at the FCA, said in a statement Thursday that a CEO “needs to exercise sound judgment and set an example to staff at their firm.”
“Mr Staley failed to do this. We consider that he misled both the FCA and the Barclays Board about the nature of his relationship with Mr Epstein,” Chambers said.
“Mr Staley is an experienced industry professional and held a prominent position within financial services. It is right to prevent him from holding a senior position in the financial services industry if we cannot rely on him to act with integrity by disclosing uncomfortable truths about his close personal relationship with Mr Epstein.”
Staley stepped down as CEO of the British lender in November 2021 following the findings of an initial FCA probe into his characterization of his ties with the disgraced former financier, who died by suicide in Manhattan’s Metropolitan Correctional Center after being charged with child sex trafficking.

The FCA asked Barclays in August 2019 to explain what it had done to satisfy itself that there was no impropriety in the relationship between the two men, and Staley approved a letter suggesting that they did not have a close relationship.
Emails subsequently emerged in which Staley described Epstein as one of his “deepest” and “most cherished” friends, the FCA confirmed. Barclays’ letter also claimed Staley had ceased contact with Epstein long before he joined the bank in December 2015. He was later discovered to have spoken to Epstein on Oct. 28, 2015. More

Politicos, rejoice. When it comes to elections, next year is a big one. In 2024 the Republicans and Democrats will battle it out in America, of course—but there will also be votes of one sort or another in Algeria, India, Mexico, Pakistan, Russia, South Africa, Taiwan, probably Britain, and many more countries besides. All told, as many as 3bn people, in countries producing around a third of global gdp, will have the chance to put an “X” in a box. And in many of these locations, populist politicians are polling well. What would their success mean for the global economy?Economists have long suspected that populists do grave damage. Names such as Salvador Allende in Chile and Silvio Berlusconi in Italy are hardly synonymous with economic competence. By contrast, what you might call “sensible” leaders, including, say, Konrad Adenauer in Germany and Bill Clinton in America, are more often associated with strong growth. New research, forthcoming in the American Economic Review, perhaps the discipline’s most prestigious journal, puts hard numbers on the hunch.The authors, Manuel Funke and Christoph Trebesch of the Kiel Institute for the World Economy and Moritz Schularick of the University of Bonn, look at over a century of data. They classify administrations as “populist” or “non-populist” (or what you might call sensible), based on whether the administration’s ideology has an “us-versus-them” flavour. This is inevitably an arbitrary exercise. People will disagree over whether this or that administration should really be classified as populist. Yet their methodology is transparent and backed up by other academic research.Mr Funke and colleagues then look at how various outcomes, including gdp growth and inflation, differ between the two types of regime. The trick is to identify the counterfactual—how a country under a populist government would have done under a more sensible regime. To do this, the authors create “doppelganger” administrations, using an algorithm to build an economy that tracks that country’s performance pre-populist governance. During Berlusconi’s tenure as prime minister for much of 2001 to 2011, for instance, the authors compare Italy’s economy to a phantom Italy mostly comprised of Cyprus, Luxembourg and Peru. The three countries share characteristics with the world’s eighth-largest economy, including a heavy reliance on international trade.Having identified 51 populist presidents and prime ministers from 1900 to 2020, the authors find striking results. For two to three years there is little difference in the path of real gdp between countries under populist and sensible leadership. For a time, it may seem as though it is possible to demonise your opponents and run roughshod over property rights without all that much consequence. Yet a gap eventually appears, perhaps as foreign investors start to look elsewhere. Fifteen years after a populist government has entered office, the authors find that gdp per person is a painful 10% lower than in the sensible counterfactual. Ratios of public debt to gdp are also higher, as is inflation. Populism, the authors firmly establish, is bad for the pocketbook.The results are comforting for those who believe in the importance of honourable politicians doing the right thing. But what if sensibles are not what they used to be? Although Mr Funke and his colleagues cannot judge the record of the most recent populist wave, some examples suggest the gap between sensibles and populists may not be as large as it was. Under President Donald Trump, the American economy largely beat expectations. Recep Tayyip Erdogan has stifled free speech in Turkey, but relative to comparable countries, real economic growth has been pretty strong. Under Narendra Modi, India’s economy is roaring ahead: this year its gdp is likely to grow by 6% or so, compared with global growth of around 3%. Under populist leadership, Hungary and Poland are not obviously doing worse than their peers.Given Mr Trump’s tariffs and Mr Erdogan’s unusual monetary policy, it is unlikely that these countries’ relative success is down to smart policymaking. Instead, their relatively strong performance may reflect the fact that countries with sensible leadership are finding growth harder to attain. In the 1960s Western countries, rebuilding from the second world war and with young populations, could hope to hit annual growth rates of 5% or more. The opportunity cost of poor economic management was therefore high. Today, in part because of older populations, potential growth is lower. As a result, the gap in gdp growth between a competent and an incompetent administration may be smaller.Yet sensible politicians are also dropping the ball. In the past they promised voters higher incomes, said how they would deliver them and then implemented the necessary policies. These days, politicians across the oecd club of mostly rich countries pledge half as many pro-growth policies as they did in the 1990s, according to your columnist’s analysis of data from the Manifesto Project, a research project. They also implement fewer: by the 2010s product- and labour-market reforms had practically ground to a halt. Meanwhile, politicians have put enormous blocks in the way of housing construction, helping raise costs and constraining productivity growth. Many focus their attention on pleasing elderly voters through generous pensions and funding for health care.Shades of greyPopulists are themselves unlikely to solve any of these problems. But what are the sensibles offering as an alternative? Technocratic, moderate governments need to regain their growth advantage. After all, a belief that maverick politicians will damage the economy is one of the main things standing in the way of more people voting for them. If scepticism about the economic competence of sensible governments deepens, it may seem like less of a risk to vote for a headbanger. Although, over the long sweep of history, economists are right to mock the economic policies of populists, today the sensibles need to get their house in order, too. ■Read more from Free exchange, our column on economics:To understand America’s job market, look beyond unemployed workers (Oct 5th)Why the state should not promote marriage (Sep 28th)Renewable energy has hidden costs (Sep 21st)For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

It was james carville, an American political strategist, who said, in an oft-repeated turn of phrase, that if he was reincarnated he would like to return as the bond market, owing to its ability to intimidate everyone. Your columnist would be more specific: he would come back as the yield curve. If the bond market is a frightening force, the yield curve is the apex of the terror. Whichever way it shifts, it seems to cause disturbance.When the yield curve inverted last October, with yields on long-term bonds falling below those on short-term ones, analysts agonised about the signal being sent. After all, inverted curves are often followed by recessions. But now the curve seems to be disinverting rapidly. The widely watched 10-2 spread, which measures the difference between ten- and two-year bond yields, has narrowed markedly. In July two-year yields were as much as 1.1 percentage points above their ten-year equivalents, the biggest gap in 40 years. They have since drawn much closer together, with only 0.3 of a point between the two yields.Since the inversion of the yield curve was taken as such a terrible omen, an investor would be forgiven for thinking that its disinversion would be a positive sign. In fact, a “bear steepener”, a period in which long-term bonds sell off more sharply than short-term bonds (as opposed to a “bull steepener”, in which short-term bonds rally more sharply than long ones), is taken to be another portent of doom in market zoology.Driving the latest scare is the rising term premium, which is often described as the additional yield investors require to hold longer-dated securities, given the extra uncertainty over such extended periods. According to estimates by the New York branch of the Federal Reserve, the premium on ten-year bonds has risen by 1.2 percentage points from its lowest level this year, more than explaining the recent surge in long-term yields.In truth, though, the term premium is a nebulous thing, and must be treated with caution. It cannot be measured directly. Instead, as with a surprising number of important economic phenomena, analysts have to tease it out by measuring more concrete parts of the financial system, and seeing what is left over. Estimating the premium for a ten-year bond requires forecasting predicted short-term interest rates for the next decade, and looking at how different they are from the ten-year yield. What remains—however large or small—is the term premium.The difficulties do not stop there. John Cochrane of Stanford University’s Hoover Institution points out that, although risk premiums might be more easily estimated at relatively short maturities, the calculations require more and more assumptions about the future of short-term interest rates as analysts move along the curve. When estimates of the term premium are published, they are not typically accompanied by a margin of error. If they were, the margins would get progressively wider the longer into the future the forecast was conducted.There is also surprisingly little history from which to draw when making assessments of changes in the yield curve or term premium. In the past 40 years, there have been perhaps eight meaningful periods of bear steepening, and only in three of them was the yield curve already inverted. The three instances—in 1990, 2000 and 2008—were followed by recessions, but with widely varying lags.Movements in bond markets are therefore both easy and difficult to explain. They are easy to explain because any number of factors could be driving yields, including the Fed’s quantitative-tightening programme, concerns about the sustainability of American debt and worries of institutional decay. Yet attributing bond yields to one factor in particular is fraught with difficulty. And without more clarity on the causes of a move, inferring the future from the shape of the yield curve becomes more like reading tea leaves than a scientific endeavour.One thing is certain, however. Whatever their cause, and regardless of their composition, rising long-term bond yields are terrible news for American companies that wish to borrow at long time horizons, and borrowers who take out new mortgages that will be linked to 30-year interest rates. The effect on the most sensitive borrowers will become only more painful if yields with long maturities remain at such high levels. For anyone concerned about whether a shifting yield curve or a rising term premium signals a looming recession or a nightmare for markets, these simple realities are a better place to start.■Read more from Buttonwood, our columnist on financial markets: Why investors cannot escape China exposure (Oct 5th)Investors’ enthusiasm for Japanese stocks has gone overboard (Sep 28th)How to avoid a common investment mistake (Sep 21)Also: How the Buttonwood column got its name More

When treasury bonds (or t-bills) last yielded as much as they do today—5.5%—punters were relieved that the world had not been destroyed by the millennium bug, Destiny’s Child were atop the charts and the dotcom bubble was going strong. The recent surge in yields has been remarkable (see chart).image: The EconomistYet bank depositors are seeing just a fraction of these increases. The average American savings account yields just 0.45%. Investors, too, are missing out. For the first time in over two decades, at the end of last year the return offered by six-month Treasuries overtook the earnings yield of s&p 500 companies.So retail investors are looking elsewhere. Trading platforms have made short-term Treasury products a big part of their offering. Advertisements for Public, one such platform, ask podcast listeners if they are aware of the meagre savings rate on their deposit accounts. Despite only having been available on the platform since March, Treasuries are now its most purchased asset. One in ten new users buy them as their first trade.Demand for Treasuries reflects a broader move towards safe, high-yielding options. Money-market funds invest in low-risk, short-duration instruments, including Treasuries. More than $880bn has been added to such funds this year, bringing their total value to an all-time high of $5.7trn. As with retail short-dated Treasury accounts, money-market funds are attractive to savers because they are highly liquid, meaning that cash can be withdrawn quickly if required.The growing popularity of such alternatives is upsetting the logic of retail banking. Banks get away with providing interest rates well below the interest they receive from short-term government debt because—as Public’s advertisements identify—many depositors pay little attention. By sucking deposits from the banking system, money-market funds are thought to have contributed to financial instability in the spring.Retail-trading platforms’ expansion has made it easier than ever for depositors to transfer funds into short-dated government debt. That may further erode the discount on savings rates that depositors will accept from banks, and make Treasuries a bigger feature in retail-investment portfolios. Savers will, then, be singing along to one of Destiny’s Child’s better tunes: “Bills, Bills, Bills”.■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Big American companies are living in a debt dreamland. Although cheap borrowing has fuelled the growth of corporate profits for decades, the biggest firms have been largely insulated from the effects of the Federal Reserve’s recent bout of monetary tightening. That is because many of them borrowed plentifully at low, fixed interest rates during the covid-19 pandemic. The tab must be settled eventually by refinancing debt at a much higher rate of interest. For now, though, the so-called maturity wall of debt falling due looks scalable.image: The EconomistBut not all companies are escaping the impact of the Fed’s actions. Indeed, there is trillions of dollars of floating-rate debt, with interest payments that adjust along with the market, that has suddenly become much more expensive. This pile of debt consists of leveraged loans and borrowing from private debt markets. Companies seldom hedge interest-rate risks, meaning that they now find themselves paying through the nose—the yield-to-maturity of one index of leveraged loans has leapt to almost 10% (see chart 1). Meanwhile, since American economic growth remains resilient, the Fed’s policymakers warn that interest rates will have to stay higher for longer. This will push more borrowers to breaking-point. A market that has grown vast is now asking two miserable questions. How bad will things get? And who, exactly, will lose out?Since the global financial crisis of 2007-09, companies have borrowed fast and loose. UBS, a bank, estimates the value of outstanding American leveraged loans at around $1.4trn and the assets managed by private credit lenders at more than $1.5trn. The two types of debt are more alike than they are different. Both have grown to service the private-equity buy-out boom of the past decade. Traditional leveraged loans are arranged by banks before being sold (or “syndicated”) to dozens of investors, whereas private lending involves just a handful of funds, which usually hold smaller loans to maturity, creating a less liquid and more opaque market.Increasing numbers of borrowers are now hitting the rocks. Since 2010 the average annual default rate in the leveraged-loan market has been less than 2%. According to Fitch, defaults rose to 3% in the 12 months to July, up from 1% a year earlier. The ratings agency reckons that they could shoot up to 4.5% in 2024. Restructurings and bankruptcies on this scale amount to spring cleaning rather than the deep distress felt during the financial crisis, when loan defaults exceeded 10%. But if rates stay higher for longer, as central bankers predict, the tally of troubled firms will grow. Although all companies with unhedged floating-rate debt balances are vulnerable, those loaded with debt in private-equity buy-outs at high valuations during the recent deal boom are especially at risk.image: The EconomistSlowing profit growth means that borrowers are finding it harder to afford their floating-rate debt. JPMorgan Chase, a bank, analysed 285 leveraged-loan borrowers at the end of June, before the Fed’s most recent rate rise. Firms where borrowing consisted only of leveraged loans saw their annual interest expense soar by 51% year-on-year. Their fortunes are diverging sharply from those that instead tapped high-yield bond markets for fixed-rate funds. According to the study, the interest expenses of such businesses have increased by less than 3%. Coverage ratios, which compare a firm’s profits with its interest costs, have begun an ominous decline (see chart 2).In the private debt market, where default rates tend to be higher, borrowers are confronting similar woes. According to Bank of America, interest costs now consume half of profits at firms where loans are held by the largest business-development companies, a type of investment vehicle. A big rise in distress would not only make it harder to find institutions willing to plough money into private debt funds, with investors normally attracted by the promise of smooth returns, but also spill over to the leveraged-loan market.Now that a reckoning looks imminent, attention is turning to which investors will be left holding the bag. Lenders today expect to recover less of their investment after a firm defaults than in earlier eras—and this year so-called recovery rates across junk-rated debt have been well below their long-run averages. According to Lotfi Karoui of Goldman Sachs, another bank, the rise of borrowers that rely solely on loans, rather than borrowing from bond markets too, could depress recoveries still further. This trend has concentrated the pain caused by rising interest rates. It is also likely to leave less value for leveraged-loan investors when they find themselves round a restructuring table or in a bankruptcy court, since there will be more claims secured against a firm’s assets.Other long-term trends could exacerbate the leveraged-loan market’s problems. Maintenance covenants, commitments that lenders can use as a “stick” to force a restructuring, have all but disappeared as the market has matured. In 2021 nearly 90% of new loans were “covenant-lite”. This could mean that companies take longer to reach default, and are in worse health when they get there. Excessive “add backs”, flattering adjustments to a company’s profitability measures, might also mean that leveraged borrowers are in worse shape than the market believes.The performance of private markets is also being closely scrutinised. Advocates for private debt have long argued that they are better suited to periods of higher defaults, since the co-ordination costs between a small group of lenders are lower, making the correction of vexed balance-sheets easier. If private markets do indeed fare better than leveraged loans during the forthcoming turmoil, it would bolster their attempts to attract finance in future.Problems in floating-rate debt markets are unlikely to cause a financial crisis, but the murkiness and growing size of private markets in particular mean that regulators have decided to take a closer look. In August America’s Securities and Exchange Commission announced rules to increase transparency, including demanding quarterly financial statements. The following month, the International Organisation of Securities Commissions, a global regulatory body, warned about the risks of leverage and the opacity of private debt markets. Few investors, however, think they need help predicting a coming crunch. ■For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. More

Shares of Bank Of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank rose in early trading.
China’s sovereign wealth fund Central Huijin Investment expects to continue increasing holdings over the next six months.
Central Huijin’s move is seen as a bid to renew confidence in China’s fatiguing stock market.

Bank of China is one of the major state-owned banks in China. Pictured here is a branch in Shanghai on March 27, 2023.
Bloomberg | Bloomberg | Getty Images

China’s sovereign wealth fund, Central Huijin Investment, increased its stake in four of the country’s biggest banks late Wednesday in what is seen as a move to renew confidence in its stock market.
Bank Of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank shares rose between 2.43% and 4.73% in early trading on Thursday, while the broader CSI 300 index gained 0.69%.

Central Huijin boosted its stake in each lender by 0.01 percentage point for the first time since 2015. It said it would continue to increase holdings over the next six months, according to filings.
“Huijin’s buying sends strong signal of the topdown view, and tends to help to shore up market confidence,” said Hao Hong, chief economist of Grow Investment Group.
Investor confidence in China’s stock markets has been shaken by turmoil in its real estate sector as property giants such as Evergrande and Country Garden struggled to repay debt. So far this year, the CSI 300 is down nearly 5%.
All eyes will now be on China’s third-quarter GDP data, which is due to be released next week. More

A box of Ozempic, a semaglutide injection drug used for treating Type 2 diabetes made by Novo Nordisk.
George Frey | Reuters

Check out the companies making big moves midday.
Novo Nordisk — The Danish drugmaker stock added 6.27% after saying late Tuesday it was halting Ozempic’s kidney disease treatment trial after a committee said an analysis showed signs of success. Eli Lilly, which makes diabetes drug Mounjaro, rose 4.48%.

DaVita, Fresenius Medical Care, Baxter International — Shares of dialysis services providers DaVita and Fresenius Medical Care sank 16.86% and 17.57%, respectively, on Novo Nordisk’s news. Baxter International, which makes products for chronic dialysis therapies, slid 12.27%.
Exxon Mobil, Pioneer Natural Resources — Exxon Mobil shares fell 3.59% after the largest U.S. oil and gas producer agreed to buy shale rival Pioneer Natural Resources for $59.5 billion in an all-stock deal, or $253 per share. Pioneer stockholders will receive 2.3234 shares of Exxon for every Pioneer share held. The deal, Exxon’s biggest since its acquisition of Mobil, is expected to close in the first half of 2024. Shares of Pioneer rose 1.44% following the news.
Humana — Shares slipped 1.39% after CEO Bruce Broussard said he will step down from his position in the latter half of 2024. The company named Jim Rechtin of Envision Healthcare as his successor.
Amgen — The biopharma stock added 4.55% following an upgrade from Leerink to outperform. Analyst David Risinger cited an expanding earnings multiple and pipeline newsflow as catalysts.
Shoals Technologies — Shares gained 5.26% after being upgraded to buy from neutral at Goldman Sachs. The investment bank cited valuation and the potential for gross margin upside.

Ally Financial — The provider of loans to midsize businesses dropped 2.12% after CEO Jeffrey Brown announced plans to step down, effective Jan. 31, 2024.
Walgreens Boots Alliance — The pharmacy chain added 0.98% after former Cigna executive Tim Wentworth was named CEO effective Oct. 23.
Coherent — The stock popped 5.23% in midday trading. Coherent announced Tuesday that Japanese companies will invest $1 billion in Coherent’s silicon carbide business. On Wednesday, B. Riley upgraded shares to buy from neutral, saying Coherent’s silicon carbide business could be worth more than the Street’s current estimate.
Plug Power — The battery company climbed 5.31% after forecasting a sharp rise in revenue to roughly $6 billion by 2027, according to a regulatory filing.
Take-Two Interactive Software — Shares gained in midday trading but closed 0.34% lower after being upgraded by Raymond James to outperform from market perform. The firm said it sees a path to more consistent video game releases and a reasonable valuation based on Take-Two Interactive’s Grand Theft Auto 6 release soon.
— CNBC’s Michael Bloom, Hakyung Kim, Yun Li and Lisa Han contributed reporting. More

Jerome Powell, chairman of the US Federal Reserve, arrives to a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, DC, US, on Wednesday, March 22, 2023. 
Al Drago | Bloomberg | Getty Images

Federal Reserve officials at their September meeting differed on whether any additional interest rate increases would be needed, though the balance indicated that one more hike would be likely, minutes released Wednesday showed.
While there were conflicting opinions on the need for more policy tightening, there was unanimity on one point – that rates would need to stay elevated until policymakers are convinced inflation is heading back to 2%.

“A majority of participants judged that one more increase in the target federal funds rate at a future meeting would likely be appropriate, while some judged it likely that no further increases would be warranted,” the summary of the Sept. 19-20 policy meeting stated.
The document noted that all members of the rate-setting Federal Open Market Committee agreed they could “proceed carefully” on future decisions, which would be based on incoming data rather than any preset path.
Another point of complete agreement was the belief “that policy should remain restrictive for some time until the Committee is confident that inflation is moving down sustainably toward its objective.”
The meeting culminated with the FOMC deciding against a rate hike.
However, in the dot plot of individual members’ expectations, some two-thirds of the committee indicated that one more increase would be needed before the end of the year. The FOMC since March 2022 has raised its key interest rate 11 times, taking it to a targeted range of 5.25%-5.5%, the highest level in 22 years.

Since the September meeting, the 10-year Treasury note yield has risen about a quarter percentage point, in effect pricing in the rate increase policymakers indicated then.

Stock chart icon

10-year Treasury yield

At the same time, a handful of central bank officials, including Vice Chair Philip Jefferson, Governor Christopher Waller and regional Presidents Raphael Bostic of Atlanta, Lorie Logan of Dallas and Mary Daly of San Francisco, have indicated that the tightening in financial conditions may negate the need for further hikes. Of the group, Logan, Waller and Jefferson have votes this year on the FOMC.
“In our view the Fed has belatedly converged on the lowest-common-denominator idea that the rise in yields means there is at present no need to raise rates again,” wrote Krishna Guha, head of global policy and central bank strategy at Evercore ISI. Guha added that officials want to wait before locking themselves in to a longer-term position on rates.”
Markets waffled following the minutes release, with major sock averages slightly higher heading into the close. Traders in the fed funds futures market pared back bets on additional rate hikes — down to just 8.5% in November and 27.9% in December, according to the CME Group’s FedWatch gauge.
Members in favor of further hikes at the meeting expressed concern about inflation. In fact, the minutes noted that “most” FOMC members see upside risks to prices, along with the potential for slower growth and higher unemployment.
Fed economists noted that the economy has proven more resilient than expected this year, but they cited a number of risks. The autoworkers’ strike, for one, was expected to slow growth “a bit” and possibly push up inflation, but only temporarily.
The minutes said consumers have continued to spend, though officials worried about the impact from tighter credit conditions, less fiscal stimulus and the resumption of student loan payments.
“Many participants remarked that the finances of some households were coming under pressure amid high inflation and declining savings and that there had been an increasing reliance on credit to finance expenditures,” the minutes said.
Inflation data points, particularly regarding future expectations, generally have been indicating progress toward the central bank’s 2% target, though there have been a few hiccups.
The Fed received some bad inflation news Wednesday, when the Labor Department said that the producer price index, a measure of inflation at the wholesale level, rose 0.5% in September.
Though that was a bit lower than the August reading, it was above Wall Street estimates and took the 12-month PPI rate to 2.2%, its highest since April and above the Fed’s coveted 2% annual inflation target.
The PPI tees up Thursday’s release of the consumer price index, which is expected to show headline inflation at 3.6% in September, and core excluding food and energy at 4.1%. More