US economy updates
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A top Fed official on Monday warned that failing to raise the US debt ceiling would have catastrophic consequences, hours before Republicans in the Senate were set to block a bill that would increase the borrowing limit and stave off a government shutdown.
John Williams, president of the Federal Reserve Bank of New York, said the US central bank would be unable to mitigate the impact of a potential default on the government’s debt. The Bipartisan Policy Center, a Washington think-tank, estimated last week that the US government could default on its obligations as soon as mid-October if the debt ceiling is not raised.
Williams warned of the risk that investors could become “extremely nervous” and think “I’ve got to get out of things”, which he said could lead to an “extreme kind of reaction in markets”. He said current prices for US Treasuries reflected a belief among investors that “cooler heads” would prevail in Congress and were therefore not necessarily an “indicator of how big the risks are”.
In other US Federal Reserve news: Two senior Federal Reserve officials whose trading activity prompted the US central bank to launch an ethics review said on Monday they are resigning their positions.
Do you think Congress should raise the debt ceiling? Let me know what you think at [email protected]. Thanks for reading FirstFT Asia — Emily
Five more stories in the news
1. German parties to start talks after narrow SPD win The parties that hold Germany’s balance of power said they would start talks to decide who they want to join in government after the Social Democrats’ narrow election win over Angela Merkel’s ruling conservatives. See the full election results here.
2. China tightens abortion controls China is tightening controls over abortions for “non-medical purposes” as policymakers heap pressure on women in their battle to counter a demographic crisis. New guidelines aimed at improving fertility and reproductive health were released yesterday by China’s cabinet as part of an updated “Outline for Women’s Development”.
3. Wells Fargo to pay $37m over foreign exchange fraud allegations Wells Fargo has agreed to pay $37m to settle federal claims that the US bank fraudulently overcharged clients for foreign exchange services, the latest of a string of penalties since a fake accounts scandal erupted five years ago.
4. Cryptocurrency exchanges start cutting off Chinese users Cryptocurrency exchanges such as Huobi and Binance have begun cutting links with customers in China after the People’s Bank of China made it illegal for exchanges to provide services to Chinese users.
5. Evergrande electric car division cancels Shanghai listing Shares in Evergrande’s electric vehicle unit tumbled in Hong Kong today after it scrapped plans for a secondary listing on Shanghai’s Star Market, as bondholders remained in limbo after the indebted Chinese property developer missed a crucial payment last week.
India recorded just over 200,000 new Covid-19 cases in the past week, the lowest number in more than six months.
A newly created party of Covid-19 vaccine sceptics has been elected to one of Austria’s largest regional parliaments after a shock election result.
Joe Biden received a Pfizer Covid-19 vaccine booster shot as he urged more Americans to get vaccinated with a first jab.
With vaccines being administered worldwide, scientists are preparing a new weapon to combat Covid: an antiviral medication to treat the worst symptoms.
The pandemic has triggered the largest falls in life expectancy since the second world war in most developed nations, with US men the hardest hit. (FT, NYT)
Follow our live coverage and sign up to the Road to Recovery for a regular briefing on business and the economy in a world transformed by the pandemic. Plus, our special report on communicable diseases is published today.
The days ahead
Bank of Japan minutes The central bank will publish the minutes of its July policy meeting today. In last week’s Free Lunch newsletter, Martin Sandbu reported on the innovations of the Japanese central bank that could inform other policymakers. Sign up here to receive Free Lunch in your inbox.
European Central Bank central bankers forum The forum today will be held online. Federal Reserve chair Jay Powell, ECB president Christine Lagarde, Bank of Japan governor Haruhiko Kuroda and Bank of England governor Andrew Bailey are all scheduled to speak.
UK premier of No Time To Die The new James Bond film will premier at the Royal Albert Hall in London. In How to Spend it, Jessica Beresford details how to dress like Bond.
US Senate holds Afghanistan withdrawal hearing The committee on Armed Services begins this week’s two day of hearings on the Afghan withdrawal. Lloyd Austin, US secretary of defence; General Mark Milley, chair of the joint chiefs of staff; and Kenneth McKenzie, commander of US central command, are expected to be called as witnesses.
Join FT Berlin bureau chief Guy Chazan, Erika Solomon, Berlin correspondent, and Sam Fleming, Brussels bureau chief, on October 4 for a discussion on the German election hosted by Valentina Pop, Europe Express editor. Sign up here.
What else we’re reading
The tale of Ray Dalio, China and $10 ‘miracle devices’ When Dalio first visited China, high-ranking officials thought his $10 pocket calculators were “miracle devices”, he recalls. Now, China rivals the US in technology and its tech platforms have been loved by global investors. At least until recently. Harriet Agnew explores foreign investors’ future in China in our revamped FT Asset Management newsletter. Sign up here.
No country for young men For decades, old men have pulled the strings in Japanese politics, writes Kana Inagaki. But young parliamentarians are seeking a bigger voice in governing the world’s fastest ageing society as the race to replace prime minister Yoshihide Suga heats up.
European defence: the quest for ‘strategic autonomy’ While the US is becoming less focused on European defence, it remains the indispensable partner for EU states. The question for Europe has become not about making the continent militarily independent from the US, but about how it can be a more reliable and muscular ally.
Anti-China hysteria lies at heart of action against IMF chief The heated attack against IMF managing director Kristalina Georgieva is not really about the alleged sanctity of World Bank data or about the quality of her management. It is about the role of China in a Washington-based multilateral institution, writes Jeffrey Sachs of Columbia University.
Ted Lasso’s leadership lessons The sweet-natured comedy shows that it pays to be a kind and decent manager, writes Pilita Clark. So too agree dozens of LinkedIn denizens who have been inspired to post their leadership lessons of Ted Lasso over the past 12 months.
We say goodbye to the blazer as Angela Merkel prepares to step down. The German chancellor’s look let her get on with the business of politics, writes deputy fashion editor Carola Long.
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