U.S.-China Trade, Peak Hawkishness, Inflation Worries: Eco Day

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Welcome to Thursday, Americas. Here’s the latest news and analysis from Bloomberg Economics to help you start the day:

  • China says U.S. efforts to reorient supply chains are unrealistic
    • President Joe Biden’s nominee for trade chief -- Katherine Tai -- is pledging to work with allies to take on China while also embarking on a pragmatic approach to the Asian nation, saying it’s both a rival and partner
    • Tai’s confirmation hearing before the Senate Finance Committee takes place today. Here’s what to watch
  • Bloomberg Economics expects an uneventful 2021 for the Federal Reserve, as even hawkish officials have signaled willingness to maintain accommodation until considerable economic slack is reabsorbed. However, the dovishly inclined Powell consensus will come under pressure in 2022, as the changing roster of voters on the FOMC approaches “peak hawkishness” at the same time that Powell’s first term as Fed chair expires
  • While the U.S. rushes toward a blockbuster fiscal stimulus package to accelerate its recovery from the coronavirus crisis, much of Europe is plodding along in the slow lane
  • Bank of England policy makers are sounding a note of caution about how much excess savings built up during Covid-19 lockdowns will be spent once the economy reopens
  • Meanwhile, the Bank of Japan’s policy review will likely center on flexible stock-fund buying, bond yield movements and the potency of negative rates as it looks for ways to make tools designed for a shorter time span function more effectively over the long haul
  • Finally, after an epic collapse last year, oil prices have tripled since April, raising inflationary pressures in emerging markets. Will this prompt a widespread increase in interest rates? Bloomberg Economics’ Ziad Daoud says some will have to respond, but most will be spared

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