Inflation Picks Up to 3.2%, Slightly Hotter Than Expected; U.S. Small Business Optimism Weakens on Inflation Worries By Hardika Singh

Good morning. The second straight month of firmer-than-expected inflation reinforced some beliefs that the central bank will continue its wait-and-see posture toward rate reductions when officials meet next week. In the meantime, small businesses are getting worried, and two senior Binance executives are detained in Nigeria. Read on for this news and more.

Top News Inflation Picks Up to 3.2% in Unexpected Turn Higher

Eric Rosengren, who headed the Boston Fed from 2007 to 2021, said the Labor Department's print shouldn't fundamentally alter expectations for three rate cuts this year. Tuesday's report "basically tells the story that there's a gradual improvement" in core inflation, Rosengren said in an interview. "As long as wages and salaries continue to drift down, I don't see this report really altering the overall view of probably a June reduction."

U.S. Economy U.S. Small Business Optimism Weakens on Inflation Worries

Confidence among U.S. small businesses weakened unexpectedly in February, as the future path of inflation returned as a top concern. The National Federation of Independent Business said Tuesday that its small-business optimism index declined to 89.4 from 89.9 in January, flipping expectations of an increase to 90.2 in a poll compiled by The Wall Street Journal.

Financial Regulation Roundup Crypto Gets Blamed for a Real-Life Currency Crisis

Tigran Gambaryan, Binance's head of financial-crime compliance, flew to Nigeria's capital to solve a problem: The government had blamed the world's largest crypto exchange for crashing the currency. The American, a former Internal Revenue Service special agent, left his wife and children at home in Georgia in late February with a small suitcase for what he thought was a quick business trip. He hasn't come back.

Forward Guidance Thursday (all times ET)

8:30 a.m.: U.S. retail sales

8:30 a.m.: Producer price index

10 a.m.: Business inventories

Research Canadian Banks' Nonmortgage Retail Credit Provisioning Expected to Rise Further

Canadian bank nonmortgage credit-loss provisions are set to continue rising in fiscal 2024, though the scale of realized loan losses will largely be determined by unemployment that has been steady in recent months after increasing much of last year, Morningstar DBRS says. Banks and credit unions underwrite more than 80% of nonmortgage retail lending in Canada. The loans make up just a small part of total loan books, yet drive an outsize proportion of provisions and loan losses. Morningstar expects higher-for-longer interest rates will mean further asset quality deterioration, with borrowers possibly turning to increasingly costly credit cards and lines of credit as shelter costs take up an increasing share of income. -Robb Stewart

Basis Points The Bank of Japan is likely to move slowly in raising interest rates above zero even if it decides to end its negative interest-rate policy, given the nation's fragile momentum on prices, according to people familiar with the central bank's thinking. - Megumi Fujikawa Short interest in Australia's major lenders is highest at Commonwealth Bank, according to Morgan Stanley analyst Richard E. Wiles. He tells clients that the average short interest as a proportion of the major banks' free-floating shares is at about 1.0%, near the midpoint of the 0.3%-2.1% range seen over the past 14 years. This rises to 1.5% at Commonwealth, which hit a record last week but is rated a sell by analysts surveyed by FactSet. Wiles adds that the equivalent proportions at ANZ, NAB and Westpac are 0.4%, 0.8% and 1.3%, respectively. -Stuart Condie Feedback Loop

This newsletter is compiled by Hardika Singh in New York.

Send us your tips, suggestions and feedback. Write to:

[hardika.singh@wsj.com]

This article is a text version of a Wall Street Journal newsletter published earlier today.


(END) Dow Jones Newswires

03-13-24 0715ET