Federal Reserve Chair Kevin Warsh on Friday laid the groundwork for a possible interest rate hike in the coming months, arguing that the economy is strong and the labor market is at full employment, while inflation is concerning.

“Inflation is running above our 2 percent target. So the Fed’s predominant focus right now should be on prices,” Warsh said in remarks at the Fed’s annual conference in Grand Teton National Park. While inflation numbers have recently been better than expected, “they do not tell me that underlying trends have meaningfully improved.”

“Market prices show confidence that we will deliver price stability,” he added. “And I can assure you, they’re right.”

Warsh, who took the helm of the central bank in May, has been under pressure to take a firmer stance on the Fed’s readiness to fight inflation. His words could help allay worries in financial markets, where global investors have been pushing up longer-term rates out of concern that elevated consumer prices might prove more persistent. Treasury Secretary Scott Bessent over the past couple of weeks has made extraordinary moves to stem the run-up in bond yields, which also reflects doubts that the U.S. will rein in deficits and that massive levels of borrowing by artificial intelligence companies will put further upward pressure on rates.

(Continue Reading – POLITICO)

Shares of California utility companies PG&E and Edison International fell Friday after state lawmakers blocked Governor Gavin Newsom’s proposal to prevent insurance companies from suing utilities that cause wildfires, according to KCRA 3.

Edison International traded down approximately 3.5%, while PG&E dropped 10%.

California lawmakers stopped the governor from pursuing his plan to prevent insurance companies in California from recovering their losses from investor-owned utilities that cause catastrophic wildfires, multiple sources confirmed to KCRA 3 Friday morning.

Negotiations broke down late Thursday night during a closed-door meeting between the governor’s staff and Democratic state lawmakers who are part of a working group on wildfire liability, the report said.

(Continue Reading – Investing)

Treasury Secretary Scott Bessent defended his move last month to support the yen, saying that any extreme volatility in the Japanese currency could feed through to higher US interest rates.

“Japan is a major holder of US Treasuries,” Bessent said in an Aug. 27 letter responding to Democratic Senator Elizabeth Warren’s recent inquiry about the yen operation. “Disorderly yen markets can trigger forced unwinds, which could destabilize global markets and ultimately raise borrowing costs for American families and businesses.”

(Bloomberg – Continue Reading)