US President Donald Trump’s advisers are said to be encouraging him to nominate a temporary Federal Reserve governor to fill the soon-to-be vacant seat on the central bank’s board. Fed Governor Adriana Kugler’s departure hands the Republican an early opportunity to pick a governor who more closely aligns with his preferences. But market concerns over a potentially supine US central bank, building since Trump returned to the White House, could worsen depending on who he picks. 

“It’s a lot of trouble to do it for four months, but it’s a critical four months as well, and Trump really wants the Fed to follow through for some of the rate cuts that have been on the table,” said Derek Tang, an economist at LH Meyer/Monetary Policy Analytics. He added however that it could hurt the Fed’s credibility to have a governor in place who is clearly pushing Trump’s agenda.

“If you don’t play it well, then you might actually un-anchor the long end of the Treasury yield curve,” Tang said. “Inflation expectations might go up because even though you’re saying this a four-month position, you’re setting a precedent that you’re willing to use this vacancy in this manner.” —David E. Rovella

What You Need to Know Today

Sitting Fed Governor Lisa Cook called the July jobs report and its grim assessment of previous months “concerning,” saying that rising unemployment could signal an inflection point for the US economy. “These revisions are somewhat typical of turning points,” Cook said Wednesday. (Other Fed officials joined in as well.)

Data published last week pointed to a sharp cooling in the labor market over the last few months, with the unemployment rate ticking up to 4.2% from 4.1% in June. Cook said the ongoing period of uncertainty facing companies was acting like a tax. She said business leaders report spending significant amounts of time managing uncertainty. “This,” Cook said, “is deadweight loss.”

Lisa Cook, right, with Jerome Powell in June Photographer: Al Drago/Bloomberg

Long-dated Treasury yields rose after an auction of 10-year notes drew weak demand and traders shifted their focus to the sale of 30-year bonds Thursday. The benchmark 10-year yield gained about two basis point to 4.23% Wednesday afternoon, while shorter-dated tenors edged lower. The move followed soft demand for the $42 billion sale, the second of three auctions this week.

A rally in the Treasuries market over the recent weeks accelerated following the jobs report on Friday, prompting traders to add to wagers that the Fed is more likely to cut rates as soon as next month. The 10-year yield is about 26 basis points lower than it was in mid-July.

The quick development of vaccines in the face of the coronavirus pandemic saved millions of American lives. But outraged medical experts warned on Wednesday that, thanks to the Trump administration, the ability of the US to pivot quickly in the face of the next pandemic will soon be erased, and Americans will die as a result.

Health Secretary Robert F. Kennedy Jr., a lawyer and vaccine skeptic who has repeatedly promoted falsehoods about medical science, has been methodically detaching the department from medical professionals who have traditionally provided it with critical advice. On Wednesday, Kennedy took another step away from established science by terminating 22 contracts worth almost $500 million to develop vaccines using messenger RNA technology.

Mike Osterholm, a University of Minnesota expert on infectious diseases and pandemic preparations, told the Associated Press that “I don’t think I’ve seen a more dangerous decision in public health in my 50 years in the business.”

A medical worker outside a refrigerated morgue in New York City in April 2020. More than a million Americans died during the coronavirus pandemic. Photographer: Angus Mordant/Bloomberg

Apple committed to spending another $100 billion on domestic manufacturing, marking the latest pledge by the tech giant to increase US production as it seeks to mollify the Trump administration and avoid punishing tariffs on its flagship iPhones.

As part of what it calls the American Manufacturing Program, or AMP, Apple promised to bring more of its supply chain and advanced production to the US. The company’s AMP partners include glassmaker Corning, Applied Materials, Texas Instruments and others. Corning will dedicate an entire factory in Kentucky to Apple glass production, increasing that company’s workforce in the state by 50%, the iPhone maker said. 

Foreign investors sold a record amount of Colombia’s local currency debt in July after the country’s latest credit downgrade triggered the removal of securities from global bond indexes. Offshore holders sold 13 trillion pesos ($3.2 billion) worth of peso-denominated bonds, known as TES, the largest amount in data going backto 2013. Net sales by overseas investors amounted to $1.56 billion, also a monthly record.

The data show the first full month of trading since S&P Global Ratings downgraded the nation’s local debt to junk in late June after the suspension of the country’s fiscal rule for the next three years, which signaled higher spending during President Gustavo Petro’s final year in office.

What You’ll Need to Know Tomorrow

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