10 Things You Need to Know: April 25, 2023
Key data releases this week include: FHFA House Price Index (Tue), new home sales (Tue), consumer confidence (Tue), durable goods orders (Wed), Q1 GDP (Thu), pending home sales (Thu), personal income and spending (Fri), PCE Deflator (Fri), and consumer sentiment (Fri).
MT Newswires
April 19, 2023
Overall economic activity in the US was “little changed” in recent weeks, according to the Federal Reserve’s Beige Book report, a summary of economic conditions released Wednesday. “Nine Districts reported either no change or only a slight change in activity this period while three indicated modest growth,” according to the summary. “Expectations for future growth were mostly unchanged as well; however, two Districts saw outlooks deteriorate.”
Haver
April 20, 2023
Sales of existing homes fell 2.4% during March (-22.0% y/y) to 4.44 million units (SAAR) after strengthening 13.8% to 4.55 million during February. Sales remained up from the January low of 4.00 million. The Action Economics Forecast Survey expected March sales of 4.49 million units. Sales remained 31.8% lower than the high of 5.85 million in October 2020.
Haver
April 20, 2023
The U.S. Leading Economic Index (LEI) fell 1.2% m/m in March after drops of 0.5% in February (-0.3% initially) and 0.5% in January. A 0.3% m/m March decline had been expected in the Action Economics Forecast Survey. The March LEI at 108.4 was the lowest level since November 2020. Seven of the LEI’s ten indicators in March contributed negatively to the index.
Reuters
April 19, 2023
UK inflation came in higher than expected in March at an annual rate of 10.1% but was down from 10.4% in February. Core inflation remained unchanged at 6.2%.
Barron’s
April 24, 2023
Estimates for when the Treasury will run out of cash have ranged from as soon as mid-June to as late as September, but right now it’s looking closer to the former than the latter. After examining Treasury data, Goldman Sachs economist Alec Phillips estimated that if receipts were 30% lower than in 2022, the X-date would be hit in late July. But if they decline 35% or more, the Treasury could run out of money in early June E.
CNN, Reuters
April 15, 2023
Banks might pull back on credit as a result of last month’s turmoil, potentially aiding the Federal Reserve’s effort to cool inflation, Treasury Secretary Janet Yellen says. “Banks are likely to become somewhat more cautious in this environment,” Yellen says, noting a restriction in credit “could be a substitute for further interest-rate hikes that the Fed needs to make.”
Market Watch
April 20, 2023
The Federal Reserve issued $143.9 billion in loans to financial institutions through its discount window and Bank Term Funding Program in the week ending April 19, an increase from $139.5 billion the week before and the first upturn in five weeks. The rise suggests the challenges that banks began facing in March are not completely behind them.
WSJ
April 18, 2023
Many securities held by banks lacked protection against rising interest rates last year, according to an academic research paper. The paper highlights the limited interest-rate hedging in place at Silicon Valley Bank and notes that hundreds of other banks were in a similar position in 2022.
Capital Economics
April 21, 2023
Once again the PMIs suggest that real activity in advanced economies continues to shrug off the effects of higher interest rates. According to the flash PMIs, GDP, and employment growth both got off to a strong start in Q2, even amid the banking sector turmoil. But the flipside is that inflationary pressures are no longer easing, meaning that central banks will need to tighten policy a bit further.