10 Things You Need To Know: April 26, 2022

Key data releases this week include: durable goods orders (Tue), FHFA Housing Market Index (Tue), consumer confidence (Tue), new home sales (Tue), pending home sales (Wed), Q1 GDP (Thu), personal income and spending (Fri), PCE (Fri), and consumer sentiment (Fri).

Haver

April 20, 2022

Existing home sales declined 2.7% (-4.5% y/y) during March to 5.770 million (SAAR) from 5.930 million in February, revised from 6.020 million. It was the lowest level of sales since June 2020 according to the National Association of Realtors (NAR). The Action Economics Forecast Survey expected sales of 5.80 million units in March. These data are compiled when existing home sales close.

Haver

April 21, 2022

The Conference Board’s Composite Leading Economic Indicators index increased 0.3% during March (6.4% y/y) after rising 0.6% in February, revised from 0.3%. The gain matched expectations in the Action Economics Forecast Survey. Seven of the index components contributed positively to the March increase.

BNN Bloomberg

April 24, 2022

While both the US and Europe are confronted by the challenge of bringing rising inflation under control they are “facing a different beast,” according to European Central Bank President Christine Lagarde. In Europe energy costs are a key factor in inflation, while in the US a “tense” labor market is aggravating inflationary pressures, she said.

Barron’s

April 25, 2022

The fed-funds futures market has priced in a half-point hike for next month, three-quarters of a point for the June 13-14 FOMC meeting, and another half-point at the July 26-27 confab. All told, that would bring the Fed’s key rate up to 2.00%-2.25%, with about an 87% probability, according to the CME FedWatch site as of Friday, up from under 16% a week earlier.

Barron’s

April 25, 2022

In a report this past week, Deutsche Bank Group Chief Economist David Folkerts-Landau warned that the Fed might have to raise interest rates far higher than expected, perhaps as high as 5%, well above the firm’s baseline view of 3.6%. And it will need to act fast to prevent even higher inflation from getting embedded in expectations, forcing it to raise rates even higher and forcing a deeper slowdown. “Prepare for a hard landing ahead,” he writes.

Bloomberg, Reuters, Financial Times, Wall Street Journal

April 21, 2022

Federal Reserve Chair Jerome Powell has said a 50-basis-point interest rate increase “will be on the table” at the central bank’s meeting next month and that there is a strong case for “front-end loading” the Fed’s efforts to bring inflation down to its 2% target. “We really are committed to using our tools to get 2% inflation back,” he said

BNN Bloomberg

April 20, 2022

The use of the euro in global payments fell to 35.4% of the total in March, marking its smallest proportion of the total since the beginning of the coronavirus pandemic, according to SWIFT. The US dollar accounted for 41.1% of all SWIFT transactions, its strongest showing since April 2020.

Financial Times

April 22, 2022

Despite the Federal Reserve’s announced intention to tighten monetary policy aggressively, investors’ expectations of where inflation is headed are rising. The Treasury break-even rate, the difference in yield between 10-year Treasury Inflation-Protected Securities and conventional 10-year Treasury debt, rose to 3.08% on Friday, the highest yield in at least 20 years.

Wall Street Journal

April 19, 2022

Despite contention that the lower corporate tax rates imposed by Tax Cuts and Jobs Act of 2017 would slash the federal government’s revenue, corporate tax revenue is well outpacing the Congressional Budget Office’s projections and is on track to surpass the CBO’s pre-reform projections for this year, the Wall Street Journal editorial board writes. “Corporate profits have been very strong, and government is sharing in the wealth even at a lower rate,” they write.