10 Things You Need To Know: April 4, 2023

Key data releases this week include: ISM Manufacturing (Mon), JOLTS Jobs Openings (Tue), factory orders (Tue), ISM Services (Wed), and nonfarm payrolls (Fri).

Haver

March 28, 2023

U.S. house prices rose 0.2% m/m in January after unrevised declines of 0.1% in December and 0.1% in November, according to the Federal Housing Finance Agency (FHFA). The January reading was the first monthly gain since October. The year-on-year rate of increase decelerated to 5.3% in January. It was the smallest rate since May 2020 and down from a 19.3% peak in February 2022.

Haver

March 29, 2023

The Pending Home Sales Index from the National Association of Realtors (NAR) rose 0.8% (-21.1% y/y) to 83.2 in February following an unrevised 8.1% January surge. The index stood at the highest level since August but remained 35.0% below its August 2020 high of 128.0.

Haver

March 30, 2023

Real GDP grew 2.6% at an annual rate (0.9% y/y) during Q4’22, revised from 2.7%. It followed 3.2% growth in Q3 and declines in Q2’23 as well as in Q1’23. The latest figure compares to expectations for a 2.7% gain in the Action Economics Forecast Survey. Real personal consumption expenditure growth of 1.0% (1.7% y/y) was revised from 1.4% and followed 2.3% growth in Q3.

Haver

March 31, 2023

The PCE chain price index increased 0.3% (5.0% y/y) in February, following the 0.6% (5.3% y/y) rise in January. A 0.3% rise had been expected. The index excluding food & energy also rose 0.3% (4.6% y/y), following a 0.5% (4.7% y/y) rise in January. The 0.3% rise was in line with expectations.

The Wall Street Journal

March 28, 2023

 Russia’s economy is showing signs of significant weakness as the country enters its second year of war with Ukraine. Economic growth appears likely to remain slow for longer than initially expected, and government finances are strained amid the sanctions imposed by Western nations. “Russia’s economy is entering a long-term regression,” said former Russian Central Bank official Alexandra Prokopenko.

Cheryl Mickel, T. Rowe Price Fixed-Income Group/ Barron’s

April 4, 2023

“There’s a real possibility that inflation may need to settle in at a slightly higher level than what has been arbitrarily set as a target over time. I don’t think the Fed can say that, but I think we may have to live with it settling in at a higher rate and the economy just adjusting. With inflation settling into something lower than what it is now and toward 2%, that still leaves a lot of room to get some attractive returns in short-term bonds.”

Barron’s

April 4, 2023

The current consensus calls for 10.6% year-over-year EPS growth in the fourth quarter of 2023. Analysts’ consensus estimate is for a record-high $247 in S&P 500 EPS next year, which would be up 14% from 2022. “The sooner estimates get in line with the macro backdrop, the sooner, and more likely, the market can re-establish an uptrend,” wrote Ed Clissold, chief U.S. strategist at Ned Davis Research.

Reuters

March 31, 2023

Recent data shows there is a chance the Federal Reserve can bring down inflation without devastating the job market, Fed Governor Christopher Waller said. If inflation is currently being driven by the frequency at which companies adjust prices, as some evidence suggests, then it “can be brought down quickly with relatively little pain in terms of higher unemployment,” Waller said.

CNBC

March 31, 2023

Technical analyst Katie Stockton, CMT, has told clients that if the S&P 500 can hold above 4,050 it could head toward the highest levels seen so far this year.