10 Things You Need To Know: January 24, 2023
Key data releases this week include: leading economic indicators (Mon), Q4 GDP (Thu), durable goods orders (Thu), new home sales (Thu), personal income and spending (Fri), PCE deflator (Fri), pending home sales (Fri), and consumer sentiment (Fri).
Trading Economics
January 18, 2023
Retail sales in the US declined 1.1% m/m in December 2022, following an upwardly revised 1% drop in November and worse than forecasts of a 0.8% fall. Excluding sales at gasoline stations, sales were down 0.8%, in another sign of a weaker-than-expected holiday shopping and a slowdown in consumer spending amid high inflation and interest rates.
Trading Economics
January 18, 2023
Producer prices for final demand in the US dropped 0.5 percent from a month earlier in December 2022, following a revised 0.2 percent gain in November and compared with market expectations of a 0.1 percent fall. On an unadjusted yearly basis, the PPI increased 6.2 percent in December. The core PPI was up 5.5% year over year.
Trading Economics
January 20, 2023
Existing home sales in the US fell 1.5% to a seasonally adjusted annual rate of 4.02 million in December of 2022, slightly above market forecasts of 3.96 million. It marks an eleventh straight month of falling home sales, the longest stretch since 1999, and the lowest level since November of 2010, as buyers continue to face limited inventory and high mortgage rates.
Barron’s
January 23, 2023
The federal-funds futures market now puts a 99.2% probability of just a quarter-point increase in the fed-funds rate—rather than a half-point—at the central bank’s next policy meeting on Feb. 1, according to the CME FedWatch site. The fed-funds range is currently 4.25% to 4.5%.
Tom Lee, Fundstrat/Barron’s
January 23, 2023
“Inflation has hit a wall, as 59% of CPI components are in outright deflation. On a weighted basis, this is now 34%. Former Fed Chairman Paul Volcker ended his war on inflation in 1982 when this diffusion measure rose above 30%. If the Fed owns up to the leg down in inflation (which the bond market sees), and annualized inflation for the next six months is 3%+, the odds for a more than 20% rise in equities is very strong in 2023.
Bloomberg
January 20, 2023
Federal Reserve Governor Christopher Waller, one of the more hawkish officials at the US central bank, has joined other policymakers in backing another moderation in the size of rate increases when they next gather. “I currently favor a 25 basis-point increase at the FOMC’s next meeting at the end of this month,” Waller said. “Beyond that, we still have a considerable way to go toward our 2% inflation goal, and I expect to support continued tightening of monetary policy.”
Bloomberg
January 23, 2023
US Treasury Secretary Janet Yellen said that goods prices moved down late in 2022 and that she expected housing inflation to cool by mid-2023. “Over the next six months, that should largely cease boosting US inflation,” she said. “I do think in the US we’re continuing to see a strong labor market and progress on inflation. And so those are very helpful signs.”
Bloomberg
January 23, 2023
Stock market optimism has come too soon and is vulnerable to negative surprises, BlackRock Investment Institute says. The strategists think the market is unprepared for recession and stick to their underweight on developed-markets equities. Investors betting on Fed rate cuts later this year are likely to be disappointed and expect to start seeing damage from policy overtightening.
Bloomberg
January 19, 2023
Excess demand for offerings, falling new issue concessions and the largest inflows into high-grade US credit in more than 17 months has helped make this year’s January borrowing, so far, the busiest ever. Global issuance of investment- and speculative-grade government and corporate bonds across currencies reached $586 billion through Jan. 18, the biggest tally on record for the period.