10 Things You Need To Know: July 5, 2023
Key data releases this week include: ISM Manufacturing (Mon), factory orders (Wed), FOMC meeting minutes (Wed), JOLTS Jobs Openings (Thu), ISM Services (Thu), and nonfarm payrolls (Fri).
Bloomberg
July 3, 2023
US factory activity contracted for an eighth month in June, slipping to the weakest level in more than three years as production, employment and input prices retreated. The Institute for Supply Management’s manufacturing gauge fell to 46, the weakest since May 2020, from 46.9 a month earlier. The current stretch of readings below 50 is the longest since 2008-2009.
Haver
June 27, 2023
House prices rose 0.7% during April following a 0.5% March gain, revised from 0.6%. These increases followed a 0.9% February rise, according to the Federal Housing Finance Agency (FHFA) House Price Index. The monthly increases were the strongest since the spring of last year. The 3.1% y/y gain remained well below its high of 19.2% in February 2022. Greatly reduced y/y gains were evident throughout the country.
Haver
June 29, 2023
The Pending Home Sales Index from the National Association of Realtors (NAR) weakened 2.7% in May (-22.2% y/y) to 76.5 from a little-revised 78.6 in April. The index has declined in each of the last three months and was 40.2% below its August 2020 high of 128.0. The index level in May was the lowest since December.
Haver
June 30, 2023
The PCE chain price index edged 0.1% higher (3.8% y/y) last month after a 0.4% April gain. The index excluding food & energy rose 0.3% (4.6% y/y), about as it did in the prior three months.
Financial Times, Reuters
June 26, 2023
Germany’s Bundesbank could require additional government funds to cover losses related to the European Central Bank’s bond-buying scheme, according to a report by the country’s federal auditor. Bundesbank has denied that it would need bailout funds to cover such losses.
Bloomberg
July 3, 2023
China imposed restrictions on exporting two metals that are crucial to parts of the semiconductor, telecommunications, and electric-vehicle industries in an escalation of the country’s tit-for-tat trade war on technology with the US and Europe. Gallium and germanium, along with their chemical compounds, will be subject to export controls meant to protect Chinese national security starting Aug. 1, China’s Ministry of Commerce said.
Barron’s
July 3, 2023
The latest projections from the nonpartisan Congressional Budget Office were released this past week. The federal budget deficit is forecast to total 5.8% of gross domestic product this year, declining to 5% of GDP by 2027, then climbing every year to 10% by 2053. Total federal debt held by the public is projected to climb from 98% of GDP this year, topping its historic World War II high in 2029, when it is forecast to hit 107% of GDP, and 181% by 2053.
The Wall Street Journal
June 28, 2023
Core inflation in the US likely won’t decline to the Federal Reserve’s 2% target before 2025, according to Fed Chair Jerome Powell. Powell signaled that more interest-rate hikes are likely on the horizon — possibly in July and September — noting that “policy hasn’t been restrictive for very long.”
Bloomberg
June 27, 2023
Money market funds appear to be absorbing the additional supply of Treasuries flowing into the market, as funds’ usage of the Federal Reserve’s reverse repo facility has declined. This has let the Fed continue offloading the massive amount of Treasuries purchased as part of the pandemic response without overwhelming the market.