10 Things You Need To Know: June 1, 2022
Key data releases this week include: FHFA House Price Index (Tue), consumer confidence (Tue), ISM Manufacturing (Wed), JOLTS Jobs Openings (Wed), Beige Book (Wed), factory orders (Thu), ISM Services (Fri), and nonfarm payrolls (Fri).
May 24, 2022
New single-family home sales during April fell 16.6% (-26.9% y/y) to 591,000 units (SAAR). It was the lowest level of sales since the end of the recession two years earlier. This fourth consecutive monthly decline in sales occurred from 709,000 units in March, revised from 763,000. Earlier figures also were revised. The Action Economics Forecast Survey expected 750,000 sales in April.
May 26, 2022
U.S. real GDP fell 1.5%, SAAR (+3.5% y/y) last quarter, revised from the 1.4% decline reported initially. Following a 6.9% rise during Q4’21, it was the only quarter of negative growth since the end of the recession in Q2’20. The Action Economics Forecast Survey expected a 1.3% decline. Deterioration in the foreign trade balance subtracted 3.2 percentage points and inventory liquidation also reduced growth by 1.1 percentage points, revised from 0.8 percentage points.
May 26, 2022
Home buying remains under pressure. The Pending Home Sales Index from the National Association of Realtors fell 3.9% (-9.1% y/y) during April after falling 1.6% in March, revised from -1.2%. It was the sixth consecutive monthly decline with total sales down 22.4% from the August 2020 peak.
May 27, 2022
Personal consumption expenditures increased 0.9% (9.2% y/y) during April following a 1.4% March gain, revised from 1.1%. A 0.6% rise had been expected in the Action Economics Forecast Survey. Adjusted for price inflation, spending increased 0.7% last month (2.8% y/y) after rising 0.5% in March. Personal income rose 0.4% (2.6% y/y) during April following a 0.5% rise. A 0.6% increase had been expected.
Financial Times, Politico, Wall Street Journal
May 23, 2022
European Central Bank President Christine Lagarde has indicated that by September, the central bank will probably have brought its key interest rate out of negative territory and up to at least zero. She wrote that, based on current data, it is likely to “be in a position to exit negative interest rates by the end of the third quarter.”
May 31, 2022
China reported the fewest new Covid-19 cases in almost three months, with the easing of outbreaks in Beijing and Shanghai emboldening authorities to relax some of the strictest virus controls of the pandemic and move to stimulate the country’s faltering economy. Shanghai will lift lockdown measures for residents in low- risk areas, allowing them to leave and enter their compounds freely starting from Wednesday.
May 25, 2022
Russia’s ability to make bond payments through banking channels has been blocked, making the country likely to default on debt. An exemption to US sanctions on Russia that had allowed payments expired on May 25th.
May 31, 2022
Yardeni Research’s Ed Yardeni notes that the Fed’s focus on inflation has caused the market’s latest panic attack. “But this one won’t end until inflation moderates significantly all by itself or with the help of a Fed-induced recession, either by design or by accident,” he writes. “We think that can happen without a recession. Nevertheless, we now are raising the odds of a recession from 30% to 40%.”
Reuters, Financial Times, Wall Street Journal
May 25, 2022
Newly-released Federal Reserve minutes show strong support for 50-basis-point interest rate increases in June and July and raise the possibility of moving beyond a neutral monetary policy to one that is restrictive. At the central bank policy committee’s May 3-4 meeting “most participants” agreed that half-percentage point hikes at their June and July meetings would probably be “appropriate,” according to the meeting minutes.