10 Things You Need To Know: June 14, 2022
Key data releases this week include: NFIB Small Business Optimism (Tue), PPI (Tue), retail sales (Wed), NAHB Housing Market Index (Wed), FOMC rate decision (Wed), housing starts (Thu), industrial production (Fri), and capacity utilization (Fri).
Haver
June 10, 2022
The National Association of Realtors’ Fixed Rate Mortgage Housing Affordability Index fell 12.1% m/m (-29.3% y/y) to 109.2 in April after drops of 7.7% to 124.2 in March and 5.9% to 134.6 in February. The April reading was the deepest of seven straight monthly falls to the lowest level since August 2007. Affordability has plunged 40.6% since its January peak of 183.8.
Haver
June 10, 2022
The Consumer Price Index rose 1.0% last month following a 0.3% April increase. The 8.6% y/y gain was the strongest since December 1981. A 0.8% May rise had been expected in the Action Economics Forecast Survey. Prices excluding food & energy remained strong and rose 0.6% in May for the second consecutive month. The 6.0% y/y gain was below the March peak. A 0.5% May increase had been expected.
Reuters, FT
June 9, 2022
The European Central Bank on Thursday voted to end the bond-buying program it launched to help the eurozone economy make it through the coronavirus pandemic and said it will raise its key interest rate by 25 basis points in July and may implement a 50-basis point increase in September. ECB President Christine Lagarde said the central bank will bring inflation back to its 2% target in the “medium term” but that getting prices under control “is not just a step, it is a journey.”
Financial Times
June 10, 2022
Borrowing costs on Greek and Italian bonds shot up on Friday after the European Central Bank confirmed its plan to shut down its bond-buying program and start pushing up interest rates. Greece’s 10-year bond moved up 0.23 percentage points to 4.28 per cent, closing above the level it reached during the worst days of the COVID-19 pandemic, while the yield on Italy’s 10-year bond surged to 3.75%, the highest figure since 2014.
The WSJ
June 8, 2022
Treasury Secretary Janet Yellen has said in a House Ways and Means Committee hearing that lowering some of the tariffs imposed on China is “something that’s under active consideration,” as the US seeks strategies for bringing inflation under control. Yellen has made the point that some of the tariffs are needed to protect national security, but there are instances in which the additional cost of the tariff is borne in practice by US consumers when they purchase Chinese imports.
Barron’s
June 13, 2022
As for stocks, the S&P 500’s P/E has corrected by about five points, to about 16 times projected earnings, from over 21 late last year. But that’s based on aggregate earnings estimates that have barely budged, despite the squeeze on profit margins from rising costs, and slowing sales growth in some cases. According to Refinitiv, S&P 500 earnings are expected to rise 11.3% in the 12 months from the first quarter of 2022.
Bloomberg
June 9, 2022
The Federal Reserve probably needs to raise interest rates by 50 basis points at each of its next three or four meetings and will likely have to endure a recession to help get inflation back down to its 2% target, according to the central bank’s former vice chair Alan Blinder. Blinder, who served on the Fed in the 1990s under then- chief Alan Greenspan, sees a recession next year as likely: he puts the odds of one occurring at “somewhat above” 50%.
Bloomberg
June 6, 2022
Three indicators of supply-side pricing have stopped rising and are headed down again, suggesting that inflation may be on the verge of easing. North American fertilizer prices, the spot rate shippers are charged for shipping containers, and semiconductor prices are all falling.
Bloomberg
June 8, 2022
Mike Novogratz, the founder and chief executive of Galaxy Digital Holdings Ltd., said that two-thirds of the hedge funds that invest in cryptocurrencies will fail as a consequence of the current market downtown.