10 Things You Need To Know: June 22, 2022
Key data releases this week include: existing home sales (Tue), consumer sentiment (Fri), and new home sales (Fri).
June 15, 2022
The Fed announced a 75-basis point increase in the target for the Federal funds rate to 1.50% – 1.75%. It placed the rate at the highest level since March 2020. The move was greater-than-expected in the Action Economics Forecast Survey due to recent, strong inflation readings. Fed Chairman Powell indicated that the “75-basis point increase is an unusually large one, and I do not expect moves of this size to be common…”
June 21, 2022
Sales of previously owned US homes fell for a fourth month in May, receding to the lowest level in nearly two years and underscoring how high prices and a surge in mortgage rates have stifled demand. Contract closings decreased 3.4% in May from the prior month to an annualized 5.41 million, the weakest since June 2020, figures from the National Association of Realtors showed Tuesday. The median forecast in a Bloomberg survey of economists called for 5.4 million.
June 14, 2022
The Producer Price Index for Final Demand increased 0.8% during May (10.8% y/y) after rising 0.4% in April. The latest increase matched expectations in the Action Economics Forecast Survey. Producer prices less food, energy & trade services increased 0.5% (6.8% y/y) in May after increasing 0.4% in April. A 0.6% rise had been expected for the PPI less food & energy.
June 15, 2022
Retail sales declined 0.3% (+8.1% y/y) last month following a 0.7% April rise, revised from 0.9% reported initially. It was the first decline in five months. The Action Economics Forecast Survey expected a 0.2% rise. Sales in the retail control group, which excludes autos, gas stations, building materials & food services, were little changed (+6.2% y/y) after increasing 0.5% in April, revised from 1.0% m/m.
June 17, 2022
The Conference Board’s Composite Leading Economic Indicators index declined 0.4% during May (+3.0% y/y) after falling 0.4% in April, revised from -0.3%. The index also eased 0.1% in March. The May decline matched expectations in the Action Economics Forecast Survey. Four of the Leading index’s components fell in May.
June 16, 2022
The Swiss National Bank surprised traders by increasing its benchmark interest rate for the first time in 15 years and signaling it is prepared to take the rate higher to blunt inflation. On the currency markets the Swiss franc spiked after the central bank raised its key rate from -0.75% to – 0.25%.
June 20, 2022
Wilshire Associates estimates that their value is down $12.5 trillion this year and $13.1 trillion from November’s peak.
Lawrence H. Summers, Professor at Harvard University/Barron’s
June 20, 2022
“I think the 0.75-percentage-point move was a desirable move for the Fed’s credibility, but I don’t think the Fed helped itself with the new projections and rhetoric. We are still headed for a pretty hard landing.”
The Wall Street Journal, Reuters
June 13, 2022
The latest Federal Reserve Bank of New York survey shows median consumer expectations of inflation in one year’s time rose from 6.3% to 6.6% in May, while expectations that household expenses will rise also climbed to a new high of 9%. However, the survey also found expectations of losing one’s job remain well below last year’s average, indicating broad consumer confidence in a robust labor market.