10 Things You Need To Know: March 21, 2023
Key data releases this week include: existing home sales (Tue), FOMC rate decision (Wed), new home sales (Thu), and durable goods orders (Fri).
Trading Economics
March 14, 2023
The annual inflation rate in the US slowed to 6% in February, the lowest since September of 2021, in line with market forecasts, and compared to 6.4% in January. Core inflation edged lower to 5.5% from 5.6%. Compared to the previous month, the CPI rose 0.4%, following a prior 0.5% gain. The core rate edged higher to 0.5% from 0.4%, compared to forecasts of 0.4%.
Haver
March 15, 2023
Consumers pulled back spending modestly in February, as overall retail sales fell 0.4% (+5.4% y/y). The decline followed a 3.2% January surge, revised from 3.0% reported last month. The decline matched expectations in the Action Economics Forecast Survey. Spending in the retail control group rose 0.5% (7.0% y/y) after strengthening 2.3% in January.
Haver
March 17, 2023
The Conference Board’s Composite Leading Economic Indicators Index fell 0.3% (-6.5% y/y) during February after an unrevised 0.3% January weakening and a 0.8% December drop. The decline matched expectations in the Action Economics Forecast Survey. Six of the Leading Index’s ten components contributed negatively to the index.
Capital Economics
March 16, 2023
Investors have taken the 50bp rate hike by the ECB as dovish, and the peak deposit rate now priced into markets is between 3% and 3.25%. We think the risks are skewed towards rates going higher than this and the economy performing much worse than consensus forecasts.
The WSJ
March 19, 2023
UBS Group has agreed to acquire Credit Suisse Group for more than $3 billion, with the Swiss government saying it will make $9 billion available to backstop potential UBS losses from the deal. The Swiss National Bank said it will provide UBS with $100 billion for liquidity.
Capital Economics
March 17, 2023
The People’s Bank (PBOC) has just announced a cut to the required reserve ratio (RRR). This will provide a bit of financial relief for China’s large and medium-sized banks. It may also help nudge down lending rates slightly. But given the wider signs of policy restraint, we doubt it will have a significant and lasting impact on monetary conditions or credit growth.
Capital Economics
March 17, 2023
The case for abandoning Yield Curve Control (YCC) has weakened further. The recent troubles at US regional banks and Credit Suisse should further reduce already easing pressure on the 10-year JGB yield ceiling, and data show the economy is weakening rapidly. But YCC remains an unsustainable policy and the Bank of Japan will have to end it eventually. We still think this will happen at incoming Governor Ueda’s first meeting in April.
Barron’s
March 20, 2023
Ed Hyman, who heads Evercore ISI’s esteemed economics team, thinks that Jerome Powell & Co. will probably approve a 25-basis-point hike. He adds that it would be most unusual for the Fed to tighten more amid the strong disinflationary force exerted by falling oil prices (down nearly 13% last week). And, he says, the Fed’s past tightening is likely to result in a recession that shrinks gross domestic product by about 2% over the fourth quarter and the first quarter of 2024.
Oxford Economics
March 16, 2023
Labor market conditions remain exceptionally tight U.S. There are still few signs that the pick-up in announced layoffs in recent months, particularly in the tech sector, is feeding through to a rise in unemployment. Many announced layoffs don’t end up happening, and those that have been laid off are quickly finding work elsewhere, reflecting the ongoing imbalance between labor demand and supply.