10 Things You Need To Know: March 28, 2023
Key data releases this week include: FHFA House Price Index (Tue), consumer confidence (Tue), pending home sales (Wed), Q4 GDP revision (Thu), personal spending and income (Fri), PCE Deflator (Fri), and consumer sentiment (Fri).
Haver
March 21, 2023
Sales of existing homes increased 14.5% during February (-22.6% y/y) to 4.580 million (SAAR) after easing an unrevised 0.7% to 4.000 million in January. Sales stood at the highest level since September after falling in January to a roughly twelve-year low. The Action Economics Forecast Survey expected February sales of 4.20 million units. Single-family home sales rose 15.3% (-21.4% y/y) to 4.140 million units.
Barron’s
March 27, 2023
Historically, curbing inflation has required a restrictive policy using positive real interest rates. The assumption is that the current banking woes will have an economic impact equivalent to a hike of a half-percentage point or more in the fed-funds rate.
Barron’s
March 27, 2023
The latest Fed data show signs that the crisis is stabilizing, if not being fully contained. The Fed provided $354 billion to banks through its various credit facilities, as of Wednesday, an increase of $36 billion from the total a week earlier. “Overall, banks don’t appear to be reaching for liquidity, and it is possible that some of the borrowing observed last week was proactive in nature,” according to a client note that J.P. Morgan’s fixed-income analysts issued late on Thursday.
Barron’s
March 27, 2023
In January, foreign investors sold $36.6 billion of U.S. Treasuries, the fourth month of outflows over the past five. And while the actual dollar amount has risen 6.8% since the end of 2019, the percentage of U.S. government debt held by foreigners has fallen to 29.3%, from 39.2% at the end of 2019. Gold has been a beneficiary—central banks bought about $70 billion, or 1,136 metric tons, of gold in 2022, according to the World Gold Council.
Barron’s
March 27, 2023
We are already several weeks into a period of Treasury taking “extraordinary measures” to keep its spending under the current limit of $31.4 trillion, including adjustments to government employee pension funds. It may not come with the next debt limit fight or the one after that, but one day bondholders will gradually start looking for compensation and search for alternatives. That’s when the damage to America’s credit and the cost to its taxpayers could become permanent.
Barron’s
March 27, 2023
U.S. diesel consumption is closely correlated with economic growth. Government data show diesel demand in the first 10 weeks of this year down 12.6% from the comparable period in 2022 due to slowing growth in parts of the economy, especially for heavy industry and construction. This slowdown is further pressured by higher interest rates and the recent bank failures.
Ian Shepherdson, Pantheon Macroeconomics
March 22, 2023
“In short, the statement, policy action, and dots signal clearly that the Fed is nervous. Our base case is that they will hike again by 25bp in May – only one round of inflation and employment data will be released before that meeting – but that by June the case for pausing, with a terminal rate of 5.1 per cent, will be quite strong.”
Financial Times
March 26, 2023
Investors have moved some $286 billion into money market funds since the beginning of March, the biggest monthly inflow since the height of the coronavirus pandemic. Most of those inflows went to funds managed by Goldman Sachs, JPMorgan Chase and Fidelity.
The Wall Street Journal
March 22, 2023
A record $270 billion in commercial real estate debt is due to expire this year, much of it held by regional and smaller banks. Concerns are mounting that the rising potential for CRE mortgage defaults could further shock the banking system. However, banks have lent more conservatively in recent years than in the period before 2008. “The saving grace here is that you do have a decent-sized cushion,” Piper Sandler stock analyst Frank Schiraldi says.