10 Things You Need To Know: May 24, 2022

Key data releases this week include: new home sales (Tue), durable goods orders (Wed), FOMC meeting minutes (Wed), Q1 GDP revision (Thu), pending home sales (Thu), personal income and spending (Fri), PCE deflator (Fri), and consumer sentiment (Fri).

Haver

May 17, 2022

Retail Spending posted a solid increase in April, rising a slightly larger-than-expected 0.9% m/m (+8.2% y/y) following an upwardly revised 1.4% monthly increase in March. The Action Economics Forecast Survey had looked for a 0.8% m/m rise. Sales in the retail control group, which excludes autos, gas stations, building materials, rose a solid 1.0% m/m.

Haver

May 19, 2022

The Conference Board’s Composite Leading Economic Indicators index fell 0.3% m/m (4.7% y/y) in April after rising 0.1% m/m in March. The Action Economics Forecast Survey had expected no change in April. This was the second monthly decline in the past four months.

Haver

May 19, 2022

Existing home sales declined 2.4% (-5.9% y/y) during April to 5.61 million (SAAR) from 5.75 million in March, revised from 5.77 million. It was the lowest level of sales since June 2020 according to the National Association of Realtors (NAR). The Action Economics Forecast Survey expected a smaller decline in sales to 5.65 million units in April.

Financial Times, Sky News, CNBC

May 16, 2022

Bank of England Governor Andrew Bailey told the UK parliament’s Treasury Committee that there is nothing the central bank can do to prevent inflation from reaching 10% this year. Bailey said he is confident that interest rate hikes will bring inflation back to the bank’s 2% target after inflation peaks above 10% in the autumn.

Reuters

May 20, 2022

Russia’s finance ministry said it has initiated wire transfers making interest payments on two of its bonds ahead of the payment due date. An exemption to US sanctions that allows Russia to continue making bond payments expires on Wednesday, and US Treasury Secretary Janet Yellen has suggested it won’t be renewed.

Barron’s

May 23, 2022

The S&P 500 has fallen for seven consecutive weeks. Following the end of its three previous losing streaks of seven weeks or more, the index went on to gain an average of 39%, observes Frank Cappelleri, chief market technician at Instinet. “While the historical sample size is small, when the previous long losing streaks ended, they were followed by exceptionally strong rebounds—regardless of the current market’s overall trend,” he explains.

CNBC, Financial Times, The Wall Street Journal

May 17, 2022

Federal Reserve Chair Jerome Powell said he is committed to taking interest rates as high as necessary to get inflation headed in the direction of the central bank’s 2% target. “If that involves moving past broadly understood levels of neutral, we won’t hesitate to do that,” he said.

Capital Economics

May 23, 2022

We doubt that the 10-year Treasury yield has peaked in this cycle. Admittedly, it has fallen back markedly on net over the past couple of weeks; having briefly climbed above 3.20% earlier this month, it is now at around ~2.85%. But it has risen ~5bp so far today and we suspect that it will climb a lot more over the next 12 months or so.

Bloomberg

May 23, 2022

Nobel laureate Joseph Stiglitz, a former World Bank chief economist, said central banks were “totally unprepared” for the current crisis, which is an “order of magnitude worse” than the 1970s because “rather than being just oil it’s about food, oil and covid-19 supply disturbances.”