10 Things You Need To Know: October 25, 2022
Key data releases this week include: FHFA Housing Price Index (Tue), consumer confidence (Tue), new home sales (Wed), Q3 GDP (Thu), durable goods orders (Thu), personal income and spending (Fri), consumer sentiment (Fri), and PCE deflator (Fri).
Haver
October 20, 2022
The Conference Board’s Composite Leading Economic Indicators Index declined 0.4% (-1.4% y/y) during September after holding steady in August, revised from -0.3%. The Action Economics Forecast Survey expected a 0.3% decline in the index for last month. Four of the Leading Index’s ten components made negative contributions in September.
Haver
October 20, 2022
Sales of existing homes continued to decline in September, falling 1.5% m/m (-23.8% y/y) to 4.71 million units at a seasonally adjusted annual rate. This was the eighth consecutive monthly decline. Since February, when the current string of monthly declines began, sales have fallen 27.4%. The Action Economics Forecast Survey expected September sales of 4.68 million units.
MarketWatch
October 19, 2022
The Federal Reserve’s latest Beige Book report pointed to some easing of inflation, as well as growing concerns about a potential recession. In addition, the report shows that the labor market continues to be tight.
Capital Economics
October 24, 2022
The flash PMIs for October provide yet more evidence that the euro-zone is sliding into quite a deep recession but that inflationary pressures remain intense.
Financial Times, Bloomberg
October 18, 2022
Bank of England deputy governor Jon Cunliffe has said the liability-driven investment funds caught short of capital which sparked last month’s UK markets rout now report that “they have enough capital to withstand much larger increases in yields than before. The risk of LDI fund behavior triggering ‘fire sale’ dynamics in the gilt market and self-reinforcing falls in gilt prices has been significantly reduced.”
Capital Economics
October 21, 2022
With the yen reaching a 14-year low against the euro, we estimate that Germany’s GDP has overtaken Japan’s in US$-terms. However, as the yen is now more severely undervalued relative to fundamentals, we think it will regain more lost ground than the euro over the coming years so Japan will retain its lead over Germany.
Barron’s
October 24, 2022
On Friday, The Wall Street Journal reported that, while the FOMC is on track for a 75-basis-point increase in November, it will debate whether to make a smaller move the following month. That made December’s rate decision roughly a coin toss between a 50- and a 75-basis-point boost, and lowered the expected rate peak, in early 2023, to 4.75%-5%, according to the CME FedWatch website.
Bloomberg
October 21, 2022
Federal Reserve Bank of San Francisco President Mary Daly said that policymakers should start planning for a reduction in the size of interest-rate increases, though it’s not yet time to “step down” from large hikes “It should at least be something we’re considering at this point, but the data haven’t been cooperating,” Daly said Friday.
Bloomberg
October 17, 2022
The Federal Reserve’s task of slowing down the US economy is tougher because consumers are in good shape, said Bank of America CEO Brian Moynihan. “Consumers are spending, they have money, they are employed, and they have good credit,” he said.