10 Things You Need To Know: June 7, 2022
Key data releases this week include: consumer credit (Tue), consumer sentiment (Fri), and CPI (Fri).
Haver
June 3, 2022
Nonfarm payroll employment increased 390,000 (4.5% y/y) last month following a 436,000 April rise, revised from 428,000. A 325,000 May gain had been expected in the Action Economics Forecast Survey. The 436,000 April rise was revised from 428,000, but the March rise was revised down to 398,000 from 428,000.
Haver
June 2, 2022
The U.S. ISM Services PMI fell to 55.9 in May from 57.1 in April and 58.3 in March, according to the Institute for Supply Management. The May reading was down from a peak of 68.4 in November and 63.2 last May. However, the 12-month average was 61.2, reflecting consistently strong growth in the U.S. services sector. The Action Economics Forecast Survey had expected 56.5 for May.
Reuters
June 1, 2022
The Federal Reserve released its latest Beige Book report, which showed most regions in the country were experiencing modest or moderate growth. However, 8 of 12 districts reported lowered expectations for future growth, and contacts cited labor market issues, supply chain disruptions, inflation, the war in Ukraine and COVID-19 disruptions among their concerns.
Capital Economics
June 1, 2022
We expect the ECB Governing Council to confirm on Thursday that the Bank will end net asset purchases in early July and raise the deposit rate out of negative territory by the end of September. The policy statement is also likely to leave the door open to a 50bp hike in July. We think surging inflation will ultimately prompt the ECB to raise interest rates more than the consensus and investors expect this year.
Bloomberg
June 6, 2022
For millions of people still locked down in Shanghai, listening to officials tout the city’s victory over Covid-19 and its “reopening” is infuriating. Some are so frustrated at being confined that conflicts with police have broken out. Almost all of Shanghai’s 25 million residents were confined to their homes for two months after the omicron variant penetrated the city’s defenses this spring.
Barron’s
June 6, 2022
The Organization of the Petroleum Exporting Countries announced it would raise production targets to 684,000 barrels a day, up from the current 432,000. Still, it’s probably not enough, says Helima Croft, head of global commodity strategy at RBC Capital Markets. “We think that too big of a burden is probably being placed on OPEC to offset the economic damage caused by a war involving the world’s commodity superstore,” she explains.
Bloomberg
June 3, 2022
Federal Reserve Bank of Cleveland President Loretta Mester reiterated her support for raising interest rates by a half point in June and July and said she would back doing the same again in September if inflation is not retreating. “I’m going to come into that September meeting and if I don’t see compelling evidence, then I could easily be a 50 basis-point in that meeting as well,” she said.
Wall Street Journal, CNBC, Reuters
June 2, 2022
The Federal Reserve has begun to passively shrink the size of its $8.9 trillion portfolio by $30 billion in Treasuries and by $17.5 billion in mortgage bonds. Meanwhile, Fed Vice Chair Lael Brainard and Cleveland Fed President Loretta Mester indicated the central bank is likely to keep hiking rates in September, casting doubt on the idea of a pause.
Financial Times
May 31, 2022
Analysts at JPMorgan Chase have spotted an upturn in the number of corporate executives buying shares in their own firms, a trend confirmed by figures from Verity Data that show insider buying at S&P 500-listed companies in May reaching the highest level since March 2020. The fact that “corporate insiders are holding a non-consensus view across most sectors and [are] actively buying the dip” is an encouraging sign for stock markets, the analysts say.