10 Things You Need to Know: April 5 2022

Key data releases this week include: NFIB Small Business Optimism (Tue), CPI (Tue), PPI (Wed), retail sales (Thu), consumer sentiment (Thu), and industrial production (Fri).

Haver
April 5, 2022
The U.S. ISM Services PMI was at 58.3 in March, up from 56.5 in February but down from 59.9 in January, according to the Institute for Supply Management. The March reading was down from a peak of 68.4 in November and 62.2 in March 2021. However, the 12-month average was 62.3, reflecting consistently strong growth in the U.S. services sector. The Action Economics Forecast Survey had expected 58.1 for March.

Haver
April 7, 2022
Initial claims for unemployment insurance of 166,000 in the week ended April 2 (-74.3% y/y) compared to 171,000 in the prior week, revised from 202,000. It equaled the lowest level of initial claims since November 1968. The Action Economics Forecast Survey expected 200,000 claims for the latest week. The 4-week moving average of initial claims fell to 170,000 from 178,000 in the prior week. The figures were revised from 2017 to 2021.

Haver
April 8, 2022
Finding an affordable home is becoming increasingly difficult. The National Association of Realtors’ Fixed Rate Mortgage Housing Affordability Index fell 5.4% to 135.4 in February and has fallen 26.3% since its recent peak in January 2021. The Housing Affordability Index equals 100 when median family income equals the amount required for an 80% mortgage on a median-priced existing single-family home.

Bloomberg
April 4, 2022
Reuters
Monday, April 4, 2022
The US Treasury has barred the use of US accounts to make debt payments for Russia. The action is intended to force Russia to either go into default, spend new revenue for bond payments or draw down its domestic dollar reserves to make the payments, a spokesperson for the Treasury’s Office of Foreign Assets Control said.

Practice Insight
April 7, 2022
Financial firms need to adapt to the reality that sanctions currently imposed on Russia will continue for an extended period of time, market participants say. “The sanctions will remain in place until there is some form of remediation, perhaps a payment of compensation, for what will likely be a significantly damaged landscape in Ukraine that will take years to rebuild,” said Clifford Sosnow, a partner in the Fasken Martineau international law firm.

Barron’s
April 11, 2022
Consumers aren’t alone in feeling the painful impact of higher prices. For a generation of investors who rarely had to worry about inflation eroding their wealth, the past year’s spike marks a major change—and ought to prompt a re-evaluation. Specifically, investors should consider adjusting their bond and stock holdings to manage inflation’s impact, while adding commodities and real assets to their portfolios.

Barron’s
April 11, 2022
“The markets are still underappreciating inflation risk over coming years,” says Rebecca Patterson, chief investment strategist at Bridgewater Associates, which oversees $150 billion. “It makes a lot of sense to have a more inflation-balanced portfolio than investors have had over the past four decades. It’s a new world.”

Barron’s
April 11, 2022
Large speculators are the most net-short 10-year Treasury futures (relative to open interest) they have been since the fall of 2018. This is often a contrarian signal preceding lower yields. While there could be slightly more upside toward 2.75%, we think we are close to a tactical top in yields.

Reuters
April 6, 2022
Financial Times
Wednesday, April 6, 2022
April 6, 2022
The Wall Street Journal
Minutes from the Federal Reserve’s March meeting indicate officials are ready to scale back the central bank’s asset holdings by as much as $95 billion a month to slow the pace of inflation. A number of officials spoke in favor of implementing a series of half-percentage-point rate increases at future meetings.