10 Things You Need to Know: March 9, 2022
Key data releases this week include: PPI (Tue), retail sales (Wed), NAHB Housing Market Index (Wed), FOMC rate decision (Wed), housing starts (Thu), industrial production (Thu), existing home sales (Fri), and leading economic indicators (Fri).
Haver
March 9, 2022
The Bureau of Labor Statistics reported that on the last business day of January, the total number of job openings fell 1.6% (+55.7% y/y) to 11.263 million. The job openings rate, calculated as job openings as a percent of the sum of total employment and openings, eased to 7.0% from 7.1%.
Haver
March 10, 2022
As the Action Economics Forecast Survey predicted, the Consumer Price Index rose an accelerated 0.8% during February. The 7.9% y/y rise was the largest since January 1982. Core price inflation eased m/m. Also matching expectations, last month’s 0.5% price rise followed two straight 0.6% gains. The 6.4% y/y increase, nonetheless, was the strongest since August 1982.
Haver
March 11, 2022
The National Association of Realtors’ Fixed Rate Mortgage Housing Affordability Index fell 2.8% in January to 143.0 from 147.1 in December. Affordability has fallen 22.2% since its recent high 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.
Reuters
March 10, 2022
Financial Times
Thursday, March 10, 2022
The European Central Bank’s policy makers said they will start withdrawing stimulus at the end of this month, while also modestly lowering their growth forecast and raising their inflation projection for the full year to 5.1%. The decisions clear the way for the first interest rate hike by the ECB in more than a decade, although it left rates unchanged at that meeting.
Capital Economics
March 11, 2022
More easing will be needed to achieve the “stability” that the Chinese government is aiming for. Soaring commodity prices are a drag both domestically and on consumers in key export markets. And the “dynamic clearing” approach to Covid may require more stringent restrictions. While we expect the government to publish figures showing that it has met its “around 5.5%” growth target, we now think that the economy may grow by only 2.5% this year.
Capital Economics
March 14, 2022
Russia’s government appears to be heading towards a default on its foreign currency debts for the first time since the Bolshevik revolution. This won’t affect the Russian government’s ability to finance itself and it seems unlikely that there will be significant spillovers elsewhere. Perhaps the bigger risk is that it may be a prelude to defaults by Russian corporates, whose external debts are more than four times larger than those of the sovereign.
Barron’s
March 14, 2022
History shows that mean reversion is a powerful force. After falling into bear-market territory—defined as a 20% decline from a recent peak—the Nasdaq has averaged a six-month return of 10% and been in positive territory nearly two-thirds of the time, going back to the index’s inception in 1972. The Dow Jones Industrial Average, meanwhile, has posted average six-month gains of 5.2% after falling into a correction (a fall of 10% from the peak).
Capital Economics
March 11, 2022
We expect the Fed to hike interest rates by 25bp at this week’s FOMC meeting and, despite the war in Ukraine, to unveil new projections showing at least five interest rate hikes this year in total.
Capital Economics
March 11, 2022
We suspect commodity prices will continue to whipsaw around in the weeks ahead, as markets move quickly to discount the war in Ukraine and its consequences into commodity prices. On balance, though, the risks to prices are still very much skewed to the upside, not least as the West could further tighten restrictions on Russia’s commodity exports.