GlobalFinancial market sentiment has improved over the last few days thanks to reassuring communications and targeted policy support from central banks together with a high profile acquisition of a troubled institution in the Swiss banking sector. Although the Fed has subsequently enacted a 25bps rate hike, Chairman Powell has further assuaged market fears by suggesting the US tightening cycle is nearly complete. Against that backdrop our first three charts this week dwell on financial instability and how this can be traced, in part, to central banks’ tightening campaigns. The trade-offs for policymakers, however, are now far more challenging, not least as inflation is proving to be far more sticky in some major economies (e.g. the UK) than expected (see chart 4). In the meantime, there remains little evidence yet of a revival in the world economy, notwithstanding the pick-up that might have been expected in some areas by now from China’s re-opening (see charts 5 and 6).
USA| Mar 23 2023U.S. New Home Sales Increase Further in February
- Home sales rise for third straight month.
- Sales changes remain mixed regionally.
- Median sales price gain fails to recoup earlier decline.
by:Tom Moeller
|in:Economy in Brief
USA| Mar 23 2023Kansas City Fed Manufacturing Index Remains Flat in March
- Composite Index stays at 0 in March, led by a drop in new orders to -13.
- Employment rises to 18, its highest level since May ’22; production rebounds to 3 after being in negative territory for five straight months.
- Price indexes show mixed results, with a rise to a six-month high in prices paid for raw materials but a slight decline in prices received for finished goods.
- Expectations for future activity improve slightly.
- Q4 deficit was smallest in six quarters.
- Goods deficit widened in Q4 as both exports and imports fell.
- Services surplus widened and deficit on secondary income narrowed in Q4.
by:Sandy Batten
|in:Economy in Brief
USA| Mar 23 2023Chicago Fed National Activity Index Is Negative in February
- Reading is below zero for fourth month in last five.
- All four components are negative.
- Recent trend roughly stabilizes.
by:Tom Moeller
|in:Economy in Brief
USA| Mar 23 2023Unemployment Insurance Claims Hold Steady in March 18 Week
- Initial claims edge downward 1,000, remain just under 200,000.
- Insured unemployment rate steady at 1.2%, holding in historically low range.
- Highest state rates at 2.7%, lowest at 0.3%-0.4%.
Denmark| Mar 23 2023Danish Confidence Bottoms and Stabilizes
Consumer confidence in Denmark in March improved slightly, moving up to -23.1 from -25.1 in February after logging a -26.1 in January. These improvements are not strong, but they are movements toward ‘better’ rather than toward ‘worse.’ The absolute reading is extremely weak with the ranking of 2.7% on data since 1995. That means that since 1995 readings have been this weak or weaker only 2.7% of the time.
The past year… The data assessing conditions over the last 12 months are generally quite weak; the financial situation for the last 12 months has a 0.6 percentile standing. The general economy reading for the last 12 months has a 3.3 percentile standing. The assessment of consumer prices over the last 12 months, of course, has a high 97-percentile standing telling us that inflation had been higher historically only about 3% of the time. That's not surprising and it's not good news. That summary sets the stage for the responses for this month.
Looking ahead The look-ahead responses from March show the financial situation for the next 12 months slightly stronger at a net 0.4 reading, up from -0.3 in February, but still with only a 3.6 percentile standing. The outlook for the general economy improved to -0.7 in March from a -6.4 reading in February, logged at a 38.8 percentile standing much better than the other standings noted to date; however, it is substantially below the 50% break even mark. Consumer prices over the next 12 months have a -8.5 assessment for March below the -8 assessment for February; the standing for this metric is the 27th percentile which is certainly a lot weaker than the 97th percentile standing for the previous twelve months. There is some expectation that inflation is going to be coming down; it is hard to tell from this whether that sort of decline is sufficient or not. The unemployment trend expected for the next 12 months has a lower net 18.6 reading in March, down from 28.4 in February (which had a small uptick compared to January). The standing still has an 87-percentile mark which is relatively high.
The environment Assessments of the environment in March change very little from February. All responses have rankings below historic midpoints (below 50%). The favorability of the time to purchase improved slightly to -39.6 in March from -41.8 in February; the favorability the time to purchase over the next 12 months improved to -15.5 from -17.9. The favorability of the time to save ticked ever so slightly higher to 64.4 from 64.3; the March favorability of the time to save over the next 12 months eroded to 22 from 23.8 logging a lower 10-percentile standing. The general financial situation of households is unchanged at 19.8, a 2.4 percentile standing. The environment is weak.
USA| Mar 22 2023FOMC Gradually Lifts Funds Rate
- The FOMC raised the targeted Federal Funds Rate by 25 basis points to a range of 4.75%-5.00%.
- Today’s decision was endorsed by each member of the FOMC.
by:Tom Moeller
|in:Economy in Brief
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