GlobalFinancial markets have been pricing in tighter-for-longer monetary policy settings in recent weeks thanks to some firmer-than-expected US data. And this is now reversing the shift from a hard to a soft landing consensus that had begun to form in January. Our charts this week, however, turn the focus back onto some of the more positive trends that have established themselves in recent times. We look, for example, at falling European energy prices (in chart 1), ebbing core inflation rates (in chart 2), and at an arguably more realistic consensus for US profits and interest rates (in chart 3). We then hone in on the punchy US fiscal policy impulse that’s being enacted for the coming years (in chart 4) and how this (relative to elsewhere) might be affecting interest rates and the US dollar (in chart 5). Finally - and from a longer-term perspective - we throw some light on how costs of various renewable energy sources have been falling over the past few years (in chart 6).
USA| Feb 23 2023U.S. GDP Growth Revised Slightly Lower in Q4’22
- Consumer spending growth reduced but capital investment raised.
- Inventories & trade deficit improvement add to growth.
- Q4 price gain revised higher but trend remains lower.
by:Tom Moeller
|in:Economy in Brief
USA| Feb 23 2023Kansas City Fed Factory Index Is Unchanged in February
- Expectations continue to deteriorate.
- Pricing power remains weak.
by:Tom Moeller
|in:Economy in Brief
- January CFNAI at 0.23, the first positive reading following three straight negative readings.
- Three of four components increase, but the Sales, Orders & Inventories component falls for the fourth time in five months.
- CFNAI-MA3 rebounds in Jan. after three consecutive m/m drops.
USA| Feb 23 2023Jobless Claims Edge Down 3,000
- Initial claims slightly lower than forecast.
- Insured unemployment down 37,000 in latest week.
- Insured unemployment rate maintains recent range of 1.1%-1.2%.
Europe| Feb 23 2023Year-on-Year EMU HICP Settles Lower But Pace Remains Hot
In January the HICP for the European Monetary Union rose 8.7% year-over-year, down from its 9.3% year-over-year gain in December. This is the mildest 12-month gain since it rose by 8.7% in June 2022; the pace was last lower in May 2022 rising 8.1% year-over-year. Similarly, the six-month inflation rate fell to 7.3% in January from 7.9% in December. This is its slowest pace since December 2021. The annualized three-month gain in the HICP is just at 3.2%. That is sharply lower than December's three-month rise at a 6% pace and it's the slowest pace since June 2021 (2.9%). But since the drop in the three-month pace from December to January is so sharp - just about having the pace from 6% to 3.2% - we should withhold judgement about the durability of this slower pace. For one thing, three-month growth rates are less reliable than the longer-term growth rates. Also, this is headline inflation and we have seen some increase in energy prices on global markets recently. The slowdown in the three-month pace may not be something you can take to the bank.
Somewhat mixed results: The inflation numbers for the month are at the same time encouraging and discouraging. Over five years the HICP average is rising at an average of 3.4%, which is well above the target rate of 2%; while the core rate, at 2.2%, is not very far from the target. This highlights the fact that much of the inflation has been in those components that are in the headline and not in the core. Food & energy prices have soared during this period. For much of the rest of the HICP, there has not been as much elevation although that's not to say the core prices are currently well behaved. They are not.
USA| Feb 22 2023U.S. Mortgage Applications Decline as Interest Rates Rise
- Purchase applications fall sharply; refinancing applications ease.
- Mortgage interest rate on 30-year loan jumps.
by:Tom Moeller
|in:Economy in Brief
USA| Feb 22 2023U.S. Energy Prices Remain Mixed
- Gasoline prices edge lower.
- Crude oil prices improve.
- Natural gas prices move up.
by:Tom Moeller
|in:Economy in Brief
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