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Market News Financial Breakfast on May 19: The U.S. economic outlook has been lowered, U.S. stocks have suffered the worst tragedy in the past two years, and oil prices have plummeted by nearly 4% to reach the top
Financial Breakfast on May 19: The U.S. economic outlook has been lowered, U.S. stocks have suffered the worst tragedy in the past two years, and oil prices have plummeted by nearly 4% to reach the top
Although the dollar's rise on Wednesday put pressure on gold prices, U.S. stocks fell sharply, with the S&P 500 and the Dow falling the most in nearly two years, which also provided safe-haven support for gold prices; after U.S. crude oil fell nearly 4% on Wednesday, it once fell on Thursday. It fell nearly 2%, hitting a new low of $107.59 per barrel this week. It was obviously dragged down by the sharp drop in U.S. stocks, and an unexpected increase in refined oil inventories, an increase in U.S. crude oil production, and a rebound in Asia's epidemic concerns all put pressure on oil prices; from a technical perspective From the point of view, the risk of short-term oil prices peaking has increased significantly.
2022-05-19
9427
In early Asian market trading on Thursday (May 19), spot gold fluctuated in a narrow range around $1,816. Although the dollar's rise on Wednesday put pressure on gold prices, U.S. stocks fell sharply, and the S&P 500 and the Dow recorded their biggest declines in nearly two years. , which also provided safe-haven support for gold prices; after US crude oil fell nearly 4% on Wednesday, it fell nearly 2% on Thursday, hitting a new low of US$107.59 per barrel this week, which was obviously dragged down by the sharp drop in US stocks, and refined oil inventories. The unexpected increase, the increase in U.S. crude oil production, and the resurgence of fears about the epidemic in Asia have all put pressure on oil prices; from a technical point of view, the risk of short-term oil prices peaking has increased significantly.
In commodities, Brent crude futures settled down $2.82, or 2.5%, at $109.11 a barrel. U.S. crude futures fell $2.81, or 2.5%, to $109.59 a barrel. U.S. gold futures settled at $1,815.9, down 0.2%.
In terms of U.S. stocks closing, the S&P 500 and the Dow suffered their biggest losses in nearly two years. The S&P 500 fell 4.04% to close at 3923.68 points; the Nasdaq fell 4.73% to 11418.15 points; It fell 3.57% to 31,490.07 points.
U.S. Wall Street stocks tumbled on Wednesday, with Target plunging about 25%, the retailer becoming the latest victim of a surge in prices that underscores deep concerns about the U.S. economy. Both the S&P 500 and the Dow Jones Industrial Average had their biggest one-day losses since June 2020.
Target, which reported a halving in first-quarter profit, warned that margins would be more affected given higher fuel and freight costs. Shares of the company tumbled about 25 percent, wiping about $25 billion off its market value, in its worst one-day performance since the October 19, 1987 Black Monday crash.
A day earlier, rival Walmart also cut its profit forecast. SPDR S&P Retail tumbled 8.3%.
“We believe that inflation has been outpacing wage gains for even longer than people expected, which is having an ongoing impact on retail spending, which was a major factor in today’s sell-off,” said Paul Christopher, head of global market strategy at Wells Fargo Investment Institute. , "Retailers are starting to expose the impact of the decline in consumers' purchasing power."
Rate-sensitive giant growth stocks exacerbated recent losses and dragged the S&P 500 and Nasdaq lower. Amazon, Nvidia (Nvidia/Nvidia) and Tesla tumbled nearly 7%, while Apple tumbled 5.6%.
“At this particular time, the tailwinds outweigh the tailwinds for growth stocks and the market is trying to decide how bad things can get,” said Liz Young, director of investment strategy at SoFi. “The market is nervous about the next six months. We may find that there is no need to be as nervous as it is now, the market does tend to overreact to the downside.”
All 11 sectors of the S&P 500 were wiped out, led by consumer discretionary and consumer staples stocks, both down more than 6%.
Rising inflation, the conflict in Ukraine, prolonged supply chain disruptions, coronavirus lockdowns in Asia and monetary tightening by major central banks have all weighed on financial markets recently, raising fears of a global economic slowdown.
The Wells Fargo Investment Institute said on Wednesday it downgraded its economic forecast and, under its current base-case forecast, expects a mild U.S. recession in late 2022 and early 2023.
Federal Reserve Chairman Jerome Powell pledged on Tuesday that the central bank will raise interest rates to levels needed to contain a surge in inflation, which he said has threatened the fundamentals of the economy. Traders expect the Fed to raise rates by 50 basis points in both June and July.
As of the close, the S&P 500 fell 4.04% to close at 3923.68 points. The Nasdaq fell 4.73% to 11,418.15; the Dow Jones Industrial Average fell 3.57% to 31,490.07.
Gold traded within a narrow range of 1807-1824 on Wednesday, closing at around 1816, as falling U.S. Treasury yields helped offset pressure from a stronger dollar and the Federal Reserve's plans to raise interest rates sharply. U.S. gold futures settled at $1,815.9, down 0.2%.
U.S. Treasury yields fell in choppy trade, tracking a slump in U.S. stocks after weak U.S. housing data fueled fears of an economic slowdown.
"Another big sell-off in equities, coupled with lower yields and safe-haven buying, is driving gold higher," said David Meger, head of metals trading at High Ridge Futures.
Federal Reserve Chairman Jerome Powell pledged on Tuesday that the central bank will raise interest rates as much as possible to curb soaring inflation.
David Meger believes, "The real question and the sticking point is whether the Fed is doing enough given the level of inflation. If that is not enough to calm inflationary pressures, gold will find support in this environment.
Gold's gains were limited by a rebound in the dollar after its biggest one-day drop in more than two months.
Inflows into SPDR Gold Trust GLD, the world's largest gold-backed ETF, continued to decline, reflecting overall market sentiment.
Oil prices fell nearly 4% from Tuesday's closing price on Wednesday, reversing early gains. Although crude oil inventories and gasoline inventories fell, refined oil inventories unexpectedly increased, and U.S. crude oil production continued to increase; and Asia's epidemic concerns rose again, and U.S. stocks fell sharply. Significant drag on oil prices.
Brent crude futures settled down $2.82, or 2.5%, at $109.11 a barrel. U.S. crude futures fell $2.81, or 2.5%, to $109.59 a barrel.
UBS analyst Giovanni Staunovo said risk sentiment shifted as stocks fell, with both benchmark contracts paring earlier gains of $2-3 a barrel.
Brent crude again traded at a rare discount to U.S. crude, with Brent crude closing below U.S. crude for the first time since May 2020 on Tuesday. Traders and analysts said U.S. crude inventories had tightened on strong export demand.
U.S. crude oil inventories unexpectedly fell by 3.4 million barrels last week, tight product inventories and near-record exports sent U.S. diesel and gasoline prices to record highs, prompting refiners to ramp up production, government data showed.
U.S. gasoline prices fell 5 percent after hitting a record two days earlier. Global stocks fell as the dollar strengthened on worries about economic growth and rising inflation.
"The market is extremely volatile, so any little news or a sell-off in the stock market could lead to significant volatility in the crude oil market," said Dennis Kissler, senior vice president of trading at BOK Financial. "The fundamentals remain bullish."
In addition, the European Union has provided member states with up to $2.1 billion to cushion the blow from the loss of Russian oil supplies, in the hope that the move will help reach a deal to impose energy sanctions on Moscow.
The dollar rose 0.6% to 103.90 on Wednesday after a three-session losing streak was interrupted as concerns over the outlook for global growth and rising inflation hit sentiment, a day after Federal Reserve Chairman Jerome Powell made hawkish remarks.
Neutral interest rates are interest rates that neither stimulate nor restrict economic activity. The neutral rate is widely expected to be around 3.5% by mid-2023.
The dollar benefited from demand for safe-haven assets on Wednesday as stocks sold off and U.S. Treasury yields fell.
"Unsurprisingly, Tuesday's rally in risk assets appeared to be short-lived, disappearing almost entirely in Wednesday morning's session," said Michael Brown, head of market intelligence at Caxton.
"As a result, there has been a re-emergence of safe-haven demand for the U.S. dollar, and there has been a sort of 'fleeing to cash' phenomenon, with Treasuries failing to get much buying despite shaky market sentiment," Brown added.
“Technically, this will keep the bulls happy, the dollar index has managed to hold above previous support at 103.20, which, combined with a persistently subdued economic backdrop, should keep the dollar firm for the time being,” said Caxton’s Brown.
Sterling fell 1.2% to $1.2340 on Wednesday, after data showed UK inflation rose to a 40-year high of 9%.
The Australian dollar, seen as an indicator of risk-on liquidity, fell 1.05% as investors took a bearish view of riskier currencies. Data from the Australian Bureau of Statistics on Wednesday showed the seasonally adjusted wage price index (WPI) rose 0.7% in the first quarter from the previous quarter, missing expectations for a 0.8% rise. That has led investors to reduce bets on a bigger rate hike in the country.
Fed's Harker sees 50 basis points of interest rate hikes in both June and July before raising rates more "moderately" ① Philadelphia Fed President Harker said on Wednesday that he expects the Fed to make two more 50 basis point hikes. interest rates, and then shifted to a single 25 basis point rate hike until the "bane" of inflation was defeated.
② "Looking ahead, if there are no major changes in the data in the coming weeks, I expect two more 50 basis point rate hikes in June and July," Harker said in a speech prepared for the Alliance of Mid-Sized Banks in the United States. "After that, I expect a series of modest increases in the funds rate until we are confident that inflation is falling back towards the Committee's target."
③ Harker also said he expects the U.S. economy to grow by 3% this year, enough to keep the labor market tight until the end of the year, despite higher interest rates.
④ He said that he believes that the Fed can reduce inflation without causing the economy to fall into recession, partly because the labor market is currently strong.
⑤ "There may be a few quarters of negative growth, but that's not my estimate, and it's not my current forecast," he said, adding that the economy can withstand a "moderate" and "methodical" tightening of financial conditions, which Will push demand down, "We don't want to overdo it, but we have to act."
Chicago Fed Evans: Interest rates above the neutral level can curb high inflation ①Chicago Fed President Evans said that if the Fed raises the benchmark interest rate to a level above the neutral rate and keeps it there, the inflation rate should be higher than the current rate. fall back.
②Evans said in an interview on Wednesday: "If we raise interest rates by 50 basis points or 75 basis points on this basis, then this monetary policy that is restraining the economy should help to bring down inflation."
③ He said, "We don't have to keep raising the federal funds rate to a level that depresses the economy. We can watch for a while after we get to that value."
④ Evans said, "As Chairman Powell said, we will quickly adjust the federal funds rate toward a more "neutral" direction. I think the "neutral rate" range is 2.25-2.5%".
⑤ "I expect that by the end of this year, we are likely to be at a neutral level and should be well prepared for inflationary pressures in 2023," he said. "Inflation is expected to ease somewhat from its current very high levels, but it will take some time."
Yellen says the United States has no legal authority to confiscate Russian assets, but Russia should pay for Ukraine's post-war reconstruction ① U.S. Treasury Secretary Yellen said on Wednesday that the United States has no legal authority to confiscate Russian central bank assets that were frozen due to the invasion of Ukraine, but is starting to work with the U.S. partners on how to get Russia to pay for Ukraine's post-war reconstruction.
② Yellen also said that the special license granted to allow Russia to pay debts to U.S. bondholders may not be extended. The license expires next week, leaving little time left for Russian officials aiming to avoid the first foreign debt default since 1917.
③ Russia's invasion of Ukraine on February 24 will be at the center of this week's G7 finance ministers meeting, with Yellen calling for increased financial support for Ukraine, where the World Bank estimates the country's weekly tangible losses are as high as $4 billion.
④ Yellen told reporters ahead of this week's meeting: "I think it's only natural that we will ask Russia to help pay for at least part of the cost, given the massive devastation that Ukraine has suffered, and the huge rebuilding costs that will be faced."
Adviser to the Chief of the Office of the President of Ukraine Says Negotiations with Russia Has Been Suspended The position of the Ukrainian president is very important to the Ukrainian side, and the Ukrainian side will only do so when he instructs that it is necessary to start negotiations and which positions should be upheld.
U.S. April building permits fell to the lowest level in five months, the real estate market is slowing Affordability declines.
② However, a report from the U.S. Commerce Department on Wednesday also showed a record number of homes still under construction, suggesting only a slight slowdown in construction activity.
③ Housing construction has been constrained by soaring prices and material shortages. The housing market is the most interest-rate sensitive sector of the economy, and building permits are a leading indicator for this sector.
④ Conrad DeQuadros, senior economic advisor at Brean Capital, said: "Housing construction appears to be undergoing a transition, on the one hand, with mortgage rates soaring and declining affordability, on the other hand, supply chain constraints continue to lead to an increase in the backlog of projects."
⑤ Building permits fell 3.2% in April to a seasonally adjusted annual rate of 1.819 million units, the lowest level since November last year. Economists polled by Reuters predicted a drop to 1.812 million units. Building permits rose 3.1% year-on-year in April.
⑥ The decline was concentrated in the single-family housing sector, where building permits for single-family homes fell 4.6% to 1.111 million units, the lowest since October last year. Multifamily permits of five or more units fell just 0.6% to 656,000.
⑦ The American Mortgage Bank Association (MBA) released a report on Wednesday showing that the number of home purchase loan applications last week fell 12% from the previous week, which further reflects the cooling of housing demand. Compared with the same period last year, the number of applications dropped by 15%.
⑧In April, housing starts decreased by 0.2% to 1.724 million households. Single-family housing starts, which account for the largest share, tumbled 7.3% to 1.1 million units, the lowest level since October last year.
More than 60% of Japanese companies think the Bank of Japan should stop massive monetary stimulus by the end of the current fiscal year
More than 60% of Japanese companies want the Bank of Japan to end the fiscal year 2022 (ending March 2023), a survey shows Its massive easing of monetary policy as the weak yen hurts, with about a quarter of businesses calling on the central bank to act now. Less than a year ago, Japanese companies enthusiastically supported the Bank of Japan's policy, but this year the yen has slipped rapidly to a 20-year low, pushing up fuel and raw material import prices, not only driving up corporate costs but also hurting household spending. blow. Twenty-four percent of respondents think the Bank of Japan should stop its massive monetary stimulus now, and 23% think it should stop by September.
JPMorgan Chase: Declining U.S. GDP forecasts due to falling stock markets and other factors The economic growth forecast for the second half of 2022 was lowered to 2.4% from 3%, the first half of 2023 forecast was lowered from 2.1% to 1.5%, and the second half of 2023 forecast was lowered from 1.4% to 1%. This will lead to a U.S. unemployment rate of 3.5% in the second half of 2023, compared with an earlier forecast of 3.2%. The Fed is ramping up its efforts to implement the needed tightening in financial conditions, giving us some confidence that GDP growth will slip below potential in the coming quarters.
Recession becomes base case, Wells Fargo downgrades S&P 500 target twice in three weeks
Wells Fargo cut S&P 500 forecast for second time in three weeks, saying mild recession is now its base case. Wells Fargo's consulting arm cut its year-end target for the S&P 500 by 300 points on Wednesday, after a 200-point cut in late April. The index is now expected to be in the 4200-4400 range before Christmas, implying a decline of as much as 7.7% for the year, but a gain of as much as 12% from current levels. "Since the beginning of the year, we have noted rising recession risks," strategists at Wells Fargo Consulting wrote in a note to clients. "We weighed the latest monthly and weekly data and the economy has crossed a probability level that makes a mild and short recession our base case."
The United Nations lowered its forecast for global economic growth in 2022
On the 18th local time, the United Nations released the "World Economic Situation and Prospects in 2022". The report predicts that as the global economic recovery is disrupted by the conflict between Russia and Ukraine, which has triggered a huge humanitarian crisis, raised food and commodity prices, and exacerbated inflationary pressures on a global scale. The report shows that the global economic growth rate in 2022 is lowered to 3.1%, which is lower than the 4% growth rate forecast released in January 2022. The report expects global inflation to increase to 6.7 percent in 2022, double the 2.9 percent average for the 2010-20 period, and food and energy prices to rise sharply. Among them, the EU's economic growth prospects have weakened significantly, and EU GDP is expected to grow by only 2.7% in 2022, instead of the 3.9% predicted in early January. (CCTV News)
Goldman Sachs CEO says U.S. at risk of recession, inflation 'extremely punitive'
Goldman Sachs CEO Solomon said the bank's clients are bracing for slower economic growth and falling asset prices, all as "extremely punitive" inflation weighs on the economy. "There is a possibility of a recession," he said in an interview, though he was not overly concerned about the risk, but citing estimates from economists such as his firm Jan Hatzius that the risk of a recession in the next 12 to 24 months is at least 30 percent. %. He is watching closely to see if credit spreads start to widen more significantly. "We have to get rid of inflation, which is extremely punitive, especially for people who are living on their weekly, dead wages. It's a huge tax on this class of society. I think it's very, very much to control it. important."
In commodities, Brent crude futures settled down $2.82, or 2.5%, at $109.11 a barrel. U.S. crude futures fell $2.81, or 2.5%, to $109.59 a barrel. U.S. gold futures settled at $1,815.9, down 0.2%.
In terms of U.S. stocks closing, the S&P 500 and the Dow suffered their biggest losses in nearly two years. The S&P 500 fell 4.04% to close at 3923.68 points; the Nasdaq fell 4.73% to 11418.15 points; It fell 3.57% to 31,490.07 points.
Thursday Forward
List of main market conditions in the world
U.S. Wall Street stocks tumbled on Wednesday, with Target plunging about 25%, the retailer becoming the latest victim of a surge in prices that underscores deep concerns about the U.S. economy. Both the S&P 500 and the Dow Jones Industrial Average had their biggest one-day losses since June 2020.
Target, which reported a halving in first-quarter profit, warned that margins would be more affected given higher fuel and freight costs. Shares of the company tumbled about 25 percent, wiping about $25 billion off its market value, in its worst one-day performance since the October 19, 1987 Black Monday crash.
A day earlier, rival Walmart also cut its profit forecast. SPDR S&P Retail tumbled 8.3%.
“We believe that inflation has been outpacing wage gains for even longer than people expected, which is having an ongoing impact on retail spending, which was a major factor in today’s sell-off,” said Paul Christopher, head of global market strategy at Wells Fargo Investment Institute. , "Retailers are starting to expose the impact of the decline in consumers' purchasing power."
Rate-sensitive giant growth stocks exacerbated recent losses and dragged the S&P 500 and Nasdaq lower. Amazon, Nvidia (Nvidia/Nvidia) and Tesla tumbled nearly 7%, while Apple tumbled 5.6%.
“At this particular time, the tailwinds outweigh the tailwinds for growth stocks and the market is trying to decide how bad things can get,” said Liz Young, director of investment strategy at SoFi. “The market is nervous about the next six months. We may find that there is no need to be as nervous as it is now, the market does tend to overreact to the downside.”
All 11 sectors of the S&P 500 were wiped out, led by consumer discretionary and consumer staples stocks, both down more than 6%.
Rising inflation, the conflict in Ukraine, prolonged supply chain disruptions, coronavirus lockdowns in Asia and monetary tightening by major central banks have all weighed on financial markets recently, raising fears of a global economic slowdown.
The Wells Fargo Investment Institute said on Wednesday it downgraded its economic forecast and, under its current base-case forecast, expects a mild U.S. recession in late 2022 and early 2023.
Federal Reserve Chairman Jerome Powell pledged on Tuesday that the central bank will raise interest rates to levels needed to contain a surge in inflation, which he said has threatened the fundamentals of the economy. Traders expect the Fed to raise rates by 50 basis points in both June and July.
As of the close, the S&P 500 fell 4.04% to close at 3923.68 points. The Nasdaq fell 4.73% to 11,418.15; the Dow Jones Industrial Average fell 3.57% to 31,490.07.
precious metal
Gold traded within a narrow range of 1807-1824 on Wednesday, closing at around 1816, as falling U.S. Treasury yields helped offset pressure from a stronger dollar and the Federal Reserve's plans to raise interest rates sharply. U.S. gold futures settled at $1,815.9, down 0.2%.
U.S. Treasury yields fell in choppy trade, tracking a slump in U.S. stocks after weak U.S. housing data fueled fears of an economic slowdown.
"Another big sell-off in equities, coupled with lower yields and safe-haven buying, is driving gold higher," said David Meger, head of metals trading at High Ridge Futures.
Federal Reserve Chairman Jerome Powell pledged on Tuesday that the central bank will raise interest rates as much as possible to curb soaring inflation.
David Meger believes, "The real question and the sticking point is whether the Fed is doing enough given the level of inflation. If that is not enough to calm inflationary pressures, gold will find support in this environment.
Gold's gains were limited by a rebound in the dollar after its biggest one-day drop in more than two months.
Inflows into SPDR Gold Trust GLD, the world's largest gold-backed ETF, continued to decline, reflecting overall market sentiment.
crude
Oil prices fell nearly 4% from Tuesday's closing price on Wednesday, reversing early gains. Although crude oil inventories and gasoline inventories fell, refined oil inventories unexpectedly increased, and U.S. crude oil production continued to increase; and Asia's epidemic concerns rose again, and U.S. stocks fell sharply. Significant drag on oil prices.
Brent crude futures settled down $2.82, or 2.5%, at $109.11 a barrel. U.S. crude futures fell $2.81, or 2.5%, to $109.59 a barrel.
UBS analyst Giovanni Staunovo said risk sentiment shifted as stocks fell, with both benchmark contracts paring earlier gains of $2-3 a barrel.
Brent crude again traded at a rare discount to U.S. crude, with Brent crude closing below U.S. crude for the first time since May 2020 on Tuesday. Traders and analysts said U.S. crude inventories had tightened on strong export demand.
U.S. crude oil inventories unexpectedly fell by 3.4 million barrels last week, tight product inventories and near-record exports sent U.S. diesel and gasoline prices to record highs, prompting refiners to ramp up production, government data showed.
U.S. gasoline prices fell 5 percent after hitting a record two days earlier. Global stocks fell as the dollar strengthened on worries about economic growth and rising inflation.
"The market is extremely volatile, so any little news or a sell-off in the stock market could lead to significant volatility in the crude oil market," said Dennis Kissler, senior vice president of trading at BOK Financial. "The fundamentals remain bullish."
In addition, the European Union has provided member states with up to $2.1 billion to cushion the blow from the loss of Russian oil supplies, in the hope that the move will help reach a deal to impose energy sanctions on Moscow.
foreign exchange
The dollar rose 0.6% to 103.90 on Wednesday after a three-session losing streak was interrupted as concerns over the outlook for global growth and rising inflation hit sentiment, a day after Federal Reserve Chairman Jerome Powell made hawkish remarks.
Neutral interest rates are interest rates that neither stimulate nor restrict economic activity. The neutral rate is widely expected to be around 3.5% by mid-2023.
The dollar benefited from demand for safe-haven assets on Wednesday as stocks sold off and U.S. Treasury yields fell.
"Unsurprisingly, Tuesday's rally in risk assets appeared to be short-lived, disappearing almost entirely in Wednesday morning's session," said Michael Brown, head of market intelligence at Caxton.
"As a result, there has been a re-emergence of safe-haven demand for the U.S. dollar, and there has been a sort of 'fleeing to cash' phenomenon, with Treasuries failing to get much buying despite shaky market sentiment," Brown added.
“Technically, this will keep the bulls happy, the dollar index has managed to hold above previous support at 103.20, which, combined with a persistently subdued economic backdrop, should keep the dollar firm for the time being,” said Caxton’s Brown.
Sterling fell 1.2% to $1.2340 on Wednesday, after data showed UK inflation rose to a 40-year high of 9%.
The Australian dollar, seen as an indicator of risk-on liquidity, fell 1.05% as investors took a bearish view of riskier currencies. Data from the Australian Bureau of Statistics on Wednesday showed the seasonally adjusted wage price index (WPI) rose 0.7% in the first quarter from the previous quarter, missing expectations for a 0.8% rise. That has led investors to reduce bets on a bigger rate hike in the country.
international news
Fed's Harker sees 50 basis points of interest rate hikes in both June and July before raising rates more "moderately" ① Philadelphia Fed President Harker said on Wednesday that he expects the Fed to make two more 50 basis point hikes. interest rates, and then shifted to a single 25 basis point rate hike until the "bane" of inflation was defeated.
② "Looking ahead, if there are no major changes in the data in the coming weeks, I expect two more 50 basis point rate hikes in June and July," Harker said in a speech prepared for the Alliance of Mid-Sized Banks in the United States. "After that, I expect a series of modest increases in the funds rate until we are confident that inflation is falling back towards the Committee's target."
③ Harker also said he expects the U.S. economy to grow by 3% this year, enough to keep the labor market tight until the end of the year, despite higher interest rates.
④ He said that he believes that the Fed can reduce inflation without causing the economy to fall into recession, partly because the labor market is currently strong.
⑤ "There may be a few quarters of negative growth, but that's not my estimate, and it's not my current forecast," he said, adding that the economy can withstand a "moderate" and "methodical" tightening of financial conditions, which Will push demand down, "We don't want to overdo it, but we have to act."
Chicago Fed Evans: Interest rates above the neutral level can curb high inflation ①Chicago Fed President Evans said that if the Fed raises the benchmark interest rate to a level above the neutral rate and keeps it there, the inflation rate should be higher than the current rate. fall back.
②Evans said in an interview on Wednesday: "If we raise interest rates by 50 basis points or 75 basis points on this basis, then this monetary policy that is restraining the economy should help to bring down inflation."
③ He said, "We don't have to keep raising the federal funds rate to a level that depresses the economy. We can watch for a while after we get to that value."
④ Evans said, "As Chairman Powell said, we will quickly adjust the federal funds rate toward a more "neutral" direction. I think the "neutral rate" range is 2.25-2.5%".
⑤ "I expect that by the end of this year, we are likely to be at a neutral level and should be well prepared for inflationary pressures in 2023," he said. "Inflation is expected to ease somewhat from its current very high levels, but it will take some time."
Yellen says the United States has no legal authority to confiscate Russian assets, but Russia should pay for Ukraine's post-war reconstruction ① U.S. Treasury Secretary Yellen said on Wednesday that the United States has no legal authority to confiscate Russian central bank assets that were frozen due to the invasion of Ukraine, but is starting to work with the U.S. partners on how to get Russia to pay for Ukraine's post-war reconstruction.
② Yellen also said that the special license granted to allow Russia to pay debts to U.S. bondholders may not be extended. The license expires next week, leaving little time left for Russian officials aiming to avoid the first foreign debt default since 1917.
③ Russia's invasion of Ukraine on February 24 will be at the center of this week's G7 finance ministers meeting, with Yellen calling for increased financial support for Ukraine, where the World Bank estimates the country's weekly tangible losses are as high as $4 billion.
④ Yellen told reporters ahead of this week's meeting: "I think it's only natural that we will ask Russia to help pay for at least part of the cost, given the massive devastation that Ukraine has suffered, and the huge rebuilding costs that will be faced."
Adviser to the Chief of the Office of the President of Ukraine Says Negotiations with Russia Has Been Suspended The position of the Ukrainian president is very important to the Ukrainian side, and the Ukrainian side will only do so when he instructs that it is necessary to start negotiations and which positions should be upheld.
U.S. April building permits fell to the lowest level in five months, the real estate market is slowing Affordability declines.
② However, a report from the U.S. Commerce Department on Wednesday also showed a record number of homes still under construction, suggesting only a slight slowdown in construction activity.
③ Housing construction has been constrained by soaring prices and material shortages. The housing market is the most interest-rate sensitive sector of the economy, and building permits are a leading indicator for this sector.
④ Conrad DeQuadros, senior economic advisor at Brean Capital, said: "Housing construction appears to be undergoing a transition, on the one hand, with mortgage rates soaring and declining affordability, on the other hand, supply chain constraints continue to lead to an increase in the backlog of projects."
⑤ Building permits fell 3.2% in April to a seasonally adjusted annual rate of 1.819 million units, the lowest level since November last year. Economists polled by Reuters predicted a drop to 1.812 million units. Building permits rose 3.1% year-on-year in April.
⑥ The decline was concentrated in the single-family housing sector, where building permits for single-family homes fell 4.6% to 1.111 million units, the lowest since October last year. Multifamily permits of five or more units fell just 0.6% to 656,000.
⑦ The American Mortgage Bank Association (MBA) released a report on Wednesday showing that the number of home purchase loan applications last week fell 12% from the previous week, which further reflects the cooling of housing demand. Compared with the same period last year, the number of applications dropped by 15%.
⑧In April, housing starts decreased by 0.2% to 1.724 million households. Single-family housing starts, which account for the largest share, tumbled 7.3% to 1.1 million units, the lowest level since October last year.
More than 60% of Japanese companies think the Bank of Japan should stop massive monetary stimulus by the end of the current fiscal year
More than 60% of Japanese companies want the Bank of Japan to end the fiscal year 2022 (ending March 2023), a survey shows Its massive easing of monetary policy as the weak yen hurts, with about a quarter of businesses calling on the central bank to act now. Less than a year ago, Japanese companies enthusiastically supported the Bank of Japan's policy, but this year the yen has slipped rapidly to a 20-year low, pushing up fuel and raw material import prices, not only driving up corporate costs but also hurting household spending. blow. Twenty-four percent of respondents think the Bank of Japan should stop its massive monetary stimulus now, and 23% think it should stop by September.
JPMorgan Chase: Declining U.S. GDP forecasts due to falling stock markets and other factors The economic growth forecast for the second half of 2022 was lowered to 2.4% from 3%, the first half of 2023 forecast was lowered from 2.1% to 1.5%, and the second half of 2023 forecast was lowered from 1.4% to 1%. This will lead to a U.S. unemployment rate of 3.5% in the second half of 2023, compared with an earlier forecast of 3.2%. The Fed is ramping up its efforts to implement the needed tightening in financial conditions, giving us some confidence that GDP growth will slip below potential in the coming quarters.
Recession becomes base case, Wells Fargo downgrades S&P 500 target twice in three weeks
Wells Fargo cut S&P 500 forecast for second time in three weeks, saying mild recession is now its base case. Wells Fargo's consulting arm cut its year-end target for the S&P 500 by 300 points on Wednesday, after a 200-point cut in late April. The index is now expected to be in the 4200-4400 range before Christmas, implying a decline of as much as 7.7% for the year, but a gain of as much as 12% from current levels. "Since the beginning of the year, we have noted rising recession risks," strategists at Wells Fargo Consulting wrote in a note to clients. "We weighed the latest monthly and weekly data and the economy has crossed a probability level that makes a mild and short recession our base case."
The United Nations lowered its forecast for global economic growth in 2022
On the 18th local time, the United Nations released the "World Economic Situation and Prospects in 2022". The report predicts that as the global economic recovery is disrupted by the conflict between Russia and Ukraine, which has triggered a huge humanitarian crisis, raised food and commodity prices, and exacerbated inflationary pressures on a global scale. The report shows that the global economic growth rate in 2022 is lowered to 3.1%, which is lower than the 4% growth rate forecast released in January 2022. The report expects global inflation to increase to 6.7 percent in 2022, double the 2.9 percent average for the 2010-20 period, and food and energy prices to rise sharply. Among them, the EU's economic growth prospects have weakened significantly, and EU GDP is expected to grow by only 2.7% in 2022, instead of the 3.9% predicted in early January. (CCTV News)
Goldman Sachs CEO says U.S. at risk of recession, inflation 'extremely punitive'
Goldman Sachs CEO Solomon said the bank's clients are bracing for slower economic growth and falling asset prices, all as "extremely punitive" inflation weighs on the economy. "There is a possibility of a recession," he said in an interview, though he was not overly concerned about the risk, but citing estimates from economists such as his firm Jan Hatzius that the risk of a recession in the next 12 to 24 months is at least 30 percent. %. He is watching closely to see if credit spreads start to widen more significantly. "We have to get rid of inflation, which is extremely punitive, especially for people who are living on their weekly, dead wages. It's a huge tax on this class of society. I think it's very, very much to control it. important."
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