Awaiting U.S. March CPI Data and FOMC Minutes
April 12, 2023
Market attention today is fixated on these two U.S. economic releases. While a further deceleration is expected of total CPI inflation, which already has dropped from 9.1% last June to a 17-month low of 6.0% in February, a rise of core inflation (excluding food and energy) above February’s 14-month low of 5.5% also appears plausible. Minutes from the March FOMC meeting will be gleaned for nuances regarding how much of a brake banking system strains might exert on interest rate tightening. Barring a big surprise between now and next month’s review, a 25-basis point hike of the federal funds target seems well baked into market expectations, but the policy rate path beyond then is quite uncertain.
The dollar in overnight trading fell by 0.4% against the Mexican peso, 0.3% versus the Australian dollar, 0.2% relative to the euro and Swiss franc and 0.1% relative to the Chinese yuan and Canadian dollar. The greenback remains unchanged against the Japanese yen and sterling.
Ten-year U.S. Treasury and German bund yields each rose two basis points.
Bitcoin has fallen 0.6%, but oil and gold prices are up 0.2% and 0.3%.
Equities in the Pacific Rim rose 0.6% in Japan, 0.5% in Australia and 0.4% in New Zealand and China but fell by 0.9% in Hong Kong. Share prices are up 0.5-0.7% in France, Spain, the U.K. and Italy but just 0.3% in Germany.
U.S. stock futures are in the black but just barely.
The United States is not the only economy releasing price data today.
- In Hungary, CPI inflation edged 0.2 percentage points lower to a 3-month low of 25.2% in March, still not far below January’s 223-month peak of 25.7%. Core inflation in Hungary also exceeded 20%.
- Japanese producer price inflation slowed to an 18-month low of 7.2% in March from 8.3% in February and 10.6% in the final month of 2022. Import price inflation of 9.9% continued to recede from July’s extreme high of 49.2%.
- Latvian Consumer price inflation decelerated three percentage points further to a 10-month low last month of 17.3%. Such crested at an all-time peak of 22.2% last September.
- In Lithuania, CPI inflation of 16.6% in March was its lowest in a year and down from last September’s 313-month high of 24.1%. Producer prices posted their biggest month-on-month drop (2.5%) in 35 months during March, and the 12-month rate of increase was more than halved from 15% in February to a 2-year low of 6.2%.
- Serbian CPI inflation edged 0.1 percentage point higher in March to a record high of 16.2%, which compares with 9.1% in March 2022.
The semi-annual IMF/World Bank meetings in Washington are running all week and have the potential to generate market-moving headlines. G-24 finance ministers and central bank governors will be holding discussions today on the periphery of the conference. Updated IMF real growth forecasts project real GDP rises in 2023 of just 1.6% in the United States, 1.5% in Canada, 1.3% in Japan, 0.9% in Brazil 0.8% in Euroland, and 0.7% in Russia. British GDP dips 0.3%, and growth of 5.9% projected for India is somewhat above the 5.2% forecast for China.
Core domestic machinery orders in Japan fell 4.5% in February but posted a 9.8% increase versus February 2022. Export orders went up 2.3% in the latest month and were 14.4% fewer than in February 2022.
Turkish retail sales suffered their largest monthly decline in February (6.5%) since the spring of 2020, depressing the 12-month rate of increase to a 3-month low of 21.5%. Retail sales in Indonesia fell 3.4% in February on top of January’s 4.4% monthly decline. Sales in January-February were on average at the same level as a year earlier.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: IMF World Economic Outlook, Japanese machinery orders, Japanese producer prices
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