10-Year Treasury Yield
U.S. Treasury yields slumped on Monday morning, as fears of a potential slowdown in global economic growth loomed. The yield on the benchmark 10-year Treasury note dropped 12.8 basis points to 2.778% at around 10:05 a.m. ET. The yield on the 30-year Treasury bond moved 8.1 basis points lower to 2.863%. Yields move inversely to prices and 1 basis point is equal to 0.01%. Treasury yields slump to start the week as fears of a Covid breakout in China grow.
CFNAI
The Chicago Fed National Activity Index decreased in March 2022, indicating a slight slowdown in U.S. economic growth. The index came in at 0.44, down from an upwardly revised 0.54 in February. Three of the four broad categories of indicators used to construct the index made positive contributions in March, but two categories deteriorated from February. The softening was apparent in the production-related component and the employment-related component.
Coca Cola - Earning Season
Coca-Cola on Monday reported quarterly earnings that topped analysts’ expectations as consumers drank more of its namesake soda, Powerade and Costa coffee. Shares of Coke rose 2% in premarket trading. Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv: Earnings per share: 64 cents adjusted vs. 58 cents expected. Revenue: $10.5 billion vs. $9.83 billion expected.
Durable Orders
Orders placed with U.S. factories for durable goods rose in March, pointing to sustained investment in business equipment that is helping drive economic growth. Bookings for durable goods -- items meant to last at least three years -- increased 0.8% in March after a revised 1.7% decline a month earlier, Commerce Department figures showed Tuesday. The figures aren’t adjusted for inflation. The figures aren’t adjusted for inflation. The value of core capital goods orders, a proxy for investment in equipment that excludes aircraft and military hardware, rose by a larger-than-forecast 1%. The median estimates in a Bloomberg survey of economists called for a 1% increase in all durable goods and a 0.5% gain in the core figure. Stocks fell in early trading as investors monitor corporate earnings, and the yield on the 10-year Treasury note declined.
S&P Case-Shiller
Home prices jumped nearly 20% in February 2022, but slowdown may be coming, S&P Case-Shiller says. Home prices increased 19.8% in February 2022 year over year, according to the S&P CoreLogic Case-Shiller national home price index. The 10-city composite annual increase came in at 18.6%, up from 17.3% in the previous month. The 20-city composite was up 20.2%, up from 18.9% in the previous month. Phoenix, Tampa, Florida, and Miami saw annual home price gains of 32.9% 32.6% and 29.7% respectively. Home prices increased 19.8% in February year over year, according to the S&P CoreLogic Case-Shiller national home price index. That is up from the 19.1% annual increase in January and is the third-highest reading in the index’s 35-year history. The 10-city composite annual increase came in at 18.6%, up from 17.3% in the previous month. The 20-city composite was up 20.2%, up from 18.9% in the previous month.
FHFA
Annual U.S. house prices rose 19.4% in February 2022, setting a new record for growth according to the FHFA House Price Index. FHFA house price index rises more than expected in February 2022. February FHFA House Price Index: +2.1% M/M vs. +1.6% prior and +19.4% Y/Y vs. +18.3% prior (revised from +18.2%). Previously, (April 25) Redfin revealed signs of a cooling housing market.
Consumer Confidence
U.S. consumer confidence eased in April 2022 as views on current conditions slightly worsened, offsetting more optimistic future expectations. The Conference Board’s index decreased to 107.3 from an upwardly revised 107.6 reading in March 2022. The median forecast in a Bloomberg survey of economists called for a reading of 108.2. Inflation -- running at the fastest pace since 1981 -- is increasingly taking a bite out of paychecks, and more dollars are being spent on essentials like food, gas and shelter. While consumers are so far hanging tough and continuing to spend, some economists worry that demand will eventually slow to a point that could cause a recession. Inflation-adjusted spending data will be released Friday.
New Home Sales
Sales of New U.S. Homes Drop to Lowest in Four Months. Purchases of new single-family homes decreased 8.6% to a 763,000 annual. Purchases of new single-family homes decreased 8.6% to a 763,000 annualized pace, government data showed Tuesday. The median estimate in a Bloomberg survey of economists called for a 768,000 rate. Mortgage rates have sharply escalated as the Federal Reserve signals aggressive steps to combat decades-high inflation. The steep ascent in borrowing costs, combined with high home prices across markets, is sidelining more prospective buyers. The figures follow a separate report last week showing sales of previously owned U.S. homes fell in March 2022 to the lowest level since June 2020 amid mounting affordability concerns.
Microsoft - Earning Season
Microsoft earnings beat across the board, stock up on outlook. Microsoft beat expectations on the top and bottom lines. Fourth-quarter revenue guidance for each of the company’s three business segments surpassed the expectations of analysts surveyed by StreetAccount. The company announced plans in the quarter to buy Activision Blizzard for almost $69 billion. Microsoft shares surged as much as 6% in extended trading on Tuesday after the software maker issued fiscal third-quarter earnings that exceeded analysts’ expectations and an optimistic outlook for the current quarter. Here’s how the company did: Earnings: $2.22 per share, adjusted, vs. $2.19 as expected by analysts, according to Refinitiv.Revenue: $49.36 billion, vs. $49.05 billion as expected by analysts, according to Refinitiv.
Alphabet - Earning Season
Alphabet missed on top and bottom lines for the first quarter.YouTube showed particularly weak results. Other Bets, which includes self-driving car unit Waymo, nearly doubled its revenue compared to the year prio. Alphabet reported weaker-than-expected earnings and revenue for the first quarter on Tuesday. The stock slid about 3% in extended trading. Here are the results: Earnings per share (EPS): $24.62 per share, vs. $25.91 expected, according to Refinitiv. Revenue: $68.01 billion, vs. $68.11 billion expected, according to Refinitiv. YouTube advertising revenue: $6.87 billion vs. $7.51 billion expected, according to StreetAccount. Google Cloud revenue: $5.82 billion vs. $5.76 billion expected, according to StreetAccount. Traffic acquisition costs (TAC): $11.99 billion vs. $11.69 billion expected, according to StreetAccount
Chipotle - Earning Season
Chipotle Mexican Grill’s quarterly earnings and revenue topped Wall Street’s estimates, fueled by consumers’ willingness to pay more for their burritos and bowls. Shares of the company rose 2% in extended trading. Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv: Earnings per share: $5.70 adjusted vs. $5.64 expected. Revenue: $2.02 billion vs. $2.01 billion expected.
MBA Purchase Applications
Mortgage applications to purchase a home fell 8% for the week and were 17% lower than the same week one year ago. This in the heart of the spring housing season. Total mortgage application volume fell 8.3% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Demand is now half of what it was a year ago. Applications to refinance a home loan fell 9% for the week and were 71% lower than the same week one year ago. The refinance share of total applications dropped to just 35%. It was about 61% of total application volume a year ago. Rising rates are to blame. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.37% from 5.20%, with points rising to 0.67 from 0.66 (including the origination fee) for loans with a 20% down payment. That is the highest rate since 2009. The rate was 3.17% the same week one year ago.
BA - Earning Season
Boeing — The aircraft maker’s shares slipped by 1.3% after the company recorded weaker-than-expected earnings and revenue for the most recent quarter. Boeing also said it’s pausing production of its 777X plane and doesn’t expect deliveries to start until 2025. Here’s how Boeing performed in the first quarter compared with analysts’ estimates complied by Refinitiv: Adjusted results: A core loss of $2.75 a share vs. an expected loss of 27 cents a share. Revenue: $13.99 billion vs. $16.02 billion, expected.Boeing’s first-quarter sales and revenue missed analysts’ estimates. The manufacturer says it is pausing 777X production and that it doesn’t expect deliveries to start until 2025. The company said it’s ramping up 737 Max output to 31 a month in the second quarter. Boeing shares are down 17% so far this year through Tuesday’s close, outpacing the S&P 500′s 12.4% drop.
Visa - Earning Season
Visa — Visa’s stock surged 5.5% premarket following a beat on the top and bottom lines in the previous quarter, as it anticipates travel recovery will bring continued growth. The payments firm reported adjusted earnings per share of $1.79 on revenues of $7.19 billion. Analysts expected $1.65 adjusted earnings per share and $6.83 billion in revenue, according to Refinitiv.
International Trade in Goods - Growth
Goods trade deficit increases 17.8% to $125.3 billion. Goods imports jump 11.5%; exports increase 7.2%. The U.S. trade deficit in goods widened to a record high in March likely as businesses who are worried about shortages front-loaded imports after Russia's invasion of Ukraine, raising the risk that economic growth stalled in the first quarter. The goods trade deficit jumped 17.8% to an all-time high of $125.3 billion. The increase likely reflected both higher volumes and prices. Imports of goods accelerated 11.5% to $294.6 billion. They were boosted by a 15.% surge in imports of industrial supplies, which include petroleum products. Imports of consumer goods vaulted 13.6%, while those of motor vehicles increased 12.0%. There were also solid gains in imports of food and capital goods. Exports of goods increased 7.2% to $169.3 billion. They were led by a 12.3% rise in exports of industrial supplies. Motor vehicle exports advanced 8.4%. There were also increases in exports of food, capital and consumer goods.
Retail Sales Inventories
Retail inventories rise 2.0%; wholesale stocks up 2.3%. The report from the Commerce Department on Wednesday also showed solid increases in retail and wholesale inventories. That could offset some of the hit to gross domestic product growth from the sky-high trade gap. The data prompted economists to downgrade their already low GDP growth estimates for the first quarter to show the economy barely growing or even contracting. The government is due to publish its snapshot of first-quarter GDP on Thursday. Economists cautioned against reading too much into any number as it would be a misleading picture of the economy.
Wholesale Inventoriess Adv
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Pending Home Sales
Pending home sales fall 1.2% in March 2022. Housing market: Pending home sales tumble for fifth straight month. Rising borrowing costs are cooling off what was once a blistering hot housing market. Pending home sales, a leading indicator of health for the housing market, declined for the fifth straight month in March 2022, according to the National Association of Realtors (NAR). The trade group’s index that tracks the number of homes under contract to be sold fell 1.2% to a reading of 103.7 in March from the previous month and sank 8.2% from a year ago. An index of 100 is equal to contract activity in 2001, said NAR. Analysts expected a 1.1% decline in pending sales from a month earlier, according to consensus estimates. Cooling housing demand was corroborated by a third report from the National Association of Realtors showing its Pending Home Sales Index, based on signed contracts, fell 1.2% in March to 103.7. That was the fifth straight monthly decline and pushed contracts to the lowest level since May 2020.
Jobless Claims
U.S. jobless claims fall 5,000 to 180,000, showing momentum continues in labor market. Strengthening labor market conditions were reinforced by a separate report from the Labor Department on Thursday showing initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 180,000 for the week ended April 23. Economists had forecast 180,000 applications for the latest week. According to data from Bank of America Securities, lower-income consumers, who tend to be disproportionately affected by inflation, were showing greater resilience.
GDP
Record trade deficit blamed for U.S. economy’s contraction in first quarter. U.S. economic growth unexpectedly contracted in the first quarter as a resurgence in COVID-19 cases disrupted activity, but the decline in output paints a misleading picture of the economy amid solid domestic demand. Gross domestic product fell at a 1.4% annualized rate last quarter, the Commerce Department said in its advance GDP estimate on Thursday. That was the first decline since the pandemic recession nearly two years ago. The economy grew at a robust 6.9% pace in the fourth quarter. Economists polled by Reuters had forecast the economy growing at a 1.1% rate. Estimates ranged from as low as a 1.4% rate of contraction to as high as a 2.6% growth pace. The slump in output reflected a wider trade deficit and moderate pace of inventory accumulation. While the headline figure could lead to howls about stagflation and recession from some quarters, it is not a true reflection of the economy.
Personal Income
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CorePCE
The Fed’s favorite inflation gauge rose 5.2% in March as worker pay fell further behind. Personal consumption expenditure prices excluding food and energy, the Fed’s preferred inflation gauge, rose 5.2% in March 2022 from a year ago. That was a slight deceleration from February 2022 and the Wall Street estimate. Including food and energy, core PCE prices surged 6.6%, the fastest pace since 1982. A measure that the Federal Reserve focuses on to gauge inflation rose in March 2022, likely cementing the central bank’s intention to hike interest rates by half a percentage in May.The core personal consumption expenditures price index, which measures costs that consumers pay across a wide swath of items and accounts for how behavior changes in response to market dynamics, increased 5.2% from a year ago, according to the Bureau of Economic Analysis. However, that was slightly below the 5.3% reading in February, which was the highest since April 1983. March’s figure was less than the 5.3% Dow Jones estimate. On a month-over-month basis, core prices rose 0.3%, in line with the estimate, providing some hope that inflation could be peaking.
Not CorePCE
Including volatile food and energy prices, the PCE index accelerated by 6.6%, the fastest pace since January 1982. Headline inflation was up 0.9% from February, much faster than the previous 0.5% increase.
Consumer Spending
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Employment Cost Index
Employment costs accelerated 1.4% in the past quarter, while inflation-adjusted income declined 0.4% in March. A separate inflation measure, the employment cost index, increased 1.4% in the first quarter from the previous period, according to the Bureau of Labor Statistics. The Dow Jones estimate for that level was 1.1%. The index, which measures total compensation cost for nongovernment workers, was up 4.5% over the past year. Separating out wages and salaries, the increase was 5%, the highest growth rate ever in a data series that dates to 2002 though only slightly above the previous quarter’s 4.9% gain. The bigger story from today’s data releases was further evidence that inflation is starting to ease.
Fixed Mortage Rates
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Consumer Sentiment UM
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