Morning Brief: U.S. May Default On June 1; RBA Interest Rate Rise Catches Markets By Surprise; Focus On Eurozone CPI And Lending Survey
Americas
Markets
🇺🇸 #Treasuries Hit in Corporate Sales Rush Before #Fed: Markets Wrap – Bloomberghttps://t.co/Ap9bIrR1wh pic.twitter.com/m3r8E11xYz
— Christophe Barraud🛢🐳 (@C_Barraud) May 1, 2023
🇺🇸 🌎 Corporate America Focuses on Cost Cuts and Layoffs — Not Growth – Bloomberghttps://t.co/NSEOMCFt58 pic.twitter.com/yaK2jttvip
— Christophe Barraud🛢🐳 (@C_Barraud) May 2, 2023
*Focus on banks
The banking industry has mixed reactions to First Republic's sale https://t.co/nDwlSHLyLc
— Bloomberg (@business) May 2, 2023
Investors Warn Of First Republic Aftershocks At Gloomy Milken Gathering – FT https://t.co/IEL7jZrj8e
— LiveSquawk (@LiveSquawk) May 1, 2023
#FDIC Releases Comprehensive Overview of Deposit Insurance System, Including Options for Deposit Insurance Reformhttps://t.co/EVZwBGXQoF
— LiveSquawk (@LiveSquawk) May 1, 2023
Economic Indicators and Prospects
ISM® Manufacturing index Increased to 47.1% in Aprilhttps://t.co/KWvJePIiZv
— Bill McBride (@calculatedrisk) May 1, 2023
The PMI® was at 47.1% in March, up from 46.3% in March. The employment index was at 50.2%, up from 46.9% last month, and the new orders index was at 45.7%, up from 44.3%.
US Atlanta Fed GDPNow Q2: 1.8% (prev 1.7%)https://t.co/GIJHH2ZMsR pic.twitter.com/LJ6bQFUHwZ
— LiveSquawk (@LiveSquawk) May 1, 2023
Slowing Demand For Fuel Adds To Fears Of Looming US Recession – FT https://t.co/oGsbPwbmW5
— LiveSquawk (@LiveSquawk) May 2, 2023
Housing
Construction Spending Increased 0.3% in Marchhttps://t.co/yqgRNAKeTl
— Bill McBride (@calculatedrisk) May 1, 2023
This was slightly above consensus expectations of a 0.2% increase in spending; however, construction spending for the previous two months was revised down (all private residential). pic.twitter.com/hch4emb0pp
— Bill McBride (@calculatedrisk) May 1, 2023
*Focus on rents
🇺🇸 #Housing #Rents | March 2023 Rental Report: Midwest Surges as Western Markets Decline – https://t.co/SeKBQcwMDuhttps://t.co/5FAuFEXIdO pic.twitter.com/hO9Cx2hcyG
— Christophe Barraud🛢🐳 (@C_Barraud) May 2, 2023
🇺🇸 #Inflation | On a YoY basis, market #rents point to a slowdown of #CPI shelter in the coming months. pic.twitter.com/vsbTgOTOQQ
— Christophe Barraud🛢🐳 (@C_Barraud) April 29, 2023
Year-over-year Rent Growth Continues to Decelerate https://t.co/ZBh5P5p1U4
— Bill McBride (@calculatedrisk) May 1, 2023
"we shouldn’t just look at various measures ex-shelter, but we should assume shelter will be lower than overall inflation in the future!"
CRE
Pockets of commercial real estate are likely to come under stress as landlords continue to struggle to refill towers in the aftermath of Covid, Citigroup CEO Jane Fraser says https://t.co/9BzUpZRYYu
— Bloomberg (@business) May 1, 2023
Monetary Policy
Until now, the Fed has been looking for clear signs of a slowdown and easing inflation to justify a pause.
— Nick Timiraos (@NickTimiraos) May 1, 2023
But after this week, the calculations could flip. Officials could need to see signs of stronger-than-expected demand and inflation to keep hiking https://t.co/wDV2ckJgpu
Rising dissents are more likely as the choices of battling inflation or much higher unemployment become more troubling https://t.co/BSOdRTbecg
— Bloomberg (@business) April 30, 2023
White House Considers Two Key Nominations At The Fed – NYT https://t.co/LE2ygK1Ags
— LiveSquawk (@LiveSquawk) May 1, 2023
Fiscal Policy
🇺🇸 Congress will need to raise the debt limit by early June, United States Treasury Secretary Janet Yellen said in a letter to congressional leaders on Monday, noting that action may even be needed before June 1, reported tca/dpa.
— Christophe Barraud🛢🐳 (@C_Barraud) May 2, 2023
*Charts from Bloomberg ⬇ pic.twitter.com/DhlpZzlbVe
🇺🇸 #Biden Sets High-Stakes Debt-Limit Meeting as Deal Deadline Nears – Bloomberghttps://t.co/F2J7bi2o3v
— Christophe Barraud🛢🐳 (@C_Barraud) May 2, 2023
Schumer Sets Expedited Process To Consider Clean Debt Ceiling Suspension – RTRS https://t.co/w0UWfpUIS6
— LiveSquawk (@LiveSquawk) May 1, 2023
US Tsy Expects To Borrow $726 Bln In Net Marketable Debt For April-June Period, Up $449 Bln From January 2023 Estimatehttps://t.co/nfF61bNm1U pic.twitter.com/sBa9qem5bL
— LiveSquawk (@LiveSquawk) May 1, 2023
Trade, Politics and Geopolitics
Biden tells Philippine President Marcos that any attack on his country would trigger US defense commitments, a message intended to reassure an ally as China becomes more aggressive https://t.co/MP7nKJs7xs
— Bloomberg (@business) May 1, 2023
US Allies Prepare For Possibility Of War Over Taiwan – Axios https://t.co/6bKDtQg14Y
— LiveSquawk (@LiveSquawk) May 1, 2023
Asia
Economic Indicators and Prospects
#China's #steel industry slipped deeper into contraction, with PMI falling to 45% in Apr, down 3.4 ppt from Mar and falling for 2nd straight month, according to China Federation of Logistics & Purchasing.https://t.co/eOYUO3GHZh pic.twitter.com/OevbCzLCK5
— YUAN TALKS (@YuanTalks) May 2, 2023
#China's #passenger trips in first three days of Labor Day holiday surged 161.9% y/y, with railway passenger trips soaring 460.9% and air passenger trips surging 546%.https://t.co/haGgRmRP6L pic.twitter.com/b1mATLzBWo
— YUAN TALKS (@YuanTalks) May 2, 2023
Housing
Monetary Policy
RBA sees some further tightening may be needed. $AUDUSD 🇦🇺 https://t.co/ZhNy1PE5Jw
— CN Wire (@Sino_Market) May 2, 2023
Japan EcoMin Goto Urges US Banks, Regulators To Tackle Liquidity Risks – RTRS https://t.co/fHzrfQP94L
— LiveSquawk (@LiveSquawk) May 2, 2023
Trade, Supply Chain and Geopolitics
The finance ministers of South Korea and Japan met for the first time in nearly seven years https://t.co/kqsPJYuC1x
— Bloomberg (@business) May 2, 2023
Europe
Economic Indicators and Prospects
German Retail Sales (M/M) Mar: -2.4% (est 0.4%; prevR -0.4%)
— LiveSquawk (@LiveSquawk) May 2, 2023
– German Retail Sales NSA (Y/Y) Mar: -8.6% (est -6.5%; prevR -5.9%)
UK Retailers Report Record Food Inflation But See Falls Ahead – RTRS https://t.co/DHMvKwnUAG
— LiveSquawk (@LiveSquawk) May 1, 2023
Monetary Policy
The ECB needs to acknowledge the risk overtightening poses to growth when it meets this week. A quarter-point increase in interest rates is appropriate, argues @marcusashworth https://t.co/HQGDxx1I0A via @opinion pic.twitter.com/L0lbKPiYc2
— Zoe Schneeweiss (@ZSchneeweiss) May 2, 2023
How much the ECB hikes on Thursday hinges on today's data-packed morning https://t.co/5uHJVQiDgn pic.twitter.com/GczHYgWhBD
— Bloomberg Economics (@economics) May 2, 2023
This week’s ECB interest-rate decision is going down to the wire as officials await two key economic reports arriving just one day before they convene 🧵 https://t.co/NpLg7D84yc pic.twitter.com/XjmDdyD4rv
— Bloomberg Economics (@economics) May 1, 2023
🇪🇺 EURO AREA MARCH M3 MONEY SUPPLY RISES 2.5% Y/Y; EST. +2.4% – BBG
— Christophe Barraud🛢🐳 (@C_Barraud) May 2, 2023
🇪🇺 #ECB: BANKS TIGHTENED #CREDIT STANDARDS MORE THAN EXPECTED IN 1Q – BBGhttps://t.co/7P9p0ltJRE pic.twitter.com/SvtyPCB4WO
— Christophe Barraud🛢🐳 (@C_Barraud) May 2, 2023
Fiscal Policy
Italy approves new labor market reform with May Day decree https://t.co/ntWWepcEEg via @chiaraalbanese pic.twitter.com/5uDPSnzhs4
— Zoe Schneeweiss (@ZSchneeweiss) May 1, 2023
Politics
Protesters clashed with security forces across France as hundreds of thousands of people took to the streets to vent their anger against President Emmanuel Macron's pension reform on Labour Day. https://t.co/viqJB66GFK
— CBS News (@CBSNews) May 1, 2023
Other Areas And Global Economy
The IMF's chief says the rapid acceleration in interest rates “exposed vulnerabilities in the financial sector,” adding that the banking industry needs to be on watch for additional risks https://t.co/Vy1WVmoxic via @EMPosts @endacurran pic.twitter.com/NxywxLhzo2
— Zoe Schneeweiss (@ZSchneeweiss) May 1, 2023