Coffee Break

Coffee Break:
  • Week

Last week in a nutshell 

  • Industrial activity and consumption-related data will be published in China, Europe and in the US. The figures will show how resilient private demand remains amid the persistent high-inflation context.
  • Housing data in the US disappointed as the latest existing home sales dropped by 2.4% and the aggregate NAHB housing market index hit the lowest level in nearly two years. House prices jumped to a record high, hitting household’s affordability.
  • Euro zone economic growth surprised slightly on the upside in the first quarter, and employment rose too. The euro zone expanded at a solid pace at the turn of the year before the war in Ukraine.
  • In China, the PBoC became the first central bank to ease. In an attempt to provide support for the (overly) ambitious GDP growth target, it lowered the benchmark lending rate for loans with tenors of five years or more from 4.60% to 4.45%.

What’s next?

  • Flash PMIs will be published, shedding some light on the impact of the war in Ukraine, COVID-19-related lockdowns in China and raw materials shortage on manufacturing activity. Demand for services has so far remained resilient but could become vulnerable to the high inflation.
  • In the US, new home sales are the next housing indicator to follow. It will reveal how quick the demand for new homes is fading as the Federal Reserve’s monetary tightening measures have already pushed mortgage rates higher.
  • Speaking of the Fed, it will publish its latest FOMC Minutes. This publication usually gives meaningful context to the monetary policy decisions made and offers clues about its longer-term intentions.
  • Inflation-related data is expected from Tokyo. The nationwide core CPI inflation rose above 2% for the first time since September 2008, but non energy and food prices rose by only 0.1%. The Bank of Japan is not expected to change its ultra-loose monetary policy pending wage rising and stronger demand.

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