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Link to full report and disclosures: Real-Time Insights, Economic and Financial Pulse
Real-Time Insights | |||||||
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· The seven-day moving average of daily COVID-19 cases in China climbed to 28k on Friday despite the imposition of strict lockdowns and quarantine policies in Shanghai and other cities. The effects of zero-COVID-19 policies and moderating growth are showing up in official data: retail sales fell 3.5% yr/yr in March, a decline that is likely to deepen in April. | |||||||
· Market expectations of a 50bp rate hike at the FOMC's May meeting have ratcheted up in recent weeks as inflationary pressures show little signs of abating. Markets now attach a 90% probability to a 50bp policy rate increase in May, up from 70% at the end of March. | |||||||
· Spot container shipping rates from China to the U.S. remain elevated amid declining rates on other routes. Lockdowns and stringent zero-COVID-19 policies have disrupted throughput at Chinese ports and contributed to rising vessel congestion, particularly at the Port of Shanghai. Industry reports point to shortages of truck drivers in Shanghai that have driven up rates and exacerbated shipping delays. | |||||||
· Some measures of in person economic activity remain significantly below pre-pandemic levels despite the waning effect of the pandemic. U.S. workplace visits remain ~20% below pre-pandemic levels, consistent with increased flexibility and "hybrid-work", while retail and recreation visits have yet to recover from their omicron induced slump and are hovering at levels below those reached one-year ago. | |||||||
· National average gasoline prices have fallen modestly, but remain above $4/gallon reflecting an easing of crude oil prices from recent highs. Soaring gas prices along with higher food prices have boosted headline inflation measures and eaten into household budgets, weighing on discretionary spending. | |||||||
· U.S. job postings on Indeed continue to decline, while those in Germany and the U.K. ticked up. If measures of labor demand and vacancies begin to moderate as the Fed raises rates, nominal and real wage pressures are likely to ease. | |||||||
Week ahead: Housing Starts, Building Permits (Apr 19); Existing Home Sales, Fed Beige Book (Apr 20) |
Link to full report and disclosures: Real-Time Insights, Economic and Financial Pulse
Mickey Levy, mickey.levy@berenberg-us.com
Mahmoud Abu Ghzalah, mahmoud.abughzalah@berenberg-us.com
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