German Ifo business confidence shows economy's resilience against the recent banking crisis
German Ifo business confidence shows economy's resilience against the recent banking crisis, w/all 3 Ifo components rising in March. Data highlight that industry is holding up as the threat of an energy crunch recedes. BUT all 3 indexes remained a bit below long-term avg of 96.6. Source: HolgerZ, Bloomberg
Used car prices increased again for the 5th month in a row
Prices continue to firm up at historical levels, despite being down about 2% on a year-over-year basis. Inflationary forces remain stubbornly high due to structural macro drivers. The Fed just erased 5 months of QT in two weeks. Will it add fuel to the inflation fire? Source: Tavi Costa, Bloomberg, Crescat Capital
Unemployment rate increased to 3.6%, above expectations
February US jobs data was mixed. US economy created 311k new jobs in February, above forecast of 225k but household numbers below forecasts with unemployment rate rises to 3.6% above 3.4% expected AND wages cool. Monthly wages rose 0.2% vs 0.3% expected.
Another indicator shows that inflation is expected to be higher in EUR than in US in the medium term!
The 5y 5y forward inflation swap, an indicator of what the market expects inflation to be over the next decade, is rising faster in Europe than in the United States. In fact, markets seem to expect more inflationary pressure in Europe than in the U.S. over the medium term. This is quite significant because the last time this gap between inflation expectations in Europe and the US was in positive territory was in 2009! So more pressure on the ECB to continue tightening monetary policy! Source: Bloomberg
Long term inflation expectations higher in Europe than in US!
For the first time in more than 10 years, markets expect long-term inflation to be higher in the Eurozone than in the U.S. A direct result of the fact that the FED seems to be fighting inflation more aggressively than the ECB? Source: Bloomberg
The market now expects the ECB to raise its key rate at the highest level ever!
As reflected in the European swap market, market participants expect the ECB to raise its key interest rates to a level never before seen. The terminal rate is expected to be close to 4%, up from 3.75% in the early 2000s. Interestingly, for the first time in this cycle, the markets believe that the terminal rate will be reached in 2024 (and not in 2023). Higher rates for longer? Source: Bloomberg.
The average price of a new home sold in the US is down 16% from its peak last July
After the last housing bubble peak the average new home price fell 25% nationally. Source: Charlie Bilello
Germany is still far from its energy transition goals
Germany must invest $1tn in expansion of renewable energy by 2030 in order to cover 80% of its electricity needs from renewable sources by then. Germany needs 43 soccer fields of solar power every day, boldest project since WWII. Source: Bloomberg, HolgerZ
