Westpac’s chief economist Luci Ellis, formerly Assistant Governor (Economic) at the Reserve Bank of Australia, provides insights on the upcoming RBA meeting.
Results for: Economic Outlook
Australia’s inflation rate rose higher than expected in the first quarter of 2024, reaching 3.6% year-on-year. Despite the slight decrease from the previous quarter’s 4.1%, it remained above the Reserve Bank of Australia’s (RBA) target range, increasing the likelihood of continued high interest rates. The elevated inflation, particularly in housing, food, and healthcare, is weighing on households and dampening consumer spending. However, the stickiness of inflation provides impetus for the RBA to maintain higher rates for longer, a trend that could pose challenges for the Australian economy.
The Bank of Japan (BOJ) is scheduled to hold its monetary policy meeting on Friday, April 26. Scotia Capital provides a preview of the meeting, highlighting key developments since the last full forecast meeting in January and the BOJ’s policy change at the March meeting.
Chief U.S. economist Carl Riccadonna and CNBC’s Steve Liesman discussed the recent 2Y Treasury auction, the housing market outlook, and inflation concerns on ‘The Exchange’.
Mexican headline inflation is anticipated to rise slightly in early April, reaching 4.48% for the first 15 days of the month, according to analysts’ forecasts. Despite easing to 4.39% in early April, core inflation, which does not consider volatile energy and food costs, remains at its lowest level since May 2021. The increase in overall inflation comes after a low point of 4.25% last October and maintains it above the Bank of Mexico’s goal of 3% +/- 1%. While the central bank lowered its benchmark interest rate by 25 basis points in March, Deputy Governor Jonathan Heath indicated that the board may prolong the hold for an extended period amidst resilient inflation.
The Richmond Fed’s April Manufacturing Survey indicated a flatlining in manufacturing activity in the region, with the index remaining at -7, in line with market expectations. The survey revealed a decline in shipments and capacity utilization but a slight increase in optimism about future local business conditions. Price pressures eased, with a decrease in the average growth rate of prices paid and a slight increase in prices received. Firms anticipate minimal changes in these growth rates over the next year.
As the spring homebuying market heats up, Veterans and service members are moving up their homebuying timelines, according to the Veteran Homebuying Report released by Veterans United Home Loans, the nation’s largest provider of VA loans. Despite ongoing concerns about high home prices and low inventory, respondents expressed optimism about the economy and their own financial outlook. The survey found that 42% of buyers plan to purchase within the next six months, up 15 percentage points from a year ago. Additionally, sellers remain confident in obtaining their desired sale price, with 77% believing now is a good time to sell. However, concerns about receiving top dollar due to high interest rates have increased among sellers. The report also indicates a positive economic outlook, with respondents expecting improvements in interest rates, inflation, and the overall economy. More buyers and sellers perceive a favorable market, suggesting an increase in inventory and sales activity in the coming months.
Stocks gained Tuesday on anticipation of earnings reports from a third of the S&P 500 companies this week, with tech stocks leading the charge. However, analyst Lawrence Fuller believes broader market strength is crucial to sustaining the bull market and economic expansion. He sees a rotation from tech to non-tech sectors, potentially limiting gains for the major market averages. Friday’s Personal Consumption Expenditures (PCE) inflation data will also be crucial in shaping the market’s direction, with expectations of a decline in the core rate to 2.7% in March. The Fed’s continued commitment to rate cuts this year contrasts with some market skepticism, but Fuller believes the economy will face the impact of tighter monetary policy in the coming quarters, leading to a slowdown in consumer spending growth. He emphasizes the need for the Fed to start lowering rates to cushion the economic impact.
TrustCo Bank Corp NY (NASDAQ: TRST) reported solid Q1 results despite the challenging economic environment. Loan activity remained strong, revenue surpassed consensus, and asset quality metrics were solid. With the dividend yield approaching 5.5% and a valuation below book value, analysts consider TRST a Buy.