Summary
United States: Residential Tailwind Set to Continue as Monetary Policy Becomes Less Restrictive
- This week’s economic data indicate that the U.S. economy is still expanding at a solid pace with the housing sector continuing to provide a tailwind. During February, existing home sales and housing starts both topped expectations and rose at robust rates. Meanwhile, initial jobless claims have remained subdued so far in March.
- Next week: New Home Sales (Mon.), Durable Goods Orders (Tue.), Personal Income & Spending (Fri.)
International: Bank of Japan Exits Negative Interest Rate Policy
- In a historic—albeit well-anticipated—policy shift, the Bank of Japan (BoJ) formally ended its ultra-easy and nonconventional monetary policy stance this week, delivering the first BoJ interest rate hike since 2007. The outcome of Japan’s spring wage talks appears to have been a particularly important factor behind the decision.
- Next week: Riksbank Policy Interest Rate (Wed.), Canada Monthly GDP (Thu.), Tokyo CPI (Fri.)
Interest Rate Watch: Sitting, Waiting, Wishing
- The FOMC left the target range on its federal funds rate unchanged and held the pace of balance sheet runoff (QT) constant at the conclusion of its March 20 meeting. Individual forecasts of FOMC participants for rates, growth and inflation this year strike a modestly hawkish tone.
Credit Market Insights: Are American Consumers Learning to Live with Higher Rates?
- This week, the New York Fed released its triannual Credit Access Survey. While the byline of its report, “Credit Application Rate Ticks Up; Rejection Rate Declines,” suggests consumers and bankers are adjusting to the “higher for longer” world, the details reveal that the higher rate environment is dampening demand for current loans and expectations of future credit access.
Topic of the Week: Building the Future
- The high-tech manufacturing sector in the U.S. has been the fastest growing category within nonresidential construction in recent years. In a report published this week, we discuss how the construction boom in high-tech manufacturing may impact the U.S. economy.
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