Summary
United States: The Calm Before the Storm
- Was it an unwillingness to share the limelight with the world’s central banks or just a quirk of the domestic economic calendar? Either way, it was an extraordinarily light week for U.S. economic data.
- Next week: Consumer Price Index (Wed.), Retail Sales (Wed.), Industrial Production (Thu.)
International: Another Busy Week for Foreign Central Banks
- It was a busy week for foreign central banks. The Bank of England, Reserve Bank of Australia and Banxico all held their policy rates steady, though the Bank of England offered a dovish outlook in contrast to the hawkish outlooks from Australia and Mexico. Sweden’s Riksbank cut its policy rate by 25 bps to 3.75%, as expected, while Brazil’s central bank slowed the pace of its monetary easing, with a 25 bps Selic rate cut to 10.50%.
- Next week: U.K. Average Weekly Earnings (Tue.), Japan GDP (Thu.), China Retail Sales and Industrial Output (Fri.)
Credit Market Insights: Give Me Some Credit
- Credit card debt is expanding at double its average annual growth in 2019. The strong rise is concerning, given the backdrop of record-high credit card APRs and generally elevated borrowing costs. Have households shown signs of stress?
Topic of the Week: The Fed’s Balance Sheet Begins Its Next Chapter
- Last week, the FOMC announced a plan to begin slowing the pace of its balance sheet runoff program, commonly known as “quantitative tightening” (QT). Starting on June 1, the monthly redemption cap on Treasury securities will drop to $25 billion. The monthly redemption cap for mortgage-backed securities (MBS) will be left unchanged at $35 billion.
