Summary
United States: Labor Market is Strong but Loosening
- Data this week broadly added evidence that the labor market is loosening. Employers added jobs at the slowest pace since 2020 in March, job openings fell and an upward trend in initial jobless claims has emerged. The weaker direction suggests the end of the Fed’s tightening cycle may be in sight.
- Next week: CPI (Wed), Retail Sales (Fri), Industrial Production (Fri)
International: Policy Divergence Down Under
- The Reserve Bank of Australia (RBA) paused its rate hike cycle this week, holding its policy rate at 3.60%, citing the cumulative tightening to date, evidence that inflation has peaked and a cautious outlook for consumer spending. We expect the current policy rate to be the peak for this cycle and do not expect RBA easing until well into 2024. The Reserve Bank of New Zealand (RBNZ) was more hawkish, raising its policy rate 50 bps to 5.25%, saying that inflation is still too high and persistent. We expect some modest further tightening from the RBNZ, and we see a final 25 bps hike to 5.50% at the May monetary policy announcement.
- Next week: Bank of Canada Policy Rate (Wed), Australian Employment (Thu), U.K. GDP (Thu)
Credit Market Insights: Households Foresee Higher Mortgage Rates
- Last Tuesday, the Federal Reserve Bank of New York released the findings from its 2023 Survey of Consumer Expectations (SCE) Housing Survey. Despite lower mortgage rates in recent weeks, households anticipate financing costs to trend higher over the next year.
Topic of the Week: OPEC+ Surprises With Production Cuts
- The Organization of the Petroleum Exporting Countries (OPEC) surprised markets early this week by cutting production in an effort to boost oil prices after the latest selloff. The production cuts could lead to renewed inflationary pressures in the United States and other parts of the world.
 surprised markets early this week by cutting production in an effort to boost oil prices after the latest selloff. The production cuts could lead to renewed inflationary pressures in the United States and other parts of the world.){kind=link}