US Inflation figures to 8.5% in March - Consumer Sentiment Down

Introduction

Welcome back viewers to our weekly article series where we bring you the latest news. Our topic today covers the outlook of the Federal Reserve members, statistics on inflation, Russia - Ukraine situation, and the gold price

Federal Reserve

Federal Reserve Member Christopher Waller indicates that the Fed will need to act quicker in raising interest rates to combat the unusual pace of inflation.
Market analysts expect the Fed to increase short-term interest rates by 50 basis points at the upcoming May meeting.
During an interview with CNBC, Mr Walker mentioned that the data to support an interest rate hike had given the Fed ammunition to alter policies. Mr Walker believes that the economy is equipped to handle a pullback through higher rates.

Statistical Analysis of Inflation, Labour Market & Household Finance

Inflation

March surveys conclude that median inflation (1 Year ahead) increased to 6.6% from 6.% in February, while median 3-year inflation decreased to 3.7% from 3.8%. The decline in medium expectations is attributed to respondents with no college education and an annual household income of less than $50,000.
Median Home prices (1 year ahead) have increased from 6.0% to 5.7%. The figures remain double the pre-pandemic figure of 3.0%.

Labour Market

Median (1 year ahead) earnings growth remains unchanged at 3.0% for March for its third consecutive month.
Mean unemployment expectations (1 year ahead) have increased by 1.7% to 36.2%.
The mean probability of job loss within the next year is currently at 11.1% compared to 10.8%. However, the figures seem to improve compared to pre-pandemic figures of 13.8%.
The mean probability of finding a job (post retrenchment) has declined to 55.7% from 56.5%. The figure remains higher compared to March 2021 at 48.7%.

Household Finance

The Median Expected growth in household income fell by 0.2% in March to 3.0%. The lowest since August 2021.
Household expenditure growth increased by 1.3% to 7.7%. However, respondents were derived mainly from college degree holders with an annual household income of above $100,000
The average probability of missing minimum debt payment over the next three months increased by 1.9% to 11.1%, above the 12 month trailing average of 10%.
Median (1 Year Ahead) growth in government debt decreased by0.4% to 10.7%, the lowest since December 2020.
The mean probability of average interest rate on savings account is expected to be higher in a year, from 31.3% in February to 32.6%
Respondents have indicated that their household financial situation has deteriorated over the year. Many have expected their financial situation to remain similar, if not worse off.

Russia Ukraine

Ukrainian President Volodymyr Zelensky has called for an oil embargo. Mr Zelenskiy indicates that Europe will have to be prepared to give up all Russian energy.
The president has confirmed that forensic experts have visited Bucha on Wednesday to investigate possible war crimes by Russia. "Responsibility for the Russian military for war crimes is inevitable. We will drag them all to the tribunal", as indicated by the president.
US President Biden has announced additional military support for Ukraine of $800million. The total aid provided for Ukraine stands at $2.5billion.
The UK government has imposed additional sanctions on 206 Russian individuals in response to the massacre of Ukrainian civilians at the train station in Kramatorsk.

Gold Price

UK Inflation and US Wholesale prices have increased further in March, surpassing market estimates.
Spot Gold is at a two week high of $1,981/ounce. Gold remains bullish as the Russian invasions persist and inflationary pressures increase in the US and UK.