MNI ASIA OPEN - Bostic Sees No Need For Hikes Larger Than 50bps

NEWS

US (MNI): Lawmakers Push For More Frequent US Income Data
Democratic U.S. lawmakers are pushing for the Bureau of Economic Analysis to produce more frequent quarterly disaggregated data on U.S. personal income, Congressman Jim Himes, who is advocating Commerce Department funding of the project and says more frequent data would help policymakers including those at the Federal Reserve, told MNI.

FED (BBG): Fed’s Bostic Says No Need to Move Faster Than Half-Point Hikes
Federal Reserve Bank of Atlanta President Raphael Bostic said he favors policy makers continuing to raise rates by half-point increments rather than doing anything larger.

FED (MNI): Fed Staffer Estimates CBDC Would Take 5 Years
The Federal Reserve could take around five years to issue a central bank digital currency if it decided to do so, a top staffer said Monday, emphasizing uncertainty around the estimate and the continued need for feedback from a broad array of stakeholders in the process.

FED (MNI): NY Fed: 3-Year Ahead Inflation Expectations Rise To 3.9%
U.S. consumer expectations for inflation three years from now rose two-tenths to 3.9% in April, according to the latest New York Fed survey, while expectations at the one-year horizon fell three-tenths to 6.3% as gas prices declined last month.

BOE (MNI): Policy Choice Was 25 or 50 bps Hike - MPC Saunders
Bank of England Monetary Policy Committee member Michael Saunders, who voted for a 50 basis point hike in May, said that he had not thought about hiking policy rate by more, with the choice for him between a 25 and a 50 bps increase.

EU (MNI): States Must Retain Agile Fiscal Policies: Gentiloni
It is clear that the Ukraine war will have a significant economic impact on the EU and that next week's Spring Forecasts from the European Commission would need to trim its previous growth estimates, Economy Commissioner Paolo Gentiloni said Monday, adding that the policy implications of the new, lower projections were clear.

EQUITIES (BBG): Goldman Sachs and the Rest of Wall Street Are Souring on S&P 500
Wall Street is reluctantly coming to grips with a new reality for 2022: This isn’t going to be a good year for stocks. Credit Suisse cut its forecast for the S&P 500 Index last week. Goldman Sachs Group Inc., Bank of America Corp. and Morgan Stanley are also now predicting that equities will struggle this year.

The Federal Reserve is in the midst of an aggressive rate hike cycle, which is expected to weigh on U.S. corporate earnings and economic growth. This could chip away at key supports for the stock market after easy monetary policy helped fuel an over 100% increase in the S&P 500 from March 2020 when the pandemic hit through the end of last year. Even if the U.S. manages to avoid dipping into a recession, stocks look risky, according to Goldman Sachs strategists.

EQUITIES (BBG): Companies Pay Up to Sell Bonds as Financial Conditions Tighten
With volatile markets fraying investors’ nerves, companies are finding it tougher -- and increasingly expensive -- to sell new bonds. U.S. investment-grade debt sales have missed Wall Street estimates for two consecutive weeks with issuers choosing to sit on the sidelines instead of braving volatile markets. Bond sales were expected to pick up this week amid a growing backlog, but seven potential issuers opted to stand down amid broad volatility on Monday.

DATA

MNI: US MAR WHOLESALE INV 2.3%; SALES 1.7%

MNI: CANADA RESIDENTIAL BUILDING PERMITS +4.7%; NON-RESIDENTIAL -29.5%
CANADIAN MAR BUILDING PERMITS -9.3% MOM

US TSYS SUMMARY: Bull Steepening As Growth Fears Come To The Fore

• Cash Tsys have seen a sizeable bull steepening today, with front-end yields down 11-13bps and the 5Y of note having earlier touched new highs since Sep-2008 prior to the US coming in and risk sentiment souring.
• Growth fears have dominated, with hiking expectations sliding accordingly – they keep to just over 50bps priced for the next FOMC in June but no longer fully price in 2x50bps come July (97.5bps) and are down 14bps over the five meetings to year-end with 185bps.
• 2YY -12.9bps at 2.604%, 5YY -11.1bps at 2.966%, 10YY -6.1bps at 3.065%, 30YY -3.5bps at 3.190%.
• TYM2 sits 16 ticks higher at 118-09+ on above average volumes for the day but with the pace slowing of late. Resistance is eyed at the 20-day EMA of 119-17 whilst support is seen at the early intraday and fresh cycle low of 117-08+.
• Data: The latest estimate for Atlanta Fed GDPNow was trimmed in Q2 from 2.16% to 1.85%, back closer to where it was in early indicators. Little of note on tomorrow’s docket before the event of the week on Wed with CPI for April.
• Issuance: Only bill issuance today with the 13-w seeing a high yield of 0.9% (b/c 3.18) and the 26-w seeing 1.385% and 2.72. Return to bond issuance tomorrow with the 3Y.

FOREX: JPY Bounces Off Lows as US Yields Wane

• Global equity markets plumbed new lows on Monday, with the e-mini S&P extending the year-to-date pullback to over 15%. Concerns continue to swirl surrounding the direction of global monetary policy and the implications of a wave of stagflation across developed markets in H2 this year.
• Yields in the US initially rallied Monday, with the 5yr yield trading north of 2018 highs and briefly clearing 3.10%. This faded as US equities extended the pullback, prompting US 10y yields to shed over 10bps off the session highs.
• As a result, early greenback strength faded, putting USD/JPY back below the Y131.00 level, prompting the pair to close lower despite topping key resistance at the 131.25 April 28 highs at one point of the trading day.
• There have been further notable moves in Chinese currency markets, with USD/CNH surging to new cycle highs following downbeat comments from Chinese Premier Li on the domestic labour market. The uncharacteristically candid speech reverberated across Asia, with the offshore yuan offered, even as the PBOC continued to lean against its depreciation via the daily fixing of USD/CNY mid-point.
• Focus turns to Italian industrial production, Australian NAB Business Conditions data and Germany's ZEW Survey. There's a bevy of central bank speakers due Tuesday, with Williams, Barkin, Waller, Kashkari and Mester all on the docket as well as ECB's de Guindos, Nagel and Villeroy.