CPI REPORT
Consumer prices for most goods and services rose in April, meaning inflation persists despite interest rate hikes. The consumer price index (CPI) increased by 0.4%, aligned with expectations, with an annual increase of 4.9% – slightly lower than the 5% estimate. Gasoline, shelter, and used vehicle prices contributed to the increase, but this was offset by lower costs for new vehicles, fuel oil, and food at home. While the CPI has lowered from its peak in June 2022, prices are still above the Federal Reserve’s 2% yearly target, causing concerns.
FIRST CITIZENS EXCEEDED EXPECTATIONS
First Citizens Banc Shares Inc. achieved better than expected deposit numbers following its recent rescue deal for Silicon Valley Bank, as the bank reported $140.05 billion in deposits for the first quarter, surpassing the estimated $119 billion. The acquisition of SVB contributed a preliminary gain of $9.82 billion to First Citizens’ net income. Furthermore, CEO Frank Holding Jr. says the company’s capital and liquidity positions remain robust despite uncertainties and challenges in the macroeconomic environment. First Citizens predicts that deposits for this year will be between $132 billion and $137 billion, with non-interest expenses predicted to hit between $1.25 billion and $1.3 billion in the next quarter.
U.S. DEBT-CEILING NEGOTIATIONS
Negotiations between President Joe Biden and Congressional Republicans failed to lead to any concrete solutions to the current debt-ceiling issues, as the two parties have divergent views on the issue. The White House is advocating for a ‘clean’ no-strings-attached debt limit increase, while Republicans preferred the inclusion of spending cuts. President Biden is set to meet with top Congressional leaders again later today, and it is reported that he is considering the option of unilaterally raising the debt ceiling using the 14th Amendment.
DECLINES IN HOME PRICES
Home prices in the U.S. have declined in more areas than they have over the past decade, with almost a third of cities reporting annual price declines during the first quarter. Western states, particularly California, have been hit the hardest, and this is likely attributed to an increase in mortgage rates, limiting home-buying demand while supply remains low. Nevertheless, limited inventory continues to drive prices higher in most of the rest of the country. According to the National Association of Realtors, the recent price drop may only be temporary taking into account that home prices generally decrease in expensive markets and increase in affordable markets.
INTERNATIONAL NEWS
The Bank of England is expected to increase interest rates for the 12th consecutive time due to high inflation, which has remained stubbornly above 10% due to high costs of food and energy. Although the UK economy has performed better than expected so far this year, GDP was flat in February due to widespread strikes and the high cost of living. Moreover, the labor market remains resilient, and the Monetary Policy Committee is expected to increase Bank Rate from 4.25% to 4.5%.
