US Consumer Confidence Index fell in March for a fourth straight month. The latest decline marks a drop below “the relatively narrow range that had prevailed since 2022,” said Stephanie Guichard, a senior economist at The Conference Board. “Of the Index’s five components, only consumers’ assessment of present labor market conditions improved, albeit slightly. Views of current business conditions weakened to close to neutral. Consumers’ expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low.”
The annual pace of home prices picked up in January, according to the Case-Shiller Home Price Index. Demand for housing appears strong enough to support prices. Prices rose 4.1% year-over-year in January, slightly faster vs. the 4.0% increase in December.
Copper prices rose on Tuesday, closing in on an all-time high, reportedly due to Trump administration tariffs. The industrial metal, considered a proxy for business-cycle activity, is up more than 24% year to date in the US and 14% higher in London on speculation that Trump’s tariffs could restrict metal imports. “Front-running the potential tariff has unleashed a wave of near-term demand for copper housed in the US,” LPL Financial chief technical strategist Adam Turnquist said.
Chicago Fed President Austan Goolsbee said that if the US bond market starts pricing in higher inflation that would be a “major red flag” that could derail policymakers’ plans to cut interest rates. “If you start seeing market-based long-run inflation expectations start behaving the way these surveys have done in the last two months, I would view that as a major red flag area of concern,” Goolsbee told the Financial Times. For the moment, a key rate that the Fed watches for inflation expectations remains subdued, based on the 2.2% five-year/five-year rate, which estimates price growth.
China courted executives of major US businesses at an annual conference in Beijing this week. CNBC reports: “Conversation on the sidelines of the state-organized China Development Forum this week reinforced a more conciliatory stance than official rhetoric this month about how China is prepared to fight ‘any type of war’ with the United States.”
Stagflation risk keeps uncertainty high for Fed’s upcoming policy decisions, notes TMC Research, a unit of The Milwaukee Company, a wealth manager. The Fed still appears to be struggling with deciding if inflation is a bigger risk than slower economic growth. The TMC Fed Funds model, which estimates the optimal target rate based on several economic and financial factors, shows that the Fed is keeping its interest rate moderately higher than current conditions suggest is optimal. The implication: there’s a slight bias for cutting rates in the near term.
