END OF DAY REPORT APRIL 14th

HIGHLIGHTS

US Treasury Secretary Yellen says a soft landing is still possible despite the banking crisis, says supply chain bottlenecks that boosted inflation are beginning to resolve
ECB's Nagel does not think the ECB's job is already or even mostly done and more rate hikes are needed EZ inflation risks are tilted to the upside. It is not a given that inflation returns to target over the medium term.
ECB's Simkus says headline inflation is falling on energy; core inflation seen peaking next month or shortly after; not done on rate hiking, May hike will be 25 or 50bps, depending on data - Bloomberg TV interview
Fed's Waller (voter, hawk) says recent data shows the Fed hasn't made much progress on inflation goal, rates need to increase further; policy needs to remain tight for a substantial period, longer than what markets anticipate The extent of further tightening depends on incoming data and credit tightening; significant credit tightening could offset the need for rate hikes, but a real-time judgement is difficult. Uncertain how SVB failure and bank stress will impact broader credit conditions; liquidity measures taken since have succeeded in stabilising the system. Developments this far validate the decision to hike at the last gathering, continue to watch data closer than normal.
Fed's Goolsbee (voter) says when you have financial tightening occurring, that does the work of monetary policy; still have several weeks before the May meeting Does not want to comment yet on what he is voting for at that meeting, he still wants to see the data. Be mindful we have raised a lot, there is some lag coming through possibly in today's retail sales number. Inflation is coming down, but there is still clear stickiness on some inflation. Producer prices and retail sales show we are moving in the right direction. Is focused on what is happening with credit conditions. We are spending too much time looking at wage growth as an indicator of prices. Wages do not serve as a leading indicator for inflation. Need to keep eye on price series, not wages. We don't know how big the rate hike equivalent is of tightening credit conditions; was asked how analysts see it between 25-75bp worth, but he said there is a lot of uncertainty. Will spend the next few weeks figuring out the amount of credit tightening going on. Put some stock in Fed staff estimate of a mild recession this year. Mild recession is definitely on the table as a possibility.