Good day. A thousand years ago, China invented paper currency. Now the Chinese government is minting cash digitally. A cyber yuan stands to give Beijing power to track spending in real time, plus money that isn’t linked to the dollar-dominated global financial system. Meanwhile, Cleveland Fed leader Loretta Mester expects a very strong second half of the year for the U.S. economy, but said the Fed needs to be "deliberately patient" when it comes to adjusting its supportive monetary policy. And the Reserve Bank of Australia kept rates unchanged but signaled its rising concerns about surging house prices.

 Now on to today’s news and analysis.

China’s version of a digital currency is controlled by the People's Bank of China, which will issue the new electronic money. In tests in recent months, more than 100,000 people in China have downloaded a mobile-phone app from the central bank enabling them to spend small government handouts of digital cash with merchants. The digital yuan is expected to give China’s government vast new tools to monitor both its economy and its people. Beijing is also positioning it for international use and designing it to be untethered to the global financial system.

10 a.m.: U.S. Labor Department releases February Job Openings and Labor Turnover Survey
4:05 p.m.: Chicago Fed’s Evans speaks at High School Fed Challenge winners announcement

Time N/A: National Bank of Poland releases policy statement
8:30 a.m.: U.S. Commerce Department releases February international trade data
9 a.m: Chicago Fed’s Evans discusses the economy and monetary policy at the Prairie State College Foundation Economic Forecast Breakfast
11 a.m.: Dallas Fed’s Kaplan participates in Reinventing Bretton Woods Committee event
12 p.m.: Richmond Fed’s Barkin participates in GIC Executive Briefing, Monetary Policy Outlook event
1 p.m.: San Francisco Fed’s Daly discusses the state of the U.S. economy, climate change and economic inequality at University of Nevada, Reno event
2 p.m.: Federal Reserve releases March 16-17 meeting minutes
3 p.m.: Federal Reserve releases February U.S. consumer-credit data

While strong economic data may be pulling forward expectations among some market participants of when the Federal Reserve may raise interest rates, it isn’t clear whether officials at the central bank are ready to go along with that outlook, Tim Duy, chief U.S. economist at SGH Macro Advisors says in a note. He writes that even if the job market adds a million new positions a month, the process of healing it would still take some time. “The consensus on the [Federal Open Market Committee] remains strongly tilted toward patience,” Mr. Duy writes. He adds that, “I expect the next several months to be painfully uncomfortable for the Fed and market participants. Strong jobs data and higher inflation will combine to maintain focus on the possibility of early liftoff from the zero bound.”

—Michael S. Derby

• Big companies are cutting back on office space and driving down rent prices for years to come, according to an analysis of U.S. office leasing trends prepared for WSJ.
• More people with low credit scores have been falling behind on their car payments in recent months, a sign of stress among consumers whose finances have been hit hard by the pandemic.
• The Conference Board Employment Trends Index rose from a revised 100.01 in February to 102.44 in March, suggesting the recovery of the U.S. labor market is gaining steam, data from the Conference Board showed Monday. (Dow Jones Newswires)
• Growth in U.S. services sector business activity accelerated significantly in March to an all-time high, retracing weather-related weakness in the prior month and signaling a strong recovery in industries hardest hit by pandemic disruptions, as the ISM Services Report on Business PMI increased from 55.3 in February to 63.7. (DJN)
• New orders for factory goods in the U.S. fell by 0.8% in February from January, data from the Commerce Department showed, marking the first decline since the depths of the coronavirus recession last April. (DJN)
• Americans believe owning rental property is a better investment relative to the stock market, the Federal Reserve Bank of New York said, noting its latest SCE Housing Market Survey found more than 50% of households recommended investing in a rental property over the overall stock market. (DJN)
• Purchasing managers indexes for Mexico improved in March, with two of three in the expansionary zone above 50. The Inegi-Bank of Mexico PMI rose 1.6 points to 51.7; IMEF’s manufacturing index rose 1 point to 50.7; and IHS Markit’s index rose from 44.2 to 45.6. (DJN)
• Remittances from Mexicans living abroad rose 16% in February to $3.17 billion, the Bank of Mexico said, bringing the total for the first two months of the year to $6.47 billion, a 21% increase from a year earlier. (DJN)

This newsletter is compiled by James Christie in San Francisco and Ed Ballard in London. 

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