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WEEKLY MARKET COMMENTARY | APRIL 20, 2023
Keep your eye on the big picture.
Last week, there was nothing too surprising in economic and financial news.
Inflation eased, as expected, although it remained above the Federal Reserve (Fed)’s target rate. The Treasury yield curve remained inverted with three-month Treasury bills yielding more than 10-year Treasury notes, as they have been since November 2022. Also, we may be nearing an end to rate hikes around the world. Bloomberg News reported:
“With the first signs of dents in economic growth now visible, and fallout from financial-market tensions lingering, any pause by the Federal Reserve after at least one more increase in May could cement a turn in what has been the most aggressive global tightening cycle in decades.”
Recession predictions for the United States continue to be prominent and varied, ranging from no recession to mild recession to deep recession over the next three to 18 months, reported Rafael Nam and Greg Rosalsky of NPR.
Minutes from the Fed’s March meeting were released last week, and they show that Federal Open Market Committee members think tightening credit conditions could result in a mild recession later this year with recovery following in 2024 and 2025.
While the idea of an economic downturn can be unnerving, recessions are part of every economic cycle. In times of uncertainty, it can help to step back and look at the big picture: the United States is quite remarkable.
“Nearly four-fifths of Americans tell pollsters that their children will be worse off than they are. In fact, America has sustained its decades-long record as the world’s richest, most productive and most innovative big economy. Indeed, it is leaving its peers ever further in the dust…American firms own more than a fifth of patents registered abroad, more than China and Germany put together,” noted Zanny Minton Beddoes of The Economist.
Economic and market uncertainty persists in the United States and elsewhere. We may experience a recession this year. We may not. Either way, it’s important to keep the big picture in mind. Recessions are one part of the economic cycle – expansions are another.
Last week, major U.S. stock indices finished higher, reported Nicholas Jasinski of Barron’s. In the Treasury market, yields on many maturities moved higher over the week.
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Sources:
https://www.bls.gov/news.release/cpi.nr0.htm
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202304
https://www.bloomberg.com/news/articles/2023-04-09/end-may-be-in-sight-for-global-rate-hike-cycle-as-fed-nears-peak (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/04-17-23_Bloomberg_End%20May%20Be%20In%20Sight%20for%20Global%20Rate-Hike%20Cycle_3.pdf)
https://www.npr.org/2023/01/24/1150319679/recession-slowdown-inflation-interest-rates-jobs-employment-economy
https://www.federalreserve.gov/monetarypolicy/fomcminutes20230322.htm
https://view.e.economist.com/?qs=945bdf0fef48265431723f8e67a3bac4cc6ba8a11ea6c83eae540fb660de54a2e234d27f2f6d212e27090a5bb3dcbf42ddc5d1108092a006a4946b60f29207d5de2d32ef670336e44020ad0567abff5c (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/04-17-23_Economist_The%20Economist%20This%20Week_6.pdf)
https://www.barrons.com/articles/stock-market-needs-solid-bank-earnings-to-keep-rallying-so-far-so-good-47ae4d3e?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/04-17-23_Barrons_As%20Bank%20Earnings%20Go%2c%20So%20Does%20Stock%20Market_7.pdf)
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202304
https://www.bloomberg.com/news/articles/2023-03-28/woolly-mammoth-meatball-created-by-lab-grown-meat-company-vow-foods?srnd=pursuits-vp (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/04-17-23_Bloomberg_Wholly%20Mammoth%20Meatball%20Created%20by%20Lab%20Food%20Tech%20Co_9.pdf)
https://www.theatlantic.com/health/archive/2023/03/woolly-mammoth-meatball-stunt-food-marketing/673578/
https://www.sciencefocus.com/science/what-is-lab-grown-meat-a-scientist-explains-the-taste-production-and-safety-of-artificial-foods/
https://www.brainyquote.com/quotes/thomas_jefferson_141477
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