Weekly Market & Economic News Recap (Week of April 24, 2023)

• GDP Report Shows Economic Growth Slowed in First Quarter. U.S. gross domestic product rose at an inflation- and seasonally-adjusted 1.1% annual rate from January to March, a significant slowdown from 2.6% growth in the fourth quarter, the Commerce Department said Thursday. Many economists are predicting a U.S. recession later this year (Wall Street Journal, April 27, 2023 https://www.wsj.com/articles/us-gdp-economic-growth-first-quarter-2023-2ff4348c?mod=economy_more_pos3)

• US inflation pressures persist, reinforcing case for fed hike. Core PCE price gauge rose 0.3% in March for a second month. Services measure watched by Fed’s Powell decelerated. (Bloomberg, April 28, 2023, https://www.bloomberg.com/news/articles/2023-04-28/us-core-pce-inflation-stays-brisk-while-consumer-spending-stalls?srnd=economics-v2)

• US labor costs pick up, likely locking in one more Fed rate hike. ECI climbed 1.2% in first quarter, above median estimate. Wages and salaries for civilian workers failed to slow down (Bloomberg, April 28, 2023, https://www.bloomberg.com/news/articles/2023-04-28/us-labor-costs-pick-up-likely-locking-in-one-more-fed-hike?srnd=economics-v2)

• Fed says it failed to act on problems that led to Silicon Valley Bank collapse. Top bank regulator calls for revamping a range of rules for midsize banks (Wall Street Journal, April 28, 2023, https://www.wsj.com/articles/regulators-to-publish-postmortems-on-silicon-valley-bank-signature-failures-37abe07?mod=markets_lead_pos4)

• Stocks Notch Second Month of Gains. All three bellwether U.S. indexes rise amid strong corporate earnings results. (Wall Street Journal, April 28, 2023 https://www.wsj.com/articles/global-stocks-markets-dow-news-04-28-2023-434d977a?mod=markets_major_pos10)

• Bets offering 2,400% payout on US default lure growing crowd. Volumes, spreads on US CDS are rising amid debt-cap showdown. Deeply discounted long bonds could supercharge swap payouts (Bloomberg, April 28, 2023, https://www.bloomberg.com/news/articles/2023-04-28/bets-offering-2-400-payout-on-us-default-lure-growing-crowd?srnd=premium&sref=6SIErc4i)

• US bank deposits rose in the latest week, a welcome break in a slide that’s seen cash flow into higher-yielding money-market funds amid unease about smaller lenders. Loans also increased, suggesting credit conditions are stable despite several recent bank failures. (Bloomberg, April 28, 2023 https://www.bloomberg.com/news/articles/2023-04-28/us-bank-deposits-rise-while-pickup-in-loans-shows-stable-credit?srnd=null)

• Bond Volatility Has Busted the 60/40 Portfolio’s Safety Valve. BlackRock, Newton, Goldman Sachs advocate alternative hedges. Volatility may pick up again amid economic uncertainty. (Bloomberg, April 29, 2023 https://www.bloomberg.com/news/articles/2023-04-29/bond-volatility-has-busted-the-60-40-portfolio-s-safety-valve?srnd=markets-vp)

• Big Tech earnings spark hope that worst is over. Shares rise on better-than-expected results, but growth lags behind what Microsoft, Amazon and Google did in past. (Wall Street Journal, April 29, 2023, https://www.wsj.com/articles/big-tech-earnings-spark-hope-that-worst-is-over-c672c5d7?mod=markets_lead_pos2)

• China celebrates economic recovery, pledges more help on jobs. Communist Party’s top policy-making body acknowledges concerns about consumer demand. (Wall Street Journal, April 28, 2023, https://www.wsj.com/articles/china-celebrates-economic-recovery-pledges-more-help-on-jobs-913398cb?mod=economy_more_pos1)