Weekly Market & Economic News Recap (Week of June 5, 2023)

• World Bank brightens view of global growth this year, downgrades 2024. Bank warns of risks to poorer nations from rising interest rates. The World Bank sees better global economic growth than previously estimated in 2023, thanks to resilient U.S. consumer spending and China’s faster-than-expected reopening in the early part of the year. (Wall Street Journal, June 6, 2023, https://www.wsj.com/articles/world-bank-brightens-view-of-global-growth-this-year-downgrades-2024-58ce3726?mod=economy_more_pos6)

• China’s trade slowdown points to global woes. Exports and imports both fell in May, the latest sign that China’s post-Covid recovery is losing steam. (Wall Street Journal, June 7, 2023, https://www.wsj.com/articles/chinas-trade-slowdown-points-to-global-woes-5bc1c903?mod=economy_more_pos4)

• Treasury’s $1 trillion debt deluge threatens market calm. U.S. government could face borrowing at rates near 6%, up from 0.1% less than two years ago (Wall Street Journal, June 7, 2023, https://www.wsj.com/articles/treasurys-1-trillion-debt-deluge-threatens-market-calm-f2173ef4)

• Eurozone slides into recession as inflation hurts consumption. Weaknesses in Germany and Ireland more than offset growth in other economies at the start of the year. (Wall Street Journal, June 8, 2023, https://www.wsj.com/articles/inflation-drags-eurozone-economy-into-recession-b6ff6158?mod=economy_more_pos1)

• U.S. stocks rose Thursday, ending the S&P 500’s longest bear market since the 1940s and marking the start of a new bull run. (Wall Street Journal, June 8, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-news-06-08-2023-ef63fc60)

• Markets were relatively quiet with investors largely in wait-and-see mode ahead of next week’s inflation data and Federal Reserve interest-rate decision. Major indexes posted modest gains and losses over the course of the week. (Wall Street Journal, June 9, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-news-06-09-2023-4d56d04c?mod=markets_lead_pos3)

• Democrats push for debt-ceiling overhaul bill after default scare. Legislation would allow administration to continue paying country’s bills unless Congress objects. (Wall Street Journal, June 9, 2023, https://www.wsj.com/articles/democrats-push-for-debt-ceiling-overhaul-bill-after-default-scare-d5d3616c?mod=markets_major_pos13)

• China’s interest rate-pivot risks following in Japan’s footsteps. The nation’s big, state-owned banks would be reducing interest rates on deposits in order to bolster growth. (Bloomberg, June 10, 2023, https://www.bloomberg.com/news/newsletters/2023-06-10/china-s-coming-balance-sheet-recession-new-economy-saturday?srnd=economics-v2)

• Fed is first to reach crucial junction in global inflation fight. Central banks are in most aggressive cycle in four decades. Choice now is between trusting transmission or doing more (Bloomberg, June 10, 2023, https://www.bloomberg.com/news/articles/2023-06-10/fed-is-first-to-reach-crucial-junction-in-global-inflation-fight?srnd=economics-v2)

• There’s more trouble coming for regional banks. Commercial real estate will pressure banks’ loan books. Credit contraction is coming. (Bloomberg, June 10, 2023, https://www.bloomberg.com/news/articles/2023-06-10/apollo-spotted-a-worrying-real-estate-signal-for-regional-banks-credit-weekly?srnd=economics-v2)