Weekly Market & Economic News Recap (Week of March 27, 2023)

• Home prices declined in January from the prior month as increased mortgage rates continued to slow the housing market. The S&P CoreLogic Case-Shiller National Home Price Index, which measures home prices across the nation, fell 0.2% in January compared with December on a seasonally adjusted basis. (Wall Street Journal, March 28, 2023, https://www.wsj.com/articles/home-prices-fell-in-january-for-seventh-straight-month-cab88799?mod=economy_more_pos5)

• Worker filings for unemployment benefits rose last week but were still historically low, showing that the broader labor market remains robust despite large companies announcing layoffs. (Wall Street Journal, March 30, 2023, https://www.wsj.com/articles/low-jobless-claims-show-labor-market-shrugs-off-economys-clouds-dfb48962?mod=economy_more_pos3)

• Consumer spending growth slowed and core inflation eased in February. The economy lost some momentum as the Fed continued to fight high inflation. (Wall Street Journal, March 31, 2023, https://www.wsj.com/articles/consumer-spending-personal-income-inflation-february-2023-526279fe?mod=economy_lead_pos3)

• US bank deposits and lending both dropped last week amid turmoil. Deposits fell nearly $126 billion, while bank loans retreated. Decrease in overall lending was largest since June 2021. (Bloomberg, March 31, 2023, https://www.bloomberg.com/news/articles/2023-03-31/us-bank-deposits-decline-sharply-for-a-second-straight-week)

• US year-ahead inflation expectations receded further at the end of March to the lowest in nearly two years, though consumers remained relatively downbeat about the economic outlook. Consumers expect prices will climb at an annual rate of 3.6% over the next year, down from 3.8% earlier in the month and 4.1% in February. (Bloomberg, March 31, 2023 https://www.bloomberg.com/news/articles/2023-03-31/us-year-ahead-inflation-views-retreat-again-lowest-since-2021)

• An economic slowdown, persistent inflation and weaker productivity growth will hurt Social Security’s finances, draining its reserves one year earlier than previously estimated, the government said Friday. (Wall Street Journal, March 31, 2023, https://www.wsj.com/articles/social-security-reserves-projected-to-run-out-earlier-than-previously-forecast-60932de5?mod=economy_lead_pos2)

• Stocks ended the quarter on a positive note, after a stormy three months in which markets were whipsawed by strains in the banking system as well as shifting outlooks for inflation and interest rates. (Wall Street Journal, March 31, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-update-03-31-2023-2eafbb02?mod=markets_major_pos10)

• Bond rally at risk as bank stress diminishes. Turmoil for banks sent yields tumbling, but some traders expect a quick reversal. (Wall Street Journal, March 31, 2023, https://www.wsj.com/articles/bond-rally-at-risk-as-bank-stress-diminishes-9998d8d?mod=markets_major_pos13)

• US banks have $620 billion of unrealized losses on their books. Most banks are strong enough to withstand the paper losses. Still, their finances could be squeezed for years to come. (Bloomberg, March 31, 2023, https://www.bloomberg.com/graphics/2023-svb-exposed-risks-banks/)