Weekly Market & Economic News Recap (Week of May 22, 2023)

• U.S. growth touches fastest monthly rate in more than a year. S&P Global surveys show American services spending is robust while European activity eased. (Wall Street Journal, May 23, 2023, https://www.wsj.com/articles/europes-economy-cools-down-as-interest-rate-rises-bite-2532af5c?mod=economy_more_pos14)

• Fed officials were divided over June rate pause. Several policy makers thought further hikes ‘may not be necessary’. (Wall Street Journal, May 24, 2023, https://www.wsj.com/articles/feds-june-rate-decision-is-close-call-official-says-271b4cba?mod=economy_more_pos9)

• Germany enters recession in blow to Europe’s economy. Second straight quarter of contraction in eurozone’s largest economy might prompt greater caution by central bankers. (Wall Street Journal, May 25, 2023, https://www.wsj.com/articles/germany-enters-recession-in-blow-to-europes-economy-d252dad3?mod=economy_more_pos6)

• Municipal bond issuers on edge as debt ceiling deadline nears. City and state governments fear potential surge in cost of financing. (Wall Street Journal, May 26, 2023, https://www.wsj.com/articles/municipal-bond-issuers-on-edge-as-debt-ceiling-deadline-nears-bc498cc0?mod=economy_lead_pos4)

• Consumer spending, the primary driver of economic growth, rose 0.8% in April, up from 0.1% increases in both February and March. Americans spent more last month on vehicles and services such as insurance and healthcare. Strong economic figures come as Federal Reserve officials deliberate over next interest-rate move. (Wall Street Journal, May 26, 2023, https://www.wsj.com/articles/consumer-spending-personal-income-april-2023-b1b57c31?mod=economy_lead_pos3)

• Profits at industrial firms in China kept falling in the first four months of the year, underlining cooling demand and deepening factory-gate deflation in the world’s second-largest economy. Industrial profits fell 20.6% in the January-April period from the same time frame in 2022. (Bloomberg, May 26, 2023, https://www.bloomberg.com/news/articles/2023-05-27/china-industrial-profits-slide-as-weak-demand-weighs-on-economy?srnd=null)

• Nvidia’s shares soared more than 24% on Thursday to an all-time high after it said the AI boom is translating into record sales, fueling excitement that the new era in computing is kicking in faster than previously thought. (Wall Street Journal, May 27, 2023, https://www.wsj.com/articles/how-ai-is-catapulting-nvidia-toward-the-1-trillion-club-14f42380?mod=markets_major_pos10)

• US employers are gradually dialing back the pace of hiring and hourly earnings are moderating, offering some solace to Federal Reserve policymakers in their bid to wrangle still-elevated inflation. (Bloomberg, May 27, 2023, https://www.bloomberg.com/news/articles/2023-05-27/us-jobs-report-set-to-provide-some-solace-to-the-fed-eco-week?srnd=economics-v2)

• Debt-limit deal sets up tough battle for passage in Congress. Conservatives, progressives set to oppose compromise measure. McCarthy, Jeffries face major challenge avoiding default. (Bloomberg, May, 27, 2023, https://www.bloomberg.com/news/articles/2023-05-28/debt-limit-deal-sets-up-tough-battle-for-passage-in-congress?srnd=economics-v2)

• Biden, McCarthy strike debt-ceiling deal ‘in principle’. House vote expected in week ahead on agreement to raise borrowing limit for two years. (Wall Street Journal, May 27, 2023, https://www.wsj.com/articles/debt-ceiling-talks-extend-into-weekend-with-deal-seen-as-close-7eb59fbc?mod=economy_lead_story)