Weekly Market & Economic News Recap (Week of October 16, 2023)

• Fed’s Logan says higher yields allow more time to watch economy. Inflation is still too high despite welcome progress, she says. Dallas Fed chief says not thinking about cutting rates yet. (Bloomberg, October 19, 2023, https://www.bloomberg.com/news/articles/2023-10-19/fed-s-logan-says-not-yet-convinced-inflation-is-trending-to-2?srnd=null)

• Economists boost US growth projections, reduce recession odds. Economists boost 3Q growth projections on stronger consumer. Bloomberg survey respondents see higher rates for longer. (Bloomberg, October 20, 2023, https://www.bloomberg.com/news/articles/2023-10-20/economists-boost-us-growth-projections-reduce-recession-odds?srnd=null)

• Emerging-market stocks post their biggest weekly losses since mid-August as the escalating conflict in the Middle East diminishes the chances of a year-end rally. (Bloomberg, October 20, 2023, https://www.bloomberg.com/news/articles/2023-10-20/em-stocks-set-for-worst-week-since-august-amid-mideast-conflict?srnd=null)

• Powell’s hawkish words signal ok for higher borrowing costs. (Bloomberg, October 20, 2023, https://www.bloomberg.com/news/newsletters/2023-10-20/powell-s-hawkish-words-signal-ok-for-higher-borrowing-costs?srnd=null)

• Big banks get a breather to respond to planned capital mandates. US banking regulators have extended comment period to Jan. 16. Fed also delays its comment deadline on capital surcharge. (Bloomberg, October 20, 2023, https://www.bloomberg.com/news/articles/2023-10-20/fed-pushes-deadline-for-comments-on-bank-capital-plan-to-january?srnd=null)

• US budget gap widened during year on rate rise, revenue drop. Income tax receipts ease following prior year’s capital gains. Interest payments increase as Fed hikes borrowing costs. (Bloomberg, October 20, 2023, https://www.bloomberg.com/news/articles/2023-10-20/us-budget-gap-widened-23-during-year-on-rate-rise-revenue-drop?srnd=null)

• A Federal Reserve report flagged concerns about the risks of persistent inflation, the potential for large losses in the US office market and funding pressures on some banks. (Bloomberg, October 20, 2023, https://www.bloomberg.com/news/articles/2023-10-20/fed-flags-concerns-about-inflation-pressures-office-market?srnd=null)

• Treasury yields declined in US trading Friday, paring weekly increases that pushed the 10-year note’s nearly to 5%, as investors showed interest in risk-free rates at multiyear highs against a backdrop of escalating warfare in the Middle East. (Bloomberg, October 20, 2023, https://www.bloomberg.com/news/articles/2023-10-20/treasury-yields-decline-after-10-year-fails-again-to-reach-5?srnd=null)

• Bond market’s bad tidings start to overwhelm miracle stock rally. S&P 500 erases October gains as long-end Treasury yields soar. Stocks can ‘only take so much’ as risks accumulate. (Bloomberg, October 20, 2023, https://www.bloomberg.com/news/articles/2023-10-20/bond-market-s-bad-tidings-start-to-overwhelm-miracle-stock-rally?srnd=markets-vp)

• Stock pickers sidelined with world events overshadowing earnings. Four of the six earnings sessions have seen concerted swings. Results from tech MegaCaps may bring earnings back to the fore. (Bloomberg, October 21, 2023, https://www.bloomberg.com/news/articles/2023-10-21/stock-pickers-sidelined-with-world-events-overshadowing-earnings?srnd=markets-vp)