Weekly Market & Economic News Recap (Week of September 11, 2023)

• Fiscal policy risk is more likely to drive up US bond yields than further tightening from the Federal Reserve, said the central bank’s former vice chair Richard Clarida. Highlights ‘disconnect’ between policymakers and market views. (Bloomberg, September 14, 2023, https://www.bloomberg.com/news/articles/2023-09-14/fiscal-policy-is-bigger-bond-risk-than-fed-pimco-s-clarida-says?srnd=null)

• Consumer spending is powering the economy in what looks like a very strong quarter. Unless the job market cracks, it won’t buckle. (Wall Street Journal, September 14, 2023, https://www.wsj.com/economy/now-is-no-time-to-bet-against-the-american-consumer-fceabad8?mod=central-banking_news_article_pos3)

• A slump in technology companies’ shares weighed on the S&P 500 Friday, chipping away at the broad-market benchmark’s recent gains and pushing it into negative territory for the week. (Wall Street Journal, September 15, 2023, https://www.wsj.com/finance/stocks/global-stocks-markets-dow-news-09-15-2023-890cb022?mod=stocks_news_article_pos3)

• A $4 trillion ‘triple witching’ event endangers stock market calm. Seasonal patterns underscore short-term risks for equity bulls. Goldman’s Rubner expects pent-up demand among investors. (Bloomberg, September 14, 2023, https://www.bloomberg.com/news/articles/2023-09-14/a-4-trillion-triple-witching-event-endangers-stock-market-calm?srnd=null)

• Banks rush to gain foothold in $1.5 trillion private credit market. Banks hope to generate revenue and stay relevant to borrowers. Barclays, Rabobank, SocGen and Deutsche Bank join the fray. (Bloomberg, September 14, 2023, https://www.bloomberg.com/news/articles/2023-09-14/banks-rush-to-gain-foothold-in-1-5-trillion-private-debt-market?srnd=null)

• Investors Are Warming Up to Private Markets, BlackRock’s Conway Says. Asset manager revamped its private asset leadership in May. (Bloomberg, September 14, 2023, https://www.bloomberg.com/news/articles/2023-09-14/blackrock-s-conway-sees-investors-warming-up-to-private-markets?srnd=null)

• Corporate borrowers are giving in to high rates. Appetite has been strong for new debt issuance. Wall Street is looking ahead to Fed’s September rate decision. (Bloomberg, September 15, 2023, https://www.bloomberg.com/news/articles/2023-09-15/wells-fargo-says-corporate-borrowers-are-giving-in-to-high-rates?srnd=markets-vp)

• High-grade bond investors are betting on duration. Investors should swap 10-year notes for 30-year, says Barclays. Long-dated debt seeing outsized demand due to lack of supply. (Bloomberg, September 15, 2023, https://www.bloomberg.com/news/articles/2023-09-15/high-grade-bond-investors-bet-on-duration-as-yields-soar?srnd=markets-vp)

• An inflation jump could bring junk debt default wave, Bank of America says. A 5% inflation level could spark cumulative defaults of 15%. Bringing inflation lower now won’t be easy according to strategists. (Bloomberg, September 15, 2023, https://www.bloomberg.com/news/articles/2023-09-15/an-inflation-jump-could-bring-junk-debt-default-wave-bofa-says?srnd=markets-vp)

• Fed’s higher-for-longer mantra has doubters in bond market. Smart money looks at 2024 rate options as hedges on Fed cuts. Slowing pace of data seen keeping 2024 recession trade in play. (Bloomberg, September 16, 2023, https://www.bloomberg.com/news/articles/2023-09-16/fed-s-higher-for-longer-mantra-has-doubters-in-bond-market?srnd=markets-vp)

• Global funds sell half of Chinese stocks purchased this year. (Bloomberg, September 14, 2023, https://www.bloomberg.com/news/articles/2023-09-14/global-funds-sell-half-of-chinese-stocks-purchased-this-year?srnd=null)