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Week in Review: 22-26 May 2023

Summary and Comment

The debt ceiling saga continues, but this Saturday there have been some positive developments. Biden calls tentative agreement ‘an important step forward’ but deal still needs to receive approval from a divided Congress. More to come in the next couple of days.

Core PCE prices in the US, which exclude food and energy, rose by 0.4% month-over-month in April, above market expectations of 0.3%. Personal spending continues to rise more than expected. The inflation fight is not over. The University of Michigan consumer sentiment for the US was revised higher to 59.2 in May of 2023 (from an initial estimate of 57.7), but remained the lowest level in six months, amid worries about the path of the economy.

GDP growth rate, MoM, was -0.3%. This is the second consecutive negative GDP print, which many would call a technical recession. Thus, the outlook for the European economy is not very bright.

For the week, big cap tech stocks ended in the green, with the the NASDAQ up 3.6 %. The S&P500 went up 0.3 %, and the RUSSEL 2000 was flat/unchanged. Gold and silver are down 1.6 % and 2.3 %, respectively. The barrel of WTI rised 1.4 % for the week. Natural gas dropped 6.6 %.

The relative strength of the US dollar rised 1 %. The US 10-year yield rised 3.6 %, to 3.8 %. The US yield curve remains inverted and is downward sloping until 2033. The US yield on the long end of the curve is ~4 % for the 20Y and 30Y maturities.

Next week, in the US, the labor report, JOLTS job openings, ISM Manufacturing PMI, and CB consumer confidence will be released. Additionally, inflation rates are anticipated for the Euro Area, Germany, France, Italy, Spain, and South Korea.

Sources:

https://tradingeconomics.com/

https://www.theguardian.com/us-news/2023/may/28/us-debt-ceiling-deal-latest-biden-mccarthy 

 

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