Week in Review: 24-28 April 2023

Summary and Comment

This week, First Republic Bank failed and was sold to one of the US Big Banks. The banking system consolidation is ongoing. Is there going to be a credit crisis? Maybe. Keep some cash on hand, in case of a market crash (so that you can buy cheap stuff!!!).

Regarding economic indicators, the US GDP growth rate estimates (~1%) were lower than expected. Personal spending is flat, and income grew ~0.3% MoM. In France and Germany, inflation estimates (YoY) are at 5.9% and 7.2%, respectively. Core PCE prices in the US, which exclude food and energy, rose by 0.3% month-over-month in March of 2023, the same pace as the prior month and in line with market expectations. The annual Core PCE, the Federal Reserve's preferred gauge to measure inflation, slowed down to 4.6%, slightly above market expectations of 4.5% but equaling the 13-month low from December 2022.

For the week, stock markets are up, led by the tech stocks (NASDAQ up 1.9%). SPX is up ~0.8%, while the RUSSEL 2000 is down ~1.3%. Gold went up ~0.4% and silver down ~0.2%. Oil went down ~1.7% and natural gas up 1.5%. The relative strength of the US dollar is unchanged. The US 10-year yield declined ~4% the past week, and the yield curve is peaking at 5.11% in July 2023.

Next week, the JOLTs job openings and FED interest rate decision are coming out. For now, the markets remain stable - watch out for any signs of instability in the debt market, for example.

Sources:

https://www.nbcnews.com/business/business-news/first-republic-bank-fdic-takeover-sold-jp-morgan-rcna81437

https://tradingeconomics.com/

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