Onwards and upwards?

Onwards and upwards?

Key data to move markets this week


Friday: German Harmonized Index of Consumer Prices and speeches by ECB Executive board member Fabio Panetta and ECB President Christine Lagarde. 
 Eurogroup meeting.
 Ecofin meeting.
 Eurozone Industrial production. 
 ECB monetary Policy Decision Statement.


Friday: GDP, Industrial Production, Manufacturing Production.
Average earnings data, Claimant count, ILO unemployment rate. 
 Budget Report. 


Thursday: Initial jobless claims and Continuing jobless claims.
Friday: Nonfarm payrolls, average hourly earnings, labour force participation rate, unemployment rate, underemployment rate, and monthly budget statement.
Tuesday: CPI.
Wednesday: PPI and Retails sales. 
Thursday: Initial jobless claims, Continuing jobless claims, Building Permits, Housing Starts, and Philadelphia Manufacturing survey. 

US Daylight Savings time, when the clocks go forward by one hour, starts on Sunday, 12 March. 

Global Market Indices 

US Stock Indices 

Nasdaq 100 +1.44% MTD and +11.66% QTD 
Dow Jones Industrial Average +0.61% MTD and -0.88% QTD 
NYSE +0.68% MTD and +1.69% QTD 
S&P 500 +1.97% MTD and +5.44% QTD

Mega caps. Despite concerns over faster Fed rate rises and growing recession risks, AlphabetAmazonAppleMicrosoft, and Meta Platforms were all up on the week. However, Tesla was down this week, sliding 3% on Wednesday after the US auto safety regulator said it was opening a preliminary investigation into 120,000 Model Y 2023 vehicles following reports about steering wheels falling off while driving. 

Energy stocks continued to come under pressure this week as investors became concerned over future economic growth and fuel demand with Apa Corp (US)ShellEnergy FuelsBaker HughesMarathon Oil CorporationCoterra Energy Inc, and Marathon Petroleum all down. According to Refinitv, Occidental Petroleum gained 2% on Wednesday after Warren Buffett's Berkshire Hathaway Inc increased its stake in the oil company to about 22.2%.

Materials and Mining stocks were mixed this week with Yara InternationalEastman Chemical CompanyCF Industries HoldingsFreeport-McMoranMosaicDow Chemical, and Newmont Mining all down while Albemarle Corporation and Sibanye Stillwater were up

European Stock Indices

Stoxx 600 -0.03% MTD and +8.50% QTD 
DAX +1.74% MTD and +12.27% QTD 
CAC 40 +0.78% MTD and +13.15% QTD 
IBEX 35 +0.76% MTD and +15.03% QTD 
FTSE MIB +1.58% MTD and +17.74% QTD
FTSE 100 +0.68% MTD and +6.42% QTD 

Other Global Stock Indices 

MSCI World Index +0.61% MTD and +4.54% QTD 
Hang Seng +1.34% MTD and +1.36% QTD

Fixed Income

US 10-year Treasuries at 3.97%.
German 10-year bunds at 2.69%.
UK 10-year gilts at 3.82%.

Following on from this week’s semi-annual monetary policy report by Fed Chair Jerome Powell to Congress, the biggest gap between 2 and 10-year treasuries since 1981 was created, with the yield differential being -102.7 basis points, the deepest since September 1981. As noted by Bloomberg, such inversions generally preceded economic downturns by 12 to 18 months. According to the CME’s Fedwatch tool, futures indicate a 70% chance of a 50 basis point increase at the Fed's next meeting, up from around 30% before the testimony.


Gold futures to $1,818.30 per ounce.
Silver futures to $20.18 per ounce.
West Texas Intermediate crude futures to $76.53 a barrel.
Brent crude futures to $82.66 a barrel.

Oil prices fell over the week due to the hawkish comments from the Fed. A stronger dollar also capped oil prices; oil and gold typically trade inversely to the USD. Concerns that more aggressive US interest rate hikes may impact economic growth and oil demand seem to have worried investors despite an expected recovery demand in China and neighbouring countries as industrial activity recovers, OPEC appears not to be willing to raise production targets, and US supply growth slows.


The USD strengthened again this week on expectations that the Fed will keep monetary policy tighter for longer. The GBP is -2.17% YTD against the USD. The EUR  -1.48% YTD.

Bitcoin -4.97% MTD and +32.69% YTD.
Ethereum -3.32% MTD and +29.57% YTD.

Note: As of 5:00 pm EST 8 March 2023 

Global Macro Updates

Fed looking at higher and faster rate rises. All eyes were on Fed Chair Jerome Powell’s testimony to Congress this week as he was forced to once again acknowledge that the Fed was wrong in initially thinking inflation was only the result of "transitory" factors.” The Fed appears to have been taken by surprise at how strong the labour market has been during the recovery from the COVID-19 pandemic. The ADP National Employment report released on Wednesday showed that private employment increased by 242,000 jobs in February and data for January was revised higher to show 119,000 jobs added instead of 106,000 as previously reported. Traders will be focusing on the non-farm payroll number on Friday and on CPI on Tuesday as these will be key determinants of whether the Fed will seek to increase the pace of rate hikes as well as the duration of the tightening cycle.

US debt ceiling still unresolved. Despite the US hitting its $31 trillion debt ceiling in January, Republicans and Democrats show no sign of surrendering their partisan positions on how to deal with the debt ceiling. President Biden, due to put forward his budget proposal today in Philadelphia, said his proposal will cut the nation's deficit by nearly $3 trillion over 10 years, though it relies on raising taxes on companies and people earning over $400,000 a year, while protecting Social Security, Medicare and Medicaid from cuts. The Republicans are pushing for sharp cuts to domestic spending. There has only been one meeting on 1 February to discuss the debt ceiling. The Congressional Budget Office (CBO) said the US Treasury Department will exhaust its ability to pay all its bills sometime between July and September, unless the current $31.4 trillion cap on borrowing is raised or suspended. Fed Chair Powell said on Tuesday before the Senate Banking Committee that the US risks long-term damage if Congress does not raise the national debt ceiling and that "Congress really needs to raise the debt ceiling... if we fail to do so, I think that the consequences are hard to estimate, but they could be extraordinarily adverse and could do long-standing harm.” According to The Hill, Speaker of the House, Kevin McCarthy, after leaving the CBO’s briefing on Wednesday, urged the president to arrange another meeting to negotiate on raising the debt limit. The CBO has projected that federal debt was on track to reach a record high in 2033, climbing to 118% of GDP before reaching 195% in 2053. CBO Director Phillip Swagel warned that revenues under current law will not keep pace with spending and that major trust funds, including Social Security and Medicare, will be exhausted within 10 years. 

Rising tensions at the ECB. European Central Bank governing council member Ignazio Visco on Wednesday criticised some fellow policymakers for comments on future interest rates that diverged from what had been agreed at ECB meetings. “Uncertainty is so high that the Governing Council of the ECB has agreed to decide ‘meeting by meeting’, without ‘forward guidance,’” he said. “I therefore don’t appreciate statements by my colleagues about future and prolonged interest rate hikes.” Austrian central-bank Governor Robert Holzmann has suggested that next week’s meeting will be the first of four 50 bps hikes that would bring the deposit rate up to 4.5%. Meanwhile, Belgian central bank governor Pierre Wunsch acknowledged that market expectations of reaching 4% may prove accurate. ECB Chief Economist Philip Lane has said it will likely be necessary to raise rates after next week’s meeting, but that any decision it makes should be data-dependen.

Dividing opinions at the BoE. Divisions in policy direction are also deepening at the Bank of England. Governor Andrew Bailey has insisted the UK economy is “evolving much as we expected it to” and he is cautioning against suggesting that the bank rate will not rise or that the BoE needs to do more. However, other BoE policy makers such as Silvana Tenreyro and Swati Dhingra are focusing on cooling wage pressures and the lagged effects from previous tightening as proof that rates should be held steady at 4% while fellow MPC member Catherine Mann has said higher rates will be required to bring inflation down. Traders are continuing to expect future UK hikes and are now starting to factor in a peak of 5% this year.

The FTX fallout continues. Silvergate Capital Corp said on Wednesday that a “voluntary liquidation of the bank is the best path forward.” Its stock tumbled about 35% in after-hours trading to $3 a share and is now down more than 40%. In a statement the company said, “In light of recent industry and regulatory developments, Silvergate believes that an orderly wind down of bank operations and a voluntary liquidation of the bank is the best path forward... and the bank’s wind-down and liquidation plan includes full repayment of all deposits.” The company warned last week that it was evaluating its ability to operate as a going concern. As noted by the Financial Times, in January it reported that customers had withdrawn more than $8bn, forcing it to sell held-to-maturity assets to fund the run, accruing losses on the sale of the securities of $718mn. In December, a group of senators wrote a letter to Silvergate asking for the company to explain its ties to FTX.

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