Weekly Market & Economic News Recap (Week of February 13, 2023)

• US stocks closed higher and Treasuries slid as investors picked through another batch of solid economic data to find different takeaways, even as worries mounted that it would force a hawkish response from the Federal Reserve. (Bloomberg, February 14, 2023, https://www.bloomberg.com/news/articles/2023-02-14/asia-stocks-set-for-choppy-open-on-cpi-fed-speak-markets-wrap?srnd=markets-vp)

• The U.S. national debt has increased by more than $8 trillion dollars since late January 2020, pushing the total debt over $31 trillion, according to the Treasury Department. Extraordinary measures to keep paying the government’s bills could run out before July, according to new figures from the Congressional Budget Office released Wednesday. (Wall Street Journal, February 15, 2023, https://www.wsj.com/articles/what-is-pushing-the-national-debt-to-its-limit-e93a1e69?mod=economy_lead_pos2)

• The consumer roared back last month with a 3% increase in retail spending that was the largest monthly gain in nearly two years, adding to evidence that U.S. economic growth picked up at the start of the year. (Wall Street Journal, February 15, 2023, https://www.wsj.com/articles/us-economy-retail-sales-january-2023-b59cb036?mod=economy_lead_pos1)

• Stocks in Asia dropped alongside US equity futures with expectations on steeper US rate hikes growing after comments by two Federal Reserve officials. Two Fed officials opened door to a 50 basis-point hike. (Bloomberg, February 16, 2023, https://www.bloomberg.com/news/articles/2023-02-16/stocks-in-asia-set-to-drop-after-wall-street-slump-markets-wrap?srnd=markets-vp)

• U.S. supplier prices rose 6% in January from a year earlier, a sign of still stubborn inflation pressures in the economy. (Wall Street Journal, February 16, 2023, https://www.wsj.com/articles/january-ppi-report-shows-producer-prices-rose-pointing-to-persistent-inflation-9bbc252b?mod=economy_lead_pos2)

• ‘Fake Ebitda’ masks risk in debt-laden companies. S&P says earnings forecasts in M&A deals are far too rosy. The big rally in Chinese developer bonds is losing steam. (Bloomberg, February 18, 2023, https://www.bloomberg.com/news/articles/2023-02-18/-fake-ebitda-projections-aren-t-aging-well-in-the-post-easy-money-era?srnd=economics-v2)

• Easing supply chain disruptions and increased trade volumes are lifting the global outlook ahead of the highly anticipated boom that should come from China’s reopening. The relief started only slowly in the trade picture, with eight of 10 indicators on the Bloomberg Trade Tracker hanging in negative territory as of Feb. 17, a very slight improvement from nine at the start of the year. (Bloomberg, February 18, 2023, https://www.bloomberg.com/graphics/global-trade-indicators/?srnd=economics-v2)

• The dollar has rebounded from a 10-month low as investors push up their forecasts for US interest rates after signs of stubborn inflation and unexpectedly strong economic activity. (Financial Times, February 18, 2023, https://www.ft.com/content/8f94ecfc-a2f9-4f24-aabf-d700cee981fb)

• For the first time in nearly two decades, investors can earn more than 5% on some of the safest debt securities in the world. Six-month Treasury bills this week became the first US government obligations since 2007 to yield more 5% as traders ramped up expectations for additional Federal Reserve interest-rate hikes. One-year bill yields approached the threshold. Meanwhile the clock is ticking to raise the federal debt limit, with the Congressional Budget Office warning that the government will otherwise run out of cash as soon as July. (Bloomberg, February 18, 2023, https://www.bloomberg.com/news/articles/2023-02-18/treasury-bills-offer-stock-like-5-to-take-fed-debt-limit-risk)