Weekly Market & Economic News Recap (Week of July 31, 2023)

• Europe Returns to timid growth, but bigger headwinds loom. Lower energy bills helped drive expansion in activity, but region faces litany of challenges. (Wall Street Journal, July 31, 2023, https://www.wsj.com/articles/europe-returns-to-timid-growth-but-bigger-headwinds-loom-b29121d3?mod=economy_more_pos6)

• China’s economic recovery weakens. New data on manufacturing and services reinforce picture of a stalled rebound. (Wall Street Journal, July 31, 2023, https://www.wsj.com/articles/chinas-economy-stutters-forward-as-growth-concerns-linger-1be8acb2?mod=economy_more_pos5)

• Jobs market shows signs of the gradual cooling the Fed wants. Employer demand for workers slipped slightly in June to lowest level in more than two years. (Wall Street Journal, August 1, 2023, https://www.wsj.com/articles/jobs-market-shows-signs-of-the-gradual-cooling-the-fed-wants-d244178b?mod=economy_more_pos4)

• U.S. stocks and bonds suffered a wave of selling after America’s credit downgrade, sending Treasury yields to the highest levels of the year and major indexes toward their worst session in months. (Wall Street Journal, August 2, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-news-08-02-2023-3059ed48)

• Fitch says US fiscal metrics and governance spurred credit-rating cut. Fitch Ratings sees debt, deficits rising over next three years. (Bloomberg, August 2, 2023, https://www.bloomberg.com/news/articles/2023-08-02/us-fiscal-metrics-governance-spurred-cut-fitch-s-francis-says)

• US downgrade hits Muni market as Fitch cuts billions of debt. Fitch Ratings downgraded billions of dollars worth of public finance credits that are linked to the rating company’s landmark decision to strip US government debt of its AAA status. (Bloomberg, August 3, 2023, https://www.bloomberg.com/news/articles/2023-08-03/us-rating-cut-hits-munis-as-fitch-downgrades-billions-of-debt)

• Slower hiring this summer could take heat off the Fed. Unemployment rate falls to 3.5%, near a half-century low, and wage growth holds steady at elevated level. (Wall Street Journal, August 4, 2023, https://www.wsj.com/articles/jobs-report-july-today-unemployment-economy-d9af32f3?mod=economy_lead_pos2)

• Inflation is cooling, but food Inflation Could Get Worse. Food prices have been rising rapidly for longer than central bankers had expected, and recent setbacks may prolong the agony. (Wall Street Journal, August 4, https://www.wsj.com/articles/inflation-is-cooling-food-inflation-could-get-worse-bb373e06?mod=economy_lead_pos3)