Weekly Market & Economic News Recap (Week of March 13, 2023)
- Jiayi (Kristy) Xu, MBA, CFP®
- Mar 18, 2023
- 2 min read
Economy shows signs of cooling as bank troubles spread. A drop in retail sales and easing price pressures in February offered preliminary signs of a cooling economy as the spread of financial turmoil on Wall Street called into question whether the Federal Reserve would continue raising interest rates. (Wall Street Journal, March 15, 2023, https://www.wsj.com/articles/us-economy-retail-sales-february-2023-6b98a40b?mod=economy_lead_story)
U.S. supplier prices fell in February from a month earlier, a possible sign of a recent easing in inflationary pressures. The producer-price index, which generally reflects supply conditions across the economy, fell 0.1% in February from the prior month, compared with a downwardly revised 0.3% increase in January, the Labor Department said Wednesday. That compared with a 0.2% average monthly rise in the two years before the pandemic. (Wall Street Journal, March 15, 2023, https://www.wsj.com/articles/u-s-producer-prices-dropped-in-february-3e55fe4a?mod=economy_lead_pos2)
The markets for the world’s safest and most liquid assets, the government bonds issued by the U.S. and other rich countries, came under immense stress on Wednesday following a week of worries about the health of global banks. (Wall Street Journal, March 15, 2023, https://www.wsj.com/articles/market-stress-snarls-treasury-trading-a84a5417?mod=economy_lead_pos3)
Banks borrow $164.8 billion from fed in rush to backstop liquidity. Discount-window borrowing surged to record $152.85 billion. New facility usage totaled $11.9 billion in first three days. (Bloomberg, March 16, 2023, https://www.bloomberg.com/news/articles/2023-03-16/banks-rush-to-backstop-liquidity-borrow-164-8-billion-from-fed?srnd=economics-v2)
Executives yank money from banks as some deposits look riskier. CFOs, treasurers review financing, cash management strategies. Market turmoil brings corporate risk frameworks in focus. (Bloomberg, March 16, 2023, https://www.bloomberg.com/news/articles/2023-03-16/executives-yank-money-from-banks-as-some-deposits-look-riskier)
President Biden called on Congress to toughen penalties on bank executives deemed responsible for the collapse of financial institutions, as the administration seeks to shore up confidence in the banking system following the failure of two midsize lenders and the bank-led rescue of a third. (Wall Street Journal, March 17, 2023, https://www.wsj.com/articles/biden-asks-congress-for-more-authority-to-punish-bank-executives-828ea811?mod=economy_lead_pos4)
Central banks should press ahead with rate rises despite bank pains, says OECD. The research group doesn’t expect a repeat of the 2008 banking crisis despite financial strains and sees high inflation as a bigger risk. (Wall Street Journal, March 17, 2023, https://www.wsj.com/articles/central-banks-should-press-ahead-with-rate-rises-despite-bank-pains-says-oecd-43c84783?mod=economy_more_pos1)
UBS Group AG UBS is nearing a deal to take over Credit Suisse Group AG, part of an urgent effort engineered by Swiss and global authorities to restore trust in the banking system, people familiar with the situation said. (Wall Street Journal, March 17, 2023, https://www.wsj.com/articles/ubs-in-talks-to-take-over-credit-suisse-ed932b01)
Fed to consider a pause as fallout from SVB roils markets. UK, Switzerland, Norway, Nigeria, Philippines may hike. Brazil and Turkey will probably hold rates this week. (Bloomberg, March 18, 2023, https://www.bloomberg.com/news/articles/2023-03-18/federal-reserve-interest-rates-latest-fed-pause-likely-on-svb-fallout?srnd=economics-v2)