Weekly Market & Economic News Recap (Week of March 20, 2023)

• The first year-over-year drop in home prices in 11 years and a dip in mortgage rates snapped a yearlong streak of declining monthly home sales, showing the effects of the Federal Reserve’s campaign to raise interest rates. U.S. sales of existing homes jump 14.5% from prior month, but down sharply from year earlier. (Wall Street Journal, March 21, 2023, https://www.wsj.com/articles/home-prices-fell-in-february-for-first-time-in-11-years-73df0107?mod=economy_more_pos4)

• The Federal Reserve approved another quarter-percentage-point interest-rate increase but signaled that banking-system turmoil might end its rate-rise campaign sooner than seemed likely two weeks ago. (Wall Street Journal, March 22, 2023, https://www.wsj.com/articles/fed-raises-rates-but-nods-to-greater-uncertainty-after-banking-stress-6ae9316f?mod=economy_more_pos1)

• Steady jobless claims show labor market remains strong. New applications for unemployment benefits fell by 1,000 last week. (Wall Street Journal, March 23, 2023, https://www.wsj.com/articles/steady-jobless-claims-show-labor-market-remains-strong-8c9aab66?mod=economy_lead_pos1)

• New Fed forecasts suggest central bank is bracing for recession. Policymakers downgrade 2023 forecasts despite strong start. Estimates imply a sharp slowdown through remainder of the year. (Bloomberg, March 23, 2023, https://www.bloomberg.com/news/articles/2023-03-23/new-fed-forecasts-suggest-central-bank-is-bracing-for-recession?srnd=economics-v2)

• Yellen says US prepared for additional deposit actions if needed. Regulators under scrutiny for handling of recent bank failures. Yellen appears at House panel after Senate hearing Wednesday. (Bloomberg, March 23, 2023, https://www.bloomberg.com/news/articles/2023-03-23/yellen-says-us-prepared-for-additional-deposit-actions-if-needed?srnd=economics-v2)

• Global economic growth rebounded modestly this month, although stubbornly high inflation and banking stresses weigh on the outlook. Business surveys published Friday recorded pickups in activity across the U.S. and Europe driven by services providers. A strong services sector is supporting activity around the world, but that strength also fuels inflation. (Wall Street Journal, March 24, 2023, https://www.wsj.com/articles/banking-strains-inflation-threaten-global-economic-rebound-949709c?mod=economy_lead_pos1)

• Bank chaos tests traders’ nerves and rewards those doing nothing. Stocks holding up well after the collapse of several lenders. Sticking to bonds amid extreme Treasury turmoil reaps profits. (Bloomberg, March 24, 2023, https://www.bloomberg.com/news/articles/2023-03-24/freezing-in-shock-is-working-pretty-well-in-stressed-out-markets?srnd=markets-vp)

• Fears of tightening financial conditions leading to a recession are driving traders to rethink their risk exposure and seek out safety in the stock market. Investors seek reliable sectors like food, pharma, telecoms. Banks drop more on earnings woes than financial system fears. (Bloomberg, March 25, 2023 https://www.bloomberg.com/news/articles/2023-03-25/traders-flight-to-safety-is-about-the-next-recession-not-banks?srnd=markets-vp)