Weekly Market & Economic Recap (Week of January 30, 2023)

• U.S. stocks jumped Wednesday, erasing earlier losses, after the Federal Reserve said it had approved raising interest rates by a quarter of a percentage point. Markets’ afternoon rally showed just how confident many investors have become that the Fed will end up lowering interest rates this year. (Wall Street Journal, February 1, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-update-02-01-2023-11675252971?mod=markets_lead_pos1)

• Strong Investor Demand Boosts Overseas Bond Markets. Some parts of the global bond market roared back to life in January, with sales of new debt securities off to a record start in Europe and across emerging markets. Expectations that policy makers will slow or halt tightening campaigns boost bond markets. (Wall Street Journal, February 1, 2023, https://www.wsj.com/articles/strong-investor-demand-boosts-overseas-bond-markets-11675257088)

• The Nasdaq Composite jumped to its highest level in nearly five months, powered by a resurgence in big technology stocks and investors’ hopes that the Federal Reserve could pivot from hiking interest rates to cutting them later this year. (Wall Street Journal, February 1, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-update-02-02-2023-11675340054)

• With counterparts from the US to the UK sending out signals of waning aggression after drastic monetary tightening, euro-zone officials insist their own onslaught against inflation isn’t about to let up. (Bloomberg, February 3, 2023, https://www.bloomberg.com/news/articles/2023-02-03/ecb-plan-for-next-big-hike-makes-lagarde-the-last-hawk-standing?srnd=economics-v2)

• Stocks ended the week on a down note Friday, after data showed surprisingly strong job growth in January. The S&P 500 and Nasdaq still notched weekly gains. The better-than-expected jobs report stoked worries the Federal Reserve will raise interest rates for longer than expected to cool the economy. (Wall Street Journal, February 3, 2023, https://www.wsj.com/livecoverage/stock-market-news-today-02-03-2023?mod=markets_lead_pos1)

• ‘Too good to be true’ jobs report draws skeptics on data quirks. Bloomberg Economics said payrolls surged on seasonal factors. Others played that down, noting figures looked ‘pretty clean’. (Bloomberg, February 3, 2023, https://www.bloomberg.com/news/articles/2023-02-03/-too-good-to-be-true-jobs-report-draws-skeptics-on-data-quirks)

• The Securities and Exchange Commission is considering a softening of planned rules requiring companies to disclose the effects of extreme weather and other costs related to global warming when the regulator completes its climate-change proposals, people close to the agency said. (Wall Street Journal, February 3, 2023, https://www.wsj.com/articles/sec-considers-easing-climate-disclosure-rules-after-investor-pushback-11675416111?mod=markets_lead_pos2)

• The selective hearing on the part of markets — celebrating citations of disinflation from the Federal Reserve, European Central Bank, and Bank of England and collectively plugging their ears about the tightening that those officials say remains — has exacerbated a game of chicken with policymakers. And it’s starting to make their jobs that much more difficult, given the dovish bets are a form of financial easing that, ironically, could force even more aggressive action that runs against market expectations. (Bloomberg, February 3, 2023, https://www.bloomberg.com/news/newsletters/2023-02-03/what-s-happening-in-the-world-economy-game-of-chicken-gets-serious?srnd=economics-v2)

• China’s economy is set to rebound this year as mobility and activity pick up after the lifting of pandemic restrictions, providing a boost to the global economy. The economy will expand 5.2 percent this year, according to our latest projections, versus 3 percent last year. That’s good news for China and the world as the Chinese economy is now expected to contribute a quarter of global growth this year. (International Monetary Fund, February 3, 2023, https://www.imf.org/en/News/Articles/2023/02/02/cf-chinas-economy-is-rebounding-but-reforms-are-still-needed)

• Bank of England signals worst years for growth since great depression. Growth set to average just 1% a year between 2006 and 2025. Dismal outlook piles pressure on Prime Minister Rishi Sunak. (Bloomberg, February 4, 2023, https://www.bloomberg.com/news/articles/2023-02-04/boe-signals-worst-years-for-uk-growth-since-great-depression?srnd=economics-v2)