Markets were somewhat resilient last week, given the disaster that was the Treasury Secretary’s speech before Congress.
Things were going well last week as the market had settled into the idea that the Fed would hike rates by another 25 basis points. Even during Chairman Powell’s speech on Wednesday following the FOMC’s rate announcement, the market was positive. The statement from the FOMC took a slightly dovish tone that seemed to comfort markets. Equities sold off, however, shortly after Treasury Secretary Yellen spoke before Congress and told the country the Treasury is “not considering a broad increase in deposit insurance” with regard to the banking situation. I’m no word-smith, but this comment could have been phrased more carefully, perhaps leading to an even better ending result for equities last week. In fact, it's evident that Yellen realized her mistake, because in day two of her testimony before lawmakers she adjusted her language regarding deposit insurance by stating, "Certainly, we would be prepared to take additional actions if warranted."
Meanwhile, on the economic front, the labor market remains on solid footing as Initial Claims once again fell below expectations for the 10th time over the last 12 weeks.
Existing Home Sales and Building Permits were higher than expected in February and higher than January. The market has taken Powell’s comments that a rate hike pause is on the way. Right now, the market is pricing in an 83% probability that the Fed won’t raise rates at their May meeting—that is if Janet Yellen can keep things together. There is some easing of fears in the banking sector as First Citizens BancShares agreed to buy most of Silicon Valley’s loan book and securities - and assume all of its deposits. The financial sector saw its first positive week in the market in 4 weeks and we just passed the first weekend in almost a month without some banking revelation. While we do not believe we are out of the woods just yet, it does appear, for now, that fears are easing.
Disclosures
The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.
Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
Past Performance does not guarantee future results.
Comments