Aviso Weekly Market Pulse: April 10th – April 14th

Apr 17, 2023

Market developments

Equities:
This week, the Nasdaq stocks were positive, but underperformed the broader U.S. market as traders increased bets that the Federal Reserve could raise interest rates at least once more this year. The Nasdaq fell by 0.3% and the S&P 500 also slid by 0.3%, trimming its weekly advance. On the other hand, financials outperformed Friday with JPMorgan Chase & Co. and Citigroup Inc. leading the charge after stronger than expected earnings. The assurance about the sector’s health and an increase in deposits drove the big banks higher. The bank sector remains in focus next week with Charles Schwab and State Street Corp set to report on Monday. Investors will be looking for signs of health from Schwab, which has plunged roughly 40% this year as rising rates drove a spike in unrealized losses at the brokerage. Bank of America Corp., Goldman Sachs Group Inc, Netflix and Tesla also report next week.

Fixed income:
Swap traders increased their bets for a rate increase by June causing treasury yields to rise on Friday. The 2yr rate jumped to a weekly high of 12 bps to trade around 4.1% and the 10yr went up to 3.5%. Inflation expectations also jumped in April with consumers expecting prices to climb 4.6% on an annual basis. This movement suggests that investors are becoming less optimistic about the economy in the short term while remaining positive in the long term.

Commodities:
Oil futures finished higher on Friday, posting their fourth straight weekly gain, after the International Energy Agency warned that OPEC+ production cuts would lead to a larger and earlier crude oil deficit in 2023 than previously expected. The IEA report also highlighted the demand surge from China, and the gap between global oil supply and demand is projected to be two million barrels a day by the third quarter of this year. Although Saudi Arabia and other major oil producers announced plans to cut production, Goldman Sachs sees the report as roughly neutral for oil prices due to the bullish analysis of U.S. supply constraints and the large fall in March preliminary commercial stocks offsetting the slight downgrade to demand and the slight upgrade to non-OPEC supply.

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