Aviso Weekly Market Pulse: March 20th – March 24th

Mar 27, 2023

Market developments

Equities:
Banking stocks remained in focus this week as Deutsche Bank said they are redeeming a tier 2 subordinated bond early. The intention of the announcement was to bolster investor confidence, but the already negative sentiment in the global banking sector drove Deutsche Bank’s share price and the European banking sector lower on Friday. The S&P 500 and Nasdaq ended the week up 1.4% and 1.6% respectively as investors bet that the Federal Reserve is done raising rates following the 25bps hike we saw this past week and will beginning cutting rates as early as this summer.

Fixed income:
The Federal Reserve raised interest rates by 25bps on Wednesday and during the press conference had a less hawkish tone regarding future interest rate hikes. Powell stated that he does not expect interest rates cuts this year, however the market is expressing a different view and sees nearly 100bps of cuts by year-end. The impact was felt across the curve as yields closed lower for the week and the U.S 10yr closed below a key support level of 3.4%.

Commodities:
Oil settled lower on Friday but finished the week up over 3% as renewed concerns over the U.S. and European banking sector were revived on Friday morning. Investors are worried that higher rates will lead to an economic slowdown and the potential for tighter credit standards will hurt overall demand. Oil remains under $70 as it closed the week at $69.24.

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