APPROACHING STALL SPEED Banking system concerns of a month ago have largely faded following liquidity support from the Federal Reserve and the passage of time without further failures – though not without consequence. The extension of credit from smaller regional banks is likely to decline... Read the full article here: Viewpoints May 2023

OK, ON AVERAGE On average, the global economy looks to be “OK” – regional and sectoral areas of weakness being offset by other areas of relative strength; meanwhile, inflation seems contained in some areas albeit still raging in others. On average, the financial system is “OK” – concerns in some regional banks and other “one-off”...

Signs of Stress The surprise failure of Silicon Valley Bank (SVB) has brought fears of instability of the financial system, sending a shockwave of uncertainty across the capital markets. Very elevated volatility in Treasuries, including a dramatic drop in rates across the curve, highlight investor concerns regarding other potential “shoes to drop.” Equity markets have...

Looking Across The Valley Global equities are off to a strong start in 2023. Investors have chosen to look across the valley of softening fundamentals – focusing instead on declining inflation, the near completion of central bank rate increases and moderating long-term rates. Notably, the easier financial conditions seen over the past few months have...

WATCHING WAGES           As inflation continues to moderate, attention has shifted to a narrower aspect of the price story – non-shelter services inflation. This component represents the aspect of inflation most closely tied to wage growth, and is proving the most resistant to central bank (particularly the Federal Reserve) taming. The labor...