Week in Review: April 14, 2023

Markets ended the week higher as investors analyzed March inflation data, the release of the Fed’s March meeting minutes, and the start of first quarter earnings season. Yields as measured by the 10-Year Treasury ended the week up 0.11%, as underlying pressure on services prices, and the release of the Fed’s March meeting minutes reinforced the likelihood of another 0.25% rate hike at the Fed’s May meeting.

The Fed’s March meeting minutes showed that officials remain committed to lowering inflation, seeing scant evidence of core services prices, excluding housing, slowing. While it was anticipated that there would be a tightening of financial conditions following the collapse of Silicon Valley Bank, participants acknowledged that the extent of the effects was highly uncertain. Adding to concerns about a potential recession, the Fed’s staff projections indicated that as a result of tighter financial conditions, it was expected that the US would experience a “mild recession starting later this year, with a recovery over the subsequent two years.”

First quarter earnings season officially commenced with announcements by multiple large banks including JP Morgan, Citigroup, and Wells Fargo. While all three banks saw an increase in deposits late in the quarter following the collapse of Silicon Valley Bank, all three banks also set aside additional money for expected future losses, a step banks often take as economic conditions slow.