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Weekly Market Update (April 23, 2023)


Equity market did not have a clear direction due to the mixed economic data. Market has downgraded the US economic growth forecast for the year. Early April data came in good relative to expectation while March data suggested otherwise. VIX hit a 17-month low this week.

Debt Ceiling: Investors might have to start worrying about debt ceiling due to the weak tax collections in April. Sovereign credit default swap (CDS) spreads have widened significantly to reflect the debt limit risks. However, Congress is still far from a debt ceiling deal even though the deadline is approaching.

Eurozone: European policymakers are hawkish - BoE is expected to hike rate by 25bps in May and ECB is expected to hike rate by 25bps 3 times in the coming 3 meetings. UK CPI came in higher than expected. Analysts believed that the banking stresses and tighter lending conditions will not likely drag down inflation.

China Growth: China's economic data has improved. Data such as GDP, export and services PMI are all reported higher than expected. US stocks with the highest sales exposure to China outperformed the S&P500 in the recent quarter.





S&P 500















*Data as of market close. 5-day change ending on Friday.



Standard Chartered: Part of the companies in S&P500 have reported earnings, and almost ¾ of them beat expectations. Banks are one of the major contributors as they benefit from the higher net interest margins.

Julius Baer: The expectation of weaker dollar and the end of the US hiking cycle will support equities in emerging markets (EM). Historically, there is an inverse correlation between EM equities and USD. Based on the data in the previous 20 years, 1% drop in USD will lead to 3.4% increase in EM equities return.

Fixed Income

Goldman Sachs: Rate volatility is dropping back to pre-banking crisis level. Current level is still too high when compared to historical norms, there is still room for decline due to relief in systematic risk and end of hiking cycle.

Standard Chartered: We recommend high quality over high yield bonds due to their defensive nature. High yield bond issuers have weaker credit fundamentals which will be vulnerable to recession or economic slowdown.


UBS: Market is pricing a nearly perfect landing scenario for the US economy. The contraction in bank lending and previous rate hikes can lead to a "Goldilocks Economy" that is not too hot and not too cold. However, we do not share the same view. We see uncertainty in growth, inflation and earnings.

Wellington Management: Banking crisis is likely to lead to tighter credit conditions and decrease economic activity. Meanwhile, Fed’s hikes have not fully worked through the economy yet. Decision of policymakers will require judgment calls based on the economic dynamics instead of the visible data. Recession is likely to happen sooner than expected.


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This newsletter is meant for informational purposes only and is not investment advice. Always consult a licensed investment professional before making important investment decisions. Advertising and sponsorship do not influence editorial content or decisions. Market Hedwig is not responsible for the promises made or the quality or reliability of the products or services offered in any advertisement.


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