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Weekly Market Update (June 25, 2023)



HIGHLIGHTS

US equities cooled down this week as markets are concerned about the potential for further rate hikes. Other than the US, other markets also retreated this week as international central banks announced more hawkish policies.


BoE: Bank of England (BoE) hiked its rate by 50bps surprisingly. It also mentioned that further rate hikes are possible as inflation is still high. Core inflation in the UK came at 7.1% at a 30-year high.


China: Unlike other western countries, China is worrying about deflation. It cuts its 1-year and 5-year loan rates by 10bps each. Markets lowered the growth expectation in 2nd quarter but expected a better 3rd quarter due to policy stimulus and the declining drag from inventory destocking.


REIT: Commercial real estate is not performing well. The negative data on distressed commercial real estate are giving downward pressure on the sector. Combined with high interest rate, the sector was down badly, especially for highly levered REIT stocks.

 
MARKETS

Nasdaq

13,492.52

-1.44%

S&P 500

4,348.33

-1.39%

Dow

33,727.43

-1.67%

10-Year

3.74%

-3bps

Brent

73.85

-3.60%

DXY

102.90

+0.59%

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

 
VIEW FROM THE STREET

Equity

UBS: China’s equities are preferred, especially for those favoring recovery, consumption and strong infrastructure investment. It includes sectors like consumer, internet, industrial and material.


Blackrock: We are underweight equities in developed markets due to the expectation of further rate hikes. On the other hand, we are overweight emerging market equities due to China’s demand, peaking rate cycles and weaker USD.

Fixed Income

Goldman Sachs: Implied volatility of the front-end rates is staying low. It is because of the declining risk of banking stress, the slower pace of tightening and the improved market microstructure.


UBS: 2Y treasury yield hit the highest level since March as sovereign bonds sold off this week, mainly driven by the expected further central bank tightening.


Economy

Julius Baer: Economies of western countries are resilient as data showed that consumers can afford higher rates. The economic slowdown would be more moderate as the demand in China sustains.


J.P. Morgan: Investors should be cautious as it would be too optimistic to think further tightening will not trigger a recession.

 
KNOWLEDGE TRANSFER

Spirit & JetBlue Merger

Here's all you need to know about the major airline merger deal.


Elon Musk's Twitter

Here's all you need to know about the $44b Twitter deal.


London Metal Exchange

Here's all you need to know about the LME´s nickel lawsuit.


LUNA

Confused about what happened to UST and LUNA? Here's all you need to know about the event!


 
DISCLOSURE

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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