Marketmind-World markets leaving March like a lamb
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[March 30, 2023] A
look at the day ahead in U.S. and global markets from Mike Dolan
In like a lion, out like a lamb.
Farmers' almanacs suggest a stormy and turbulent start to March means
it's likely to end calm and serene - and so it appears with world
financial markets this year.
The surge in stock and bond volatility around this month's banking shock
in the United States and Europe appears to be petering out - and the
financial tensions of the month also disguise what has still been a
decent overall first quarter.
As regulators and central banks on both sides of the Atlantic learn the
lessons and ponder remedial action to prevent any repeat or further
contagion, the main question now is how deeply underlying economies have
been disturbed.
The evidence is sketchy so far and the impact on lending and credit
generally will be examined forensically from here.
Otherwise there's little sign yet of a shock to a wider economy that, if
anything, was picking up steam again this year just before March. Weekly
U.S. jobless numbers will again gauge the labor market temperature later
on Thursday as more Fed officials emerge to give their readout on the
situation.
![](http://archives.lincolndailynews.com/2023/Mar/30/images/ads/current/peasley_sda_SFARM_2023.png)
But while U.S. regional bank stock indices have clearly suffered a hit
of about 20% from the March stress, the wider S&P500 is on track to end
the first quarter tomorrow some 5% higher. The tech-heavy, interest-rate
sensitive NasdaqIXIC> is up 14%.
Stock volatility indices have returned to levels seen just as the
Silicon Valley Bank problems first hit three weeks ago - more than two
points lower than where they started the year.
That's partly due to an assumption a brewing credit crunch will stop
Federal Reserve interest rate rises in their tracks and see easing by
year-end.
![](http://archives.lincolndailynews.com/2023/Mar/30/images/ads/current/charrons_bch_2022.png)
That U-turn in thinking during the month saw wild swings in the bond and
rates markets, where key volatility gauges hit their highest since the
2008 crash. But even these seismographs are down by a quarter from
mid-month peaks.
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![](../images/033023PIX/busine45.jpg)
Traders work on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., March 27, 2023.
REUTERS/Brendan McDermid
![](http://archives.lincolndailynews.com/2017/Jul/22/images/ads/current/rohlfs_lda_072017.png)
Futures markets remain undecided about whether there's one more Fed
rate hike left in May - but they remain confident easing will now
come later in 2023.
Two-year Treasury yields which have now got a toehold back above 4%
are settling about 25-30 basis points below where they started this
year. The is about 1% lower so far this year.
So the rates horizon has fallen a bit once the noisy swings of the
month are stripped out - but the economy, even though the bulk of
March data has not arrived yet, continues to surprise more
positively than at any point in almost a year.
Elsewhere, European markets continued to advance on Thursday, with
banking stocks up another 2% and credit default swaps on many banks
lower too. Even battered commercial real estate stocks, hit hard by
the banking wobble, were recovering some ground.
March inflation numbers and business sentiment surveys are due
across the continent.
H&M climbed 7.3% after the world's second-biggest fashion retailer
reported a surprise operating profit for the December-February
period but warned that overall sales for the spring season had been
delayed by cold weather.
Key developments that may provide direction to U.S. markets later on
Thursday:
* U.S. weekly jobless claims, U.S. Q4 corporate profits, Q4 GDP
revisions
* Boston Federal Reserve President Susan Collins, Minneapolis Fed
President Neel Kashkari, Richmond Fed chief Thomas Barkin all speak
* Spanish Prime Minister Pedro Sanchez meets Chinese President Xi
Jinping in Beijing
(By Mike Dolan, editing by XXXX mike.dolan@thomsonreuters.com.
Twitter: @reutersMikeD)
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