Bassanese Bites: Heating up – February 20 2023
Global Markets
Global equities nervously retreated further last week as bond yields edged higher amid concerns that stubbornly persistent US economic growth and inflation could see the Federal Reserve lift rates more than expected. The US$ also held up while oil prices remained range bound.
The key global highlights last week were US consumer and producer price reports which suggested that while inflation continued to ease an a year-on-year basis, pricing pressure remained uncomfortably firm. Adding to the angst, US retail sales in January were blisteringly strong, up a lazy 3%.
Along with the strong January payrolls report, this either suggests the US economy amazingly lifted a gear in early 2023, or is benefiting from a milder than usual winter. Either way, reports over the past week add to the risk of a “no landing” US scenario, which could hurt both bonds and equities if the Fed decides to ramp up policy tightening.
