The Banking Turmoil Impact

What impact did the week have on the market?

• Another heavy week: The week was dominated by a key U.S. Federal Reserve meeting and continuing concerns about bank stability, leading to an overall rise in major U.S. stock indexes of 1% to 2%, as reported by CNBC. However, markets remained unsettled, with significant shifts between gains and losses.?

Meanwhile, U.S. government bond yields fell for the third consecutive week, amid volatility in fixed-income markets due to shifting interest-rate expectations. The yield of the 10-year Treasury bond slipped to 3.38% on Friday, down from a recent peak of 4.07% on March 2, while the 2-year note's yield was around 3.77%, down from 5.07% on March 8. These fluctuations in bond yields reflect ongoing uncertainty in the global economic landscape, and are likely to continue to impact investor sentiment and market performance in the weeks ahead.

• The Fed said its word: On Wednesday, the U.S. Federal Reserve increased its benchmark overnight interest rate by a quarter of a percentage point, bringing it to its highest level in 15 years at 4.75 to 5 percent. The decision comes amid continuing instability in segments of the banking sector, and the Fed's GDP growth forecast was also revised downward.?

As a result, each of the major U.S. indexes fell 1.6% for the day. The move by the Fed reflects its efforts to balance economic growth with the potential for inflation, and signals a tightening of monetary policy. The impact of this decision on the broader economy remains to be seen, but it is likely to have ripple effects across a range of sectors.

• Gold continues to roll: Gold prices surged to $2,000 per ounce on Monday, marking the highest price since August 2020. Despite some fluctuations, the precious metal remained near that level throughout the week, settling slightly below the threshold by Friday.?

This recent rally has seen gold prices rise by approximately 9% since hitting a low point on March 8th. The spike in gold prices reflects growing investor interest in safe-haven assets, as concerns persist over the ongoing economic impact of the COVID-19 pandemic. The rise in gold prices could also signal a potential shift in investor sentiment away from riskier assets, and towards more stable investments. As the global economy continues to navigate a volatile period, the price of gold is likely to remain a closely watched indicator of market sentiment.

What to expect for the markets next week?

• The week ahead: Important economic data coming out this week includes personal consumption and consumer sentiment. We'll receive the latest updates on home prices, with the Case-Shiller National Home Price Index and the FHFA House Price Index (HPI) for January.

On Friday, the Bureau of Economic Analysis (BEA) will release the Personal Consumption Expenditures (PCE) Price Index—the Fed’s preferred gauge of inflation—for February.

• Report Earnings: Micron Technology Inc. (MU), Lululemon Athletica (LULU), Walgreens Boots Alliance (WBA), McCormick & Company (MKC), and Jefferies Financial Group (JEF) report earnings