The Weekly Wrap: April 10, 2023

Week in Review

The Dow Jones Industrial Average led stocks higher for last week, rising 1.9% to finish in positive territory for the year. The NASDAQ Composite is still the top-performing equity index year-to-date, up more than 15%. Treasury yields fell to new lows for the year, while the US Dollar Index dropped for the fourth straight week. Gold finished the week above 2000 for the first time in more than two years. Bitcoin was unchanged.

One Thing to Consider

Economic data showed considerable softness last week, beginning with manufacturing PMI survey results that were at levels seen only during recessions over the past twenty years. The following day, job openings declined to the lowest level in nearly two years. Despite that, Friday’s jobs report revealed that hiring remained strong in March, and the unemployment rate dipped back to 3.5%. The Federal Reserve will need to weigh weakening activity against the threat of sustained inflation at their May meeting. Next week’s CPI report will play heavily into their decision.

Monitoring Macroeconomics

GDP grew at a healthy pace in the final quarter of 2022, helped by a surge in inventories and strong net exports. Economists widely believe that a recession will hit the United States sometime in the latter half of this year, as the Federal Reserve’s battle with inflation heats up and financial conditions tighten. The odds of a ‘soft landing’ – a scenario where the Fed successfully contains prices without creating widespread economic hardship – declined after February data showed the US economy continues to run hot, and banking stresses emerged in March.

Measures of inflation remain well above the Federal Reserve’s 2% target, but CPI has decelerated for 7 straight months, and measures of core price changes have dropped below 5%. Unemployment, meanwhile, remains near 50 year lows, and job creation to start 2023 has been well above the level needed to keep pace with population growth.

What’s Ahead

Here are the key data releases to keep on eye on in the coming days.

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