It’s been a slow start to the week in the markets as investors have an eye on what’s to come with earnings season getting into full flow and major economic releases on the agenda.
We’ve reached an interesting moment in which investors have been forced to retreat on post-SVB positioning on rate hikes, albeit not entirely, but they seem far from convinced that central banks will actually follow through and, if they do, that they will not reverse course.
Credit conditions have tightened
The reason for the apprehension is that early evidence suggests credit conditions have tightened in the aftermath of the mini-banking crisis but the extent to which it has happened, what the real economic consequences are, and what exactly it means for interest rates isn’t clear.
And this is occurring at a time when inflation appears very stubborn but is set to fall sharply due to favourable base effects but the pace of disinflation is ultimately what, along with credit conditions, will determine how central banks respond. I feel things may look very different in a couple of months’ time but for now, we have to patiently play the waiting game.
Earnings season is obviously giving us plenty of food for thought in the interim but the first day of the week isn’t typically the most thrilling and we’re seeing another example of that today. Stock markets are treading water and we may see that continue throughout the rest of the session.
For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/
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