Market Data

The first half of 2023 was marked by continued economic uncertainty, having endured four U.S. bank failures, fears over debt ceiling negotiations, rising geopolitical uncertainty, and lingering concerns over inflation and rising interest rates. Despite the likely challenges still ahead, there are signs of a resilient economy: the S&P 500 had its 4th-best first half in the last 25 years, the labor market remains strong, consumers continue spending on big-ticket services and commodities, and corporate debt levels appear stable (J.P. Morgan). While the Fed decided against an additional rate hike at the recent June meeting, further tightening is possible in the months ahead, though at a slower pace than what’s been experienced over the last 16 months. Recession fears persist, but there remains hope for a soft landing, with marginal economic growth expected in the quarters ahead.

The first quarter of 2023 has seen a continuation of the economic uncertainty witnessed at year end 2022. The recent failures of Silicon Valley Bank and Signature Bank, and the forced merger of Credit Suisse have further rattled financial markets, and are likely to curb credit extension, impair growth, and potentially increase recession risk (Northern Trust). While U.S. inflation eased to 5% in March, its lowest level in two years, it remains well above the Fed’s 2% target, and another quarter point hike is on the table for May’s meeting. Although Chairman Powell confirmed risks are higher today, he believes “the path to a soft landing” is still possible, and that a recession would be “mild.” Jamie Dimon, J.P.Morgan CEO, echoed some optimism, highlighting the resiliency of consumer spending, the current strength of the job market, and low unemployment. “Looking ahead,” he says, “the positives are huge.”