John Hancock: Weekly Market Recap Week Ended March 17th

Financial stressors

The week’s market volatility was driven primarily by the fallout from two U.S. bank failures and stresses at a midsize lender that secured a $30 billion deposit pledge on Thursday from a consortium of 11 large banks. In addition, a troubled European bank received emergency assistance from Switzerland’s central bank.

Bond price rally

Prices of U.S. government debt surged for the second week in a row, sending yields sharply lower, with the steepest decline coming at the short end of the yield curve. After ending the previous week at 4.59%, the yield of the 2-year U.S. Treasury note fell to around 3.82% on Friday. As recently as March 8, it had been as high as 5.07%.

Inflation moderation

U.S. inflation fell for the eighth consecutive month, slipping to the lowest level since September 2021. The government’s Consumer Price Index recorded a 6.0% annual rate in February, down from 6.4% the previous month and in line with most economists’ expectations.

Fed ahead

Current risks involving segments of the banking system have injected fresh uncertainty into the next meeting of the U.S. Federal Reserve, which is scheduled to announce its next move on interest rates on Wednesday. Earlier expectations for another rate hike of either a quarter percentage point or a half point have been thrown into doubt, with some observers suggesting the Fed may keep rates unchanged.

Source: https://wmr.jhinvestments.com/