Market Wrap – More cautious tone

The US trading session saw a much more cautious tone for stocks as they moved into the red shifted alongside the risk trades and so also have yields.

Today there is also a triple witching going on, where options and indices expire. Add to that, the volatility from the financial anxiety helped to create strong two ways.

First public shares are moving lower as is the regional bank index. FRC shares are currently down by nearly $8.00 or -23.00%. The KRE regional bank index was down -5.00%.

Also the data from the US was more negative than many traders were expecting. I think aside from the market stress this also needs to be widely acknowledged.

The University of Michigan consumer sentiment for the US dropped for the first time in four months to 63.4 in March of 2023 from 67 in February, which was the highest reading in nearly a year, and well below forecasts of 67, a preliminary estimate showed.

Overall, all components worsened relatively evenly, mainly due to persistently high prices, creating downward momentum for sentiment leading into the financial turmoil.

Still, this decrease was already fully realized prior to the failure of Silicon Valley Bank. Both current conditions (66.4 vs 70.7) and expectations (61.5 vs 64.7) worsened. At the same time, inflation expectations slowed for both the year-ahead (3.8%, the lowest since April of 2021, vs 4.1%) and the five-year outlook (2.8% vs 2.9%).

Industrial production in the United States was unchanged in February 2023, missing market expectations of a 0.2 percent increase after rising by 0.3 percent in January.

Manufacturing output edged up 0.1 percent, compared with forecasts of a 0.1 percent decrease. The indexes for durable manufacturing and nondurable manufacturing moved up 0.1 percent and 0.2 percent, respectively, while the index for other manufacturing (publishing and logging) fell 1.5 percent.

Meanwhile, mining output fell 0.6 percent while the output of utilities rose 0.5 percent. Capacity utilization was unchanged in February at 78.0 percent, a rate that is 1.6 percentage points below its long-run average.