March 13, 2023 Headlines

A significant flight to safety trade evolved overnight in the wake of two bank failures (Silicon Valley Bank and Signature Bank). The 2-year Treasury yield is down 45 basis points (bps) in early trading to 4.13% as of 8:57 am ET, and the 10-year yield is down 25 bps to 3.45%. Federal regulators announced measures late yesterday to stem any contagion risk in the banking system as a whole. Depositors at both failed banks will receive all their money (insured and uninsured), and the Fed has established a Bank Term Funding Program to provide loans up to 1 year against depository securities at a par valuation to provide liquidity in the event of deposit outflows. Despite the measures, markets are expectedly choppy to start the day. Agency MBS spreads are wider on expected sales by banks, including the remaining held-to-maturity position of Silicon Valley Bank. Spreads of regional bank debt are 20-50 bps wider versus Treasuries in the last two trading sessions, and the very largest banks (GSIBs) are experiencing less widening (approximately 15 bps in a more uniform move). The government will likely respond with more measures to restore confidence in the banking system if needed, and we will have additional commentary available this morning. In short, SVB was a very unique model with an undiversified funding base, and despite the effects of the Fed’s extraordinary interest rate policy swing of the last three years, the system, as a whole, remains very well capitalized.

Jason Haley
Chief Investment Officer

3/14/23NFIB Small Business Optimism90.390.3
3/14/23Real Avg Hourly Earning YoY-1.80%-1.90%
3/14/23Real Avg Weekly Earnings YoY-1.50%-1.90%
3/14/23CPI MoM0.40%0.50%
3/14/23CPI Ex Food and Energy MoM0.40%0.40%
3/14/23CPI YoY6.00%6.40%
3/14/23CPI Ex Food and Energy YoY5.50%5.60%
3/14/23CPI Index NSA300.86299.17
3/14/23CPI Core Index SA303.736302.702
3/15/23MBA Mortgage Applications7.40%
3/15/23PPI Final Demand MoM0.30%0.70%
3/15/23PPI Ex Food and Energy MoM0.40%0.50%
3/15/23PPI Ex Food, Energy, Trade MoM0.30%0.60%
3/15/23PPI Final Demand YoY5.40%6.00%
3/15/23PPI Ex Food and Energy YoY5.20%5.40%
3/15/23PPI Ex Food, Energy, Trade YoY4.90%4.50%
3/15/23Empire Manufacturing-8-5.8
3/15/23Retail Sales Advance MoM-0.30%3.00%
3/15/23Retail Sales Ex Auto MoM-0.10%2.30%
3/15/23Retail Sales Ex Auto and Gas-0.20%2.60%
3/15/23Retail Sales Control Group-0.30%1.70%
3/15/23Business Inventories0.00%0.30%
3/15/23NAHB Housing Market Index4142
3/15/23Net Long-term TIC Flows$152.8b
3/15/23Total Net TIC Flows$28.6b
3/16/23Initial Jobless Claims205k211k
3/16/23Import Price Index MoM-0.20%-0.20%
3/16/23Import Price Index ex Petroleum MoM0.00%0.20%
3/16/23Import Price Index YoY-1.10%0.80%
3/16/23Export Price Index MoM-0.30%0.80%
3/16/23Continuing Claims1698k1718k
3/16/23Export Price Index YoY2.30%
3/16/23Housing Starts1310k1309k
3/16/23Building Permits1345k1339k
3/16/23Housing Starts MoM0.10%-4.50%
3/16/23Building Permits MoM0.50%0.10%
3/16/23Philadelphia Fed Business Outlook-15-24.3
3/16/23New York Fed Services Business Activity-12.8
3/17/23Industrial Production MoM0.20%0.00%
3/17/23Capacity Utilization78.40%78.30%
3/17/23Manufacturing (SIC) Production-0.30%1.00%
3/17/23Leading Index-0.30%-0.30%
3/17/23U. of Mich. Sentiment6767
3/17/23U. of Mich. Current Conditions70.7
3/17/23U. of Mich. Expectations64.864.7
3/17/23U. of Mich. 1 Yr Inflation4.00%4.10%
3/17/23U. of Mich. 5-10 Yr Inflation2.90%2.90%

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