Weekly Macro Matters
Macro Matters – Weekly review, w/c February 12
The S&P 500 broke the 5,000 mark for the first time as markets rallied, bolstered by Big Tech gains and easing inflation concerns. Meanwhile, Jerome Powell reiterated caution over early rate cuts, regional banks grappled with commercial real estate risks, and the US saw record demand for its $42 billion 10-year note auction.
Macro Matters – Weekly Review, W/C February 12
Macroeconomic / Geopolitical Developments
• Stocks advance again, S&P 500 breaks 5,000
• Jerome Powell pushes back on early rate cuts in 60 Minutes interview
• US regional banks struggle with commercial real estate worries
• Record $42 billion 10-year note auction goes well
Stocks Advance Again, S&P 500 Breaks 5,000
The S&P 500 crossed the 5,000 mark for the first time, with Big Tech stocks such as Nvidia, Microsoft, and Amazon driving the rally. The Nasdaq Composite surged close to its all-time high, while the MSCI World Index reached a record level. Optimism around easing inflation supported market sentiment, although analysts warn of potential overvaluation risks.
Jerome Powell Pushes Back on Early Rate Cuts in 60 Minutes Interview
Federal Reserve Chair Jerome Powell, in an interview with CBS’s 60 Minutes, indicated that March rate cuts are unlikely as the Fed awaits more data to confirm inflation’s sustainable decline toward its 2% target. Despite inflation easing to 2.6%, Powell emphasized the importance of caution given persistent price pressures and geopolitical risks.
US Regional Banks Struggle with Commercial Real Estate Worries
A report by the National Bureau of Economic Research highlighted growing solvency concerns among US regional banks due to declining commercial real estate values. Approximately 14% of commercial property loans are in negative equity, with office spaces hit hardest due to remote work trends. Delinquency rates are rising, sparking fears of wider instability in the banking sector.
Record $42 Billion 10-Year Note Auction Goes Well
The US Treasury’s largest-ever 10-year note auction saw robust demand, with a yield of 4.093%—slightly lower than anticipated. The strong results signaled investor confidence in US government debt, supported by historically attractive yields and solid international demand.
What’s Ahead
Other Events:
• Chinese New Year may result in quieter Asian trading sessions this week.
Central Bank Watch:
• A quiet week for central banks, but Fed speakers remain in focus.
Macro Data Watch:
• Monday, February 12: Nothing of note
• Tuesday, February 13: UK Employment; EU & German ZEW Surveys; US CPI
• Wednesday, February 14: UK CPI & Inflation Report; EU GDP, Employment, & Industrial Production
• Thursday, February 15: Japan GDP; Australian Employment; UK GDP & Industrial Data; US Retail Sales
• Friday, February 16: UK Retail Sales; US PPI; Michigan Consumer Sentiment
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