Week of March 27, 2023

The Federal Reserve meeting comments and continued concerns over the regional banking crisis caused continued volatility in the markets last week.  However, all major indices and the bond market were able to deliver positive returns.  The S&P 500 was up 1.41% for the week, while the Dow Jones Industrial Average and Nasdaq were down 1.18% and 1.66% respectively.  The bond market measured by the Bloomberg Capital Aggregate was up 0.52%. 

As investors were expecting, in an effort to continue the fight against inflation, the Federal Reserve raised interest rates by 0.25% after the Tuesday and Wednesday meeting.  The Federal funds rate now stands in the range of 4.75% - 5% with this most recent rate hike.  In their comments, Fed officials are keeping their peak interest rates for this year in the range of 5% - 5.25% as inflation remains elevated.  They also said job gains have picked up in recent months and forecast the unemployment rate to end the year at 4.5%.

After concerns about the banking crisis, UBS agreed to buy Credit Suisse for $3.2 billion dollars.  Swiss regulators and central banks offered financial support for the acquisition to help limit risks.  UBS chair Colm Kelleher commented on the significance, saying, “It’s a historic day, and a day we hoped would not come.

This week, futures were positive Monday morning as news on that First Citizens bank will purchase $72 billion of Silicon Valley bank assets at a discounted price of $16.5 billion.