It’s been six weeks since the collapse of Silicon Valley Bank. Since then, the markets have gone from panicking over the prospects of a systemic banking crisis, fear of an imminent recession and expectations for the Fed to cut rates immediately, to coming around to the Fed’s view of one more rate hike and no rate cuts till late 2023 / early 2024, buying into the story of immaculate disinflation (disinflation with limited negative impact to employment and growth) and a soft-landing.
The relative quiet from the SVB storm has opened the door for focus on other topics, such as earnings, the debt ceiling debate, and economic data that provides a murky picture of a slowing economy with persistent pockets of strength, driving continued vigilance from the Fed.
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