Thursday's Markets Update (March 16, 2023)

16 Mar 2023 by rate3

On Thursday, the Census Bureau reported that building permits jumped 13.8 percent in February, marking the highest reading in five months and the largest increase since July 2020. This is compared to a rise of 0.1 percent in January and market expectations of 0.2 percent. Regionally, the highest increase was seen in the West (30.0 percent to 381 thousand), with the South (10.9 percent) and Midwest (9.6 percent) following suit. However, permits were down in the Northeast (-2.8 percent to 103 thousand).

On the other hand, the Philadelphia Fed Manufacturing index, which had been deeply in negative territory, increased by 1 point to -23.2 in March, compared to market expectations of -15.6. However, the Philadelphia Fed's report also showed a decline in employment (-10.3) among firms that responded to the survey. In addition, the firms reported overall increases in prices.

However, it appears that traders disregarded economic fundamentals, which show that FOMC has not yet finished its quest to demolish consumers' wealth. Instead, traders focused on government rhetoric insisting that the banking sector is holding strong. This sentiment was compounded by the announcement that First Republic Bank, the third bank with the highest percentage of uninsured deposits after SVB and Signature, is set to receive $30 billion from 11 of the largest banks.

Additionally, many traders are betting that the FOMC, faced with a banking crisis, will be reluctant to raise rates by more than 0.25 points, if at all, during its March 21-22 meeting. As a result, the NASDAQ rose by 2.9 percent (opening: 11,384, closing: 11,717), while BTC remained below 25,000 (opening: 24,720, closing: 24,953).