Market Update

Global equity markets ended the week on an upswing, driven by US CPI inflation data, hinting that the current monetary tightening phase might be winding down.
While the recent US job figures initially suggested a potential rise in US interest rates during the 3 May 2023 meeting, that possibility seems less likely now. This shift in perspective comes after the release of March's US inflation data, showing a rate of 5.0% – a notable decline from February's 6.0%.
Hints that the peak of US interest rates might be near also emanated from remarks by Austan Goolsbee, the Chicago Fed President. He emphasized the importance of assessing the economic repercussions of stringent credit conditions, alluding to the economic vulnerability exposed by the banking disruptions, a consequence of the swift rise in US interest rates over the previous year.
Adding to the narrative, the Bank of America's Consumer Checkpoint report indicated a 1.5% drop in household credit and debit card spending for March compared to February. This figure is a mere 0.1% above where it stood a year ago. Moreover, the US retail sales data released on 14 April 2023 reflected a more significant contraction than anticipated by analysts.
It's essential to note that consumer expenditure represents a little over two-thirds of the US GDP. Thus, these subdued figures, consistent with our earlier predictions, point towards an impending mild recession. Especially as non-discretionary spending, like on food, energy, and mortgages, continues to escalate.