In today’s briefing:
- US Bank Deposits and the Real Economy: More Complex than Commonly Perceived
- AFC Vietnam Fund April 2023 Report
- The Final Fed Rate Hike?
- The Case For An S&P 500 Correction
US Bank Deposits and the Real Economy: More Complex than Commonly Perceived
- Lower deposit levels in the US banking system have historically been associated with bearish implications for the real economy.
- The dynamics driving deposit growth have, however, changed since the repeal of Regulation Q, thereby making the economic implications of lower deposits more uncertain.
- Deposit growth will be impinged by weaker loan growth, lower banking profitability and passive quantitative tightening that will have an incremental impact at a later date.
AFC Vietnam Fund April 2023 Report
- In April the stock market trended mostly sideways with little change in the benchmark index, while market liquidity improved significantly.
- The VN-index slightly decreased by -1.5%, while the AFC Vietnam Fund manged to increase by +2.3% to an NAV of USD 3,025, according to internal estimates.
- In the first month of the second quarter, around 60% of all listed companies released their first-quarter financial reports.
The Final Fed Rate Hike?
- The Fed appears poised to raise rates for the last time next week for the current rate hike cycle.
- We conducted a study of the behaviour of stocks and bonds after the final rate hike of the monetary cycle.
- If history is any guide, the S&P 500 is likely to exhibit subpar performance in the coming year, while 10-year Treasury yields decline and bond prices should see some gains.
The Case For An S&P 500 Correction
- The technical backdrop may be setting up for pullback in the S&P 500. Strong support can be found at the 3770–3800 zone should the market weaken
- The bear case consists of renewed doubts over banking system stability, narrow leadership and negative divergences from risk appetite indicators.
- The bull case consists of positive divergences in the regional banking index, a bullish recycle in NYSI and a relatively benign earnings season.
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