Global Markets Update Monday, 13 February 2023

US stocks and bond yields slid after investors reassessed their projections for US interest rates following the far stronger-than-expected jobs growth in January.


The FTSE 100 eased 0.2% over the week.

The UK economy flatlined over the fourth quarter, with GDP falling 0.5% in December alone. The public sector strikes show no signs of abating.

The UK Treasury and Bank of England are designing a digital pound that could replace bank notes by the end of this decade.


The S&P 500 dropped 2.1% over the week, while the Nasdaq lost 4.0%.

Stronger-than-expected jobs data for January has caused investors to rethink forecasts for future interest rates. Investors now expect rates to peak slightly above 5% in July, with only one interest rate cut by year-end, compared to a peak of around 5% in May, with two interest rate cuts by the end of 2023, prior to the non-farm payroll data.

Federal Reserve chair Jay Powell has warned that the US central bank might have to raise interest rates more than investors expect because it will probably take a “significant period of time” to tame inflation given stronger labour market data.

The University of Michigan US consumer sentiment index jumped to a thirteen-month high of 66.4 in February from 64.9 in January.

Shares of Google parent Alphabet fell after a technology glitch in its new artificial intelligence software during a live demonstration.


The FTSEurofirst 300 slid 0.6% over the week.

German inflation slowed to a five-month low of 9.2% in January from a year earlier, but a delay in the data may means that the eurozone-wide figure of 8.5% for the month is revised upwards.

Eurozone retail sales declined 2.7% in December, the biggest monthly fall since April 2021.


The Nikkei 225 rose 0.6% over the week.

Emerging Markets

The MSCI EM Index declined 2.0% in USD terms over the week.

Turkey suffered a massive earthquake near its border with Syria on Monday. Trading on Turkey’s benchmark Bist 100 was subsequently suspended for five days after a steep fall in share prices.


The yield on the 10-year US Treasury bond rose 20 bps over the week to close at 3.72%. The yield on the two-year note rose to 4.52%, meaning the inversion between yields on two- and 10-year yields hit the deepest level since 1981

The yield on the 10-year German Bund closed the week up 17 bps at 2.36%.

The yield on the 10-year UK Gilt closed the week 34 bps higher at 3.39%.


The Japanese yen strengthened on news of that academic Kazuo Ueda would likely replace ultra-dovish Haruhiko Kuroda as the new governor of the Bank of Japan.


Oil prices advanced slightly following Russia’s announcement that it would cut its monthly oil output in response to a price cap imposed by western nations.