1Q 2023 Market and Economic Overview

March 2023 was described as one of the most turbulent months in recent times, marked by bank failures on both sides of the Atlantic. Silicon Valley Bank failed to raise new equity on 7 March after selling securities at a loss of USD 2bn, and was designated as failed by the FDIC on 9 March. Signature Bank was closed by New York regulators on 11 March. Credit Suisse accepted a rescue bid of USD 3bn from UBS on 19 March, after which the Swiss government announced that the bank's USD 17bn of AT1 bonds would be written down to zero.

On 12 March the US Federal Reserve announced a liquidity programme allowing banks to borrow against securities at par value for up to 12 months, and the Fed raised rates for the ninth consecutive time in March. The report said the Fed's balance sheet had grown by USD 300bn since the programme began. The 10-year US Treasury yield fell from 3.9% to 3.5% over the month, and the yield curve was highly inverted.

Equities rose over the quarter despite the banking stress. The MSCI World Equity Index gained 6.84%, with euro area equities up 13.74%, German equities 11.91%, Japanese equities 7.46%, US equities 7.03%, Chinese equities 4.63%, Swiss equities 3.51% and UK equities 2.42%, while Indian equities fell 3.04% and Brazilian equities 7.16%. Policy rates were 5.00% in the US, 3.50% in the euro area, 4.25% in the UK and 1.50% in Switzerland, with inflation at 6.00%, 6.90%, 10.40% and 3.40% respectively.

In currencies, the euro rose 1.28% against the US dollar to 1.08 and sterling rose 1.95% to 1.23, while the dollar fell 1.04% against the Swiss franc to 0.91 and rose 1.28% against the yen to 132.79. Gold rose 7.87% to USD 1,967.90 and WTI crude fell 6.18% to USD 75.57. The report also discussed the effect of rising interest rates on bond prices, the accounting treatment of bond holdings by banks and central banks, and risks in commercial real estate.

Important information: This snapshot summarises MWC Group's market commentary for the period shown and is provided for general information only. It is not investment, tax or legal advice, a personal recommendation, or an offer or solicitation to buy or sell any investment, and it does not take account of your personal circumstances. Views and figures reflect conditions at the date of publication and may since have changed. Past performance is not a reliable indicator of future results. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. Exchange-rate movements can affect returns. Market data comes from third-party sources believed to be reliable, but its accuracy cannot be guaranteed. Please seek personal advice before making any investment decision. Issued by Manentia Wealth Consulting Group Limited (C80087), licensed by the Malta Financial Services Authority.