Major stock indices sold off as strong jobs data increased the likelihood of larger FED rate hikes.  The Dow Jones Industrials saw its worst week since last June.  Adding to the selloff was the failure of Silicon Valley Bank, the biggest bank failure since 2008.  The bank catered to startup technology firms.  On Wednesday the bank reported that it needed to raise capital.  Some venture capital firms recommended that startup companies withdraw their funds, as corporations only get $250,000 of FDIC insurance.  This caused a run on the bank, leading to an FDIC takeover on Friday.  From what we can tell, this is not an indication of systemic banking risk but rather due to Silicon Valley Bank’s unique business model.

Treasury bond yields fell with the 30-year bond ending at 3.710% and the 10-Year note at 3.705%.  Freddie Mac reported that 30-year mortgage rates rose to 6.73%.  Crude oil fell to $76.68 a barrel and natural gas fell to $2.568 per MMBTUs.  The U.S. dollar index fell to 104.64 and gold rose to $1872.70 an ounce.

1. China reported:
   1. Exports for the first two months of 2023 were 6.8% below the same period last year.
   2. Imports fell 10.2% during the same period.
   3. The consumer-price index increased 1.0% in February from a year ago, down from 2.1% in January.
   4. Producer prices fell 1.4% in February from a year ago, down from -0.8% in January.
2. Japan’s central bank met and decided to leave interest rates unchanged despite inflation running twice its 2% goal.
3. The Bank of Canada met and chose to keep the benchmark interest rate at 4.5%, its first pause after 9 rate hikes.  The bank left the door open to future hikes if needed.
4. The Commerce Department reported:
   1. New orders for manufactured goods fell 1.6% in January.

1. The trade deficit grew 1.6% in January.
   1. Exports grew 3.4%.
   2. Imports grew 3.0%.

1. The Labor Department reported:
   1. Job openings fell from an upwardly revised 11.2MM in December to 10.8MM in January.
      1. The ratio of openings to unemployed workers fell from 2.0 to 1.9.
      2. 2.5% of workers quit their jobs in January.
      3. 1.1% of workers were laid off.
   2. Non-farm employment grew 311,000 jobs in February. 
      1. Leisure and hospitality, retail and healthcare added jobs.
      2. Transportation and warehousing, finance and manufacturing cut jobs.
   3. The unemployment rate increased to 3.6% from 3.4%.
   4. Average hourly earnings have increased 4.6% from a year ago. 
   5. Seasonally adjusted first-time claims for unemployment were 211,000 up from 190,000 in the prior week.

1. 1. 1. The 4-week moving average of claims, designed to smooth out volatility, was 197,000 up from 193,000 in the prior week.
      2. For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf .
2. The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf .  Also, the EIA reported in the prior week:
   1. Field production of crude oil fell from 12.3MM BPD to 12.2MM BPD.
   2. Natural gas storage fell 84BN cubic feet and is above the 5-year average at this time of year.
3. Baker Hughes reported the number of active oil rigs fell 2 to 590.  The number of active natural gas rigs fell 1 to 153.

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Thank you,

Loren C. Rex, CFP^®, MA                                                                     Erik A Smith, AIF®

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These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.