Interest Rates and Inflation

Despite concerns of slowing economic growth, Q1/2023 earnings season began with the major US banks posting better than anticipated results. Several of the major technology and consumer discretionary names, including Microsoft and Alphabet, also reported better than expected results, leading their respective share prices to rise.

On the economic data front, US and European headline inflation data declined to 5.0% and 6.9% respectively. However, core inflation in both regions remained stubbornly high. The continued crises in US regional banks led the market to revise its expectation for interest rates lower with the Fed now forecast to deliver its final hike of 0.25% in May.

source: Goodbody