Today is Tuesday, June 14, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition, we examine the prospects of an economic downturn in the U.S. The Federal Reserve is aiming for a "soft landing" where demand is reduced by tightening monetary policy just enough to cause a decline in inflation without sparking outright recession. The persistence of inflation will be decisive in determining whether household finances are healthy enough to cushion the impact. For now, economists expect consumers to weather a 40-year-high inflation rate and prevent an economy that shrank by 1.4% in the first quarter from falling into a recession. The banking industry is expected to be protected from a deep recession that would spark notable loan losses, thanks to strong institutional risk management and a tight labor market.
U.S. fixed mortgage rates are surging as the Federal Reserve raises interest rates as housing demand outpaces supply. Banks are fearful of how rising rates will impact mortgage banking activity. Some lenders are looking to trim expenses, namely through headcount reductions, to offset the decline in mortgage activity.
Publicly traded companies have been slow to adopt net-zero emissions goals. However, pressure from investors, regulators and other stakeholders to carefully document and disclose emissions up and down the supply chain is drawing more companies into the broader discussion about greenhouse gas emissions. With this push toward a more granular disclosure of corporate ambition and progress on climate issues, more companies will soon need to reduce their emissions.
- In Focus: US Economy
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As inflation soars, consumers brace for hard landing
The U.S. economy shrank in the first quarter, and the Federal Reserve is attempting to tighten demand to curb inflation. But whether a recession can be avoided might rest on the health of household finances.
—Read the full article from S&P Global Market Intelligence
US Fed aims for soft landing as economists see recession odds growing
The Fed is trying to chill inflation with higher rates, but another recession could be difficult to avoid.
—Read the full article from S&P Global Market Intelligence
Risk management, low unemployment insulate banks in case of recession
The banking industry is well prepared to defend itself in the event of a recession and the current environment has more in common with the dot-com bubble than the 2008 financial crisis.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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US banks fear slowdown in mortgage activity as rates skyrocket
As of May 27, the average rate for a 30-year fixed mortgage stood at 5.12%, creeping closer to 6% — a level some bankers said will heavily weigh on mortgage banking activity.
—Read the full article from S&P Global Market Intelligence
US banks increasingly look to noninterest income to bolster revenue
Banks looking to diversify their revenue streams have grown noninterest income in areas such as wealth management, investment banking, financial technology and cryptocurrency, with some turning to M&A to achieve that growth.
—Read the full article from S&P Global Market Intelligence
Indian banks' profits set to grow more as rates rise, nonperforming loans fall
Indian banks are likely to benefit from rising interest rates, stable asset quality and higher credit growth after a solid fiscal fourth quarter.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Real Estate
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US housing market: House prices surge over 20% YOY in March
The 20-City Composite index posted 21.2% year-over-year growth in March, while the 10-City Composite index increased 19.5% during the same period.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: ESG
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As regulators step in, push for climate disclosure intensifies
Investors, regulators and corporate peers are ratcheting up pressure on companies to establish net-zero emissions goals and provide detailed information on how they will meet those targets.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Technology, Media and Telecommunications
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Game-console makers look to diversify as component shortages linger
As supply chain issues weigh on the production of Microsoft, Sony and Nintendo game consoles, the companies are increasingly expanding to new platforms and offerings.
—Read the full article from S&P Global Market Intelligence
Infrastructure deals to keep European telecom M&A buoyant
Some of the largest European telecom companies are seeking strategic alternatives for their noncore infrastructure assets as they look to reduce high debt loads and free up cash to fund 5G network developments.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Private Equity
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Private equity-backed SPAC IPOs plunge in Q1
Only three special purpose acquisition companies backed by U.S. private equity firms went public in the first quarter, compared to 42 in the same period in 2021.
—Read the full article from S&P Global Market Intelligence
Global private equity deal value sinks to 12-month low in May
Tallies for global private equity and venture capital entries were lower in volume and value, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy and Utilities
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Renewable capacity overshadows other US fuel additions in April
New generating capacity in the U.S. was led by wind, solar and energy storage in April. Wind and solar accounted for almost 70% of total additions.
—Read the full article from S&P Global Market Intelligence
US energy storage developers plan 10 GW of additions in 2022, 38 GW through 2024
A strong start to the year pushed total operating nonhydroelectric power storage capacity in the U.S. to nearly 6,800 MW, mostly in the form of one- to four-hour lithium-ion battery systems, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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Flow of Russian metal into US rises in Q1'22 due to scant options
Trade data suggests Russia's invasion of Ukraine did not have a significant year-over-year impact on first-quarter U.S. imports of Russian metals. Imports of Russian minerals including crude oil and cement declined.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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Completed or not, Twitter deal would make records
Deal Tracker: Infotech megadeals support May M&A values amid lower volume
Asia-Pacific financial institutions M&A interest tracker
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Written and compiled by Louis Bacani