Today is Tuesday, October 04, 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 of Insight Weekly, we take a close look at U.S. equities. The S&P 500 fell 17% during the 12 months ending Sept. 23 as the Federal Reserve raised benchmark interest rates to combat soaring inflation and as recession fears grew. Investors have fled to higher-yielding, safer alternatives, pouring hundreds of billions of dollars into U.S. government debt securities. The yields on the benchmark 10-year and 2-year Treasury notes have climbed to their highest levels in over a decade.
The sharp worsening in financial conditions points to a further weakening in spending that will cause the U.S. economy to slide into recession in coming quarters. S&P Global's IHS Markit expects the recession to be mild by historical standards, with the unemployment rate rising by several percentage points.
U.S. corporate cash ratios are falling as pressures from rising interest rates, inflation and a slowing economy eat into cash reserves. The median cash ratio for investment-grade companies declined to 18.8% in the second quarter, down from 19.5% in 2019's fourth quarter just before the pandemic hit. The median non-investment grade ratio remained above the pre-pandemic level at 30.2% but was down from 34.2% in the first quarter.
- In Focus: U.S. Equities
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S&P 500 tumbles as interest rates, inflation rise
Worries over the pace of the U.S. Federal Reserve's rate hikes weighed on stocks, though the energy sector continues to outperform others.
—Read the full article from S&P Global Market Intelligence
Investors flee stocks for better yield as Fed hikes kill 'TINA'
The Federal Reserve has raised its benchmark rate by 300 basis points since March, pushing up bond yields and crushing equities.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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US bank M&A deal terminations pick up in 2022
The uptick in broken deals during the year stems from unpredictable market pricing and closer regulatory scrutiny, observers said.
—Read the full article from S&P Global Market Intelligence
More credit unions opt into streamlined leverage ratio reporting framework
The number increased to 406 in the second quarter from 385 in the first quarter, while eligible credit unions only grew to 713 from 709, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
Commerzbank, UniCredit, HSBC lead European banks forecast to hike 2023 dividends
Though Europe's well-capitalized banks are heading into a worsening economic climate, dividends are set to rise in coming years, according to S&P Global Market Intelligence's Dividend Forecasting unit.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Credit and Markets
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US Weekly Economic Commentary: Worsening financial conditions likely to tip US into recession
The sharp worsening in financial conditions points to a further weakening in spending that will cause the US economy to slide into recession in coming quarters, according to S&P Global's IHS Markit.
—Read the full article from S&P Global Market Intelligence
US corporate cash ratios fall below pre-pandemic levels
The liquidity buffers built up by corporate America during COVID-19 have been whittled away with cash ratios for some sectors now lower than they were before the pandemic.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy and Utilities
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US Midterms 2022: SEC climate risk rule on GOP chopping block
With a U.S. House majority, Republicans say they would likely try to pass a government funding bill blocking the Securities and Exchange Commission's hotly debated climate risk disclosure rule.
—Read the full article from S&P Global Market Intelligence
China's increasingly cheap wind turbines could open new markets
Chinese wind turbines today cost less than half the global average, spawning renewed chatter about possible expansion by Chinese suppliers into international markets.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Technology, Media and Telecommunications
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Media, telecom Q2 early-stage funding drops 43.2% YOY
The aggregate transaction value of early-stage funding deals in the sector also declined sequentially in the second quarter to $20.8 million from $30.5 million, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
US TV stations set for record midterm political ad spending – S&P podcast
Competitive races and hot-button topics are spurring a surplus of ads as Election Day nears. TV station groups are expected to earn the lion's share of ad spending in what should be a record midterm political cycle.
—Read the full article from S&P Global Market Intelligence
Sinclair's RSNs face bankruptcy, sale rumors amid wide streaming launch
Diamond Sports Group, the Sinclair subsidiary that operates its regional sports networks business, may face bankruptcy proceedings or could look at selling the networks to sports leagues.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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Critical minerals: Illuminating the path to an electric future
The growing global commitment to the energy transition — the transformation of the economy to Net-Zero Emissions by 2050 — is intensifying demand for critical minerals like lithium and exposing shortages of mining and processing capacity.
—Read the full article from S&P Global Market Intelligence
Miners aim to shed stodgy image, attract tech workers
New skill sets will be needed in the metals and mining industry as technology proliferates, but the sector must step up if it wants to attract those workers, according to attendees at a recent conference.
—Read the full article from S&P Global Market Intelligence
Gas stays in Fortescue's energy mix as net-zero strategy's 'plan B'
Fortescue Metals Group executives said gas will remain in the iron ore producer's energy plans for the foreseeable future, which speaks to the ongoing need for gas in the mining sector through 2050, experts say.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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Deal Profile: New Jersey-based Provident Financial Services to acquire Lakeland Bancorp
Deal Profile: Louisiana-based Homeland Bancshares, Beauregard Bancshares seek merger
M&A Replay: Glencore's deal with Newmont tops metals, mining M&A for week ended Sept. 23
Howden taking on 'Big 3' reinsurance brokers with TigerRisk buy
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The Big Number
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IHS Markit is now part of S&P Global.
Written and compiled by Alex Virtucio