Debt Ceiling Turmoil and Regional Bank Worries Keep Investors On Defensive

Barry Adams
12 May, 2023
New York City

Stocks traded near flatline as investors debated the health of regional banking and the wider economy and hoped for a decisive resolution to debt ceiling negotiations. 

Benchmark indexes traded sideways amid growing uncertainties about the debt ceiling revisions. 

The critical meeting between President Joe Biden and congressional leaders was postponed till next week as lawmakers struggled to find a common ground. 

Global financial markets are on the hook and stock and bond markets could face significant disruptions if lawmakers fail to lift the current debt ceiling of $31.4 trillion by the end of May. 

Markets are expected to turn volatile in the next two weeks after a faction of the Republican party is looking for significant government spending cuts in bargain for higher debt limits. 

 

U.S. Import and Export Prices Rebounded In April 

U.S. Import prices in April rose 0.4% form the previous month, the U.S. Bureau of Labor Statistics reported Friday. 

Import prices rose for the first time in four months and increased to the most since May 2022. Import prices of fuel increased 4.5% after 5.7% higher petroleum costs and 17.4% decline in natural gas prices. 

On a yearly basis, import prices declined 4.8% in April, matching the rate in March.     

Nonfuel import prices were unchanged in April, after decreasing 0.5% the previous month. Foods, feeds, and beverages prices increased 0.2% in April following a 0.9% decline in March.

U.S. export prices increased 0.2% in April, after declining 0.6% in the previous month. 

Higher prices for nonagricultural exports and agricultural exports in April each contributed to the overall increase. 

The price index for U.S. exports fell 5.9% from a year ago in April, the largest over-the-year drop since a 6.7% fall in May 2020.

 

U.S. Indexes & Yields 

The S&P 500 index increased 0.2% to 4,138.53 and the Nasdaq Composite increased to 0.08% 12,342.22. 

The yield on 2-year Treasury notes increased to 3.91%, 10-year Treasury notes edged up to 3.39% and 30-year Treasury bonds held at 3.73%. 

Crude oil fell $0.55 to $71.41 a barrel and natural gas prices rose 1 cent to $2.20 a thermal unit.