Daily Market Color January 23, 2023Yields and Stocks Continue to Grind Higher as Fed Begins Quiet Period Jordan Wank Analyst Risk-on sentiment continues to start the week. Bonds sold off and equities rallied during today’s quiet session, with Treasury yields rising across a flattening curve while the S&P and NASDAQ rose 1.19% and 2.01%, respectively. The NASDAQ gain came despite continued news of layoffs, as Spotify became the latest firm to announce mass job cuts. Looking ahead, tomorrow’s manufacturing data will be closely watched as investors hope for further evidence of economic slowdown, though a 25bp hike at the upcoming FOMC meeting is effectively locked in. S&P survey shows U.S. bankers expect credit deterioration in 2023. A majority of respondents to an S&P survey expect lower credit quality this year across major lending categories, led by auto and commercial real estate. This echoes the sentiment of many analysts in recent months, with both S&P and Fitch publishing outlooks late last year expecting credit normalization. Respondents also predicted that net charge-offs as a percent of total loans will increase between 5-30bps, with a smaller group expecting an increase of more than 30bps. The survey follows a fairly benign 2022 that saw only 1.23% of loans and leases at U.S. banks in past-due or nonaccrual status, down from 1.38% in 2021, and NPLs as a % of loans ending at 0.69% in 2022, down from 0.75% in 2021. Day ahead. U.S. manufacturing data will kick off the day at 9:45 AM ET, where forecasts are calling for a 1.4 point increase in composite PMI. Richmond manufacturing will follow at 10 AM, while crude oil stock changes will be released at 4:30 PM.