Highlights: All US major indexes finished the week with losses on Friday and the Dow posted its worst week since June. The stock market continued to be held down by the financial sector as the collapse of SVB was spreading fear among bank stocks. US Treasury yields also had the biggest fall since 2008.

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US added 311,000 jobs in February, but unemployment rate rose to 3.6% (3 min read)
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The US economy added 311,000 jobs in February, exceeding the expected 225,000, according to the Labor Department. However, the unemployment rate unexpectedly rose to 3.6% from January's 3.4%, and wages grew by just 0.2% month-to-month, short of projections. Despite the strong job growth, the Fed may only increase interest rates by 0.25% at its policy meeting this month due to lower-than-expected wage growth. The participation rate also increased to 62.5%, indicating that more Americans are looking for jobs.

Bond Yields Plunge Most Since 2008 as Traders Rethink Fed Path (3 min read)
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The US government bond yields saw their biggest fall since 2008 over the fears of financial contagion following the collapse of Silicon Valley Bank. Traders are concerned that bank turmoil could reduce the Fed’s ability to keep rising interest rates. Along with the US wage growth slowing in February, traders have shifted their expectations on the size of rate hike from the Fed this month to 0.25% instead of 0.5%. The market now also sees interest rate cuts starting by the end of this year.

Silicon Valley Bank collapses after failing to raise capital (4 min read)

Silicon Valley Bank (SVB) has collapsed after a 48-hour capital crisis and was the largest US bank failure since the financial crisis of 2008, leading to concerns of a wider banking industry meltdown. Regulators closed the bank and put the US Federal Deposit Insurance Corporation (FDIC) in control. The FDIC will liquidate the bank’s assets to pay back depositors and creditors. While relatively unknown outside of Silicon Valley, SVB had $209 billion in total assets and was among the top 20 American commercial banks, catering primarily to higher-risk tech startups.

US banks sitting on unrealized losses of $620 billion (5 min read)

The collapse of Silicon Valley Bank (SVB) has caused concern among investors due to the widening gap between the value banks place on the bonds they hold and what they're actually worth on the market. The decline in value of bonds held by banks is in part due to rising interest rates. Newly issued bonds are paying higher rates, making older bonds with lower rates less valuable. US banks were sitting on $620 billion in unrealized losses at the end of 2022 due to this issue, which weakens a bank's future ability to meet unexpected liquidity needs.

GICS Changes to Affect Select Sector SPDRs, Other ETFs (2 min read)
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The Global Industry Classification Standard (GICS) used by index providers will undergo significant changes effective March 17, which will affect the 11 sectors and 14 stocks in the S&P 500 index. The data processing & outsourced service sub-industry will move to the industrials sector, and eight of its stocks will move to the newly created transaction and payment processing services sub-industry in the financial sector. The changes will impact the holdings in a number of sector-focused ETFs. More details on the changes are available in the article. 

SPIVA U.S. Scorecard 2022: Fewer Excuses (3 min read)
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The SPIVA US Year-End 2022 Scorecard shows that just over half (51%) of actively managed US large-cap equity funds underperformed the S&P 500 in 2022, marking the slimmest margin of underperformance in over a decade. This was due in part to a reversal in the strong performance of the largest stocks in the index, which active managers often underweight. However, the long-term statistics remain bleak, with 91% and 95% of all actively managed large-cap US equity funds underperforming over 10 years and 20 years, respectively.

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Thomas

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