Monthly Outlook - June 2023

Summary of the month

Despite previous difficulties, the major technology groups have had an outstanding rise in 2023, driven by artificial intelligence and outperforming other market indices.

Stock indexes closed higher, despite increased volatility due to debt ceiling negotiations, which dragged one close to the June deadline. If negotiations were to extend further, the U.S. government would have run out of money.

Compromises were eventually reached, where both sides gave in and took, but allowed the market some breathing room to continue trading, albeit showing the fragility of U.S. debt markets and an apparent overvaluation of U.S. Treasuries relative to risk.

The 1Q earnings season basically ended and showed some surprising positive results from banks with JPM, Citi and Wells Fargo delivering above expectations. All in all, Q1 results are beating expectations despite negative EPS growth of -2.21TP3Q, according to Factset as of May 25, 2023.

Macro Corner

The debt ceiling

This month's story was about the struggle to resolve the debt ceiling before the U.S. government ran out of money. Both sides of the aisle reached a compromise at the end of the month, but not before Fitch and DBRS Morningstar reviewed the nation's AAA rating for possible downgrades, citing policy risk, failure to address medium-term fiscal problems and rising deficits leading to a growing debt burden.