Well, that panic didn’t last too long. S&P 500 futures were open before every day this week and rallied again on Thursday, but that’s not what really stood out. The most striking fact about this week’s trading action is how quiet it was compared to two weeks ago. The CBOE Volatility Index, which started March 19 and rose to 30 by mid-month, is now back at 19. .VIX YTD mountain Wall Street’s fear gauge this year Activity in the S&P The Bank ETF (KBE), where volume normally averaged one to two million shares a day before the banking crisis, saw days with over 11 million shares two weeks ago. On Wednesday, only 2.7 million shares changed hands, almost back to pre-banking crisis levels. As bond yields began to slowly rise again this week, market breadth (the number of stocks that rose versus fell per day) improved on a daily basis this week. Hard-hit sectors like REITs, industrials and materials, all in the red this month, started to recover this week. If this sounds too good to be true for you, you’re not alone. That’s certainly good news as the banking panic subsides, but it means we’ll all be back to focusing on inflation, starting with Personal Consumption Spending (PCE) on Wednesday. Six, where annual core PCE is expected to remain in the 4.7% range. . Fed Chairman Jerome Powell, when meeting Republican congressional leaders this week, reminded them that the current forecast calls for at least one more rate hike at a quarter of a percentage point. . “Markets are pricing in the best of both worlds: a recession that causes inflation to drop rapidly and keeps interest rates low, but a recession that doesn’t exist,” said Ajay Rajadhyaksha of Barclays. corporate earnings did not fall sharply.” “We’re skeptical and think both (US) bonds and stocks look expensive.” Indeed: S&P is currently trading for about 18 times estimated 2023 earnings. That would be an expensive multiple even during economic expansion. In an economic contraction, it constitutes a bit of magical thinking.