Business Frame Weekly – IRS Offers Tax Filing Extensions to Hawaii Wildfire Victims / Global stocks extend comeback,US yields hit new peaks

This IRS relief is available to all residents and businesses in any area designated by the Federal Emergency Management Agency (FEMA).

S&P Global on Monday cut credit ratings and revised its outlook for multiple U.S. banks, following a similar move by Moody’s, warning that funding risks and weaker profitability will likely test the sector’s credit strength.

Global stocks extended their comeback rally on Tuesday, while benchmark Treasury yields scaled 16-year highs on concerns that interest rates could stay higher for longer and the safe-haven dollar pulled back from recent 10-week highs.

In this newsletter:

• IRS Offers Tax Filing Extensions to Hawaii Wildfire Victims
• S&P downgrades multiple U.S. banks citing ‘tough’ operating conditions
• Global stocks extend comeback,US yields hit new peaks
• Zoom earnings top estimates, but Wall Street analysts say questions remain
• Mortgage rates hit their highest point since 2000

August 22, 2023

IRS Offers Tax Filing Extensions to Hawaii Wildfire Victims

This IRS relief is available to all residents and businesses in any area designated by the Federal Emergency Management Agency (FEMA). The Internal Revenue Service will allow Hawaii taxpayers in Maui and Hawaii counties extra time – until February 15, 2024 – to file various federal individual and business tax returns and make tax payments that would have been normally been due before then. This IRS relief is available to all residents and businesses in any area designated by the Federal Emergency Management Agency (FEMA). The current list of eligible localities is always available on the disaster relief page on IRS.gov.

S&P downgrades multiple U.S. banks citing ‘tough’ operating conditions

S&P Global on Monday cut credit ratings and revised its outlook for multiple U.S. banks, following a similar move by Moody’s, warning that funding risks and weaker profitability will likely test the sector’s credit strength. S&P downgraded the ratings of Associated Banc-Corp and Valley National Bancorp on funding risks and a higher reliance on brokered deposits. It also downgraded UMB Financial Corp, Comerica Bank and Keycorp, citing large deposit outflows and prevailing higher interest rates. A sharp rise in interest rates is weighing on many U.S. banks’ funding and liquidity, S&P said in a summarized note, adding that deposits held by Federal Deposit Insurance Corp-insured banks will continue to decline as long as the Federal Reserve is “quantitatively tightening.”

Global stocks extend comeback,US yields hit new peaks

Global stocks extended their comeback rally on Tuesday, while benchmark Treasury yields scaled 16-year highs on concerns that interest rates could stay higher for longer and the safe-haven dollar pulled back from recent 10-week highs. The MSCI All Country stock index climbed 0.4% in a second straight session of gains - pulling further away from Friday's 2-1/2 month trough. Pan-European stocks gained 0.7%, while U.S. futures pointed to small gains for Wall Street later on . But it was U.S. Treasuries that hogged the limelight once again, with benchmark 10-year yields climbing to 4.366% - their highest level since 2007 and up almost 40 bps month-to-date.

Zoom earnings top estimates, but Wall Street analysts say questions remain

Shares of Zoom (ZM) rose 3.5% in pre-market trading on Tuesday following a thorough thumping of Wall Street analyst profit estimates. The company's ticker page was the second most visited on Yahoo Finance through early morning. The videoconferencing company came into this earnings cycle looking to capitalize on artificial intelligence hype among investors. It managed to feed the AI beast, but analysts were quick to call out a more mixed quarter than first thought and tepid guidance. "Zoom's Q2 results initially appeared quite solid, with a healthy top/bottom line beat with revenue upside coming from the Enterprise segment with ZM Phone strength. That said, the upside was partially one-time driven with PSO revenue pull-forward, a softer Q3 billings and weaker 2H revenue outlooks," Citi analyst Tyler Radke said in a client note.

Mortgage rates hit their highest point since 2000

Mortgage rates jumped Monday, following a rise in bond yields driven by investors’ concerns that high interest rates and inflation will linger longer than expected. The average rate on the popular 30-year fixed mortgage hit 7.48%, the highest level since November 2000, according to Mortgage News Daily. It has risen 29 basis points in just the past week. “Investors just aren’t seeing the kind of deterioration in economic data that they expected,” said Matthew Graham, chief operating officer of Mortgage News Daily. He noted that the Federal Reserve wants to see the same deterioration before considering a policy shift, and that shift would likely favor short-term rates first. “The net effect is that longer-term rates like 10-year Treasury yields and mortgages are bearing the brunt of the market’s negative rate sentiment. This won’t change until the data forces the Fed to start talking about the first rate cut.”

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