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Recession Looms, But Markets Haven’t Got the Message [WSJ]
Unfortunately, it is only monetary policy that’s clearly priced in. The bad news is that for all the talk of recession, stocks and bonds aren’t reflecting much risk…. For mainstream junk bonds with a BB rating, the best measure of their risk—the extra yield, or spread, offered above safe Treasury yields—is only just above where it stood in mid-March. Even CCCs had a higher spread than now in December 2019. While a bit of recession risk has been priced in, corporate bonds are prepared for a very mild recession at worst that takes out only the weakest companies. So far, bond investors share Fed Chairman Jerome Powell’s hopes for a “soft or softish” landing for the economy.

Powell Says Fed Has Resolve to Bring U.S. Inflation Down [WSJ]
“Restoring price stability is an unconditional need. It is something we have to do,” Mr. Powell said in an interview Tuesday during The Wall Street Journal’s Future of Everything Festival. “There could be some pain involved….”
The Fed chairman repeated his hope that the central bank can curtail high inflation without spurring a large rise in unemployment. However, Mr. Powell said, there is little from modern economic experience to suggest that outcome can be achieved. “If you look in the history book and find it—no, you can’t,” he said. “I think we are in a world of firsts.”

Fed Nominee Michael Barr Has Pressed to Reverse Trump-Era Banking Policies [WSJ]
“We need to undo the damage caused by the last four years of policy,” Mr. Barr said in June 2020, referring in part to Trump-era policies that pared back capital and other cash-management requirements for large U.S. lenders…. Analysts said they expect Mr. Barr would likely pursue relatively modest steps to strengthen bank stress tests, rather than wholesale revisions to the annual exercise to test whether large lenders are able to withstand a severe recession.

Stock Selloff Crunches SPAC Creators as They Race to Find Deals [WSJ]
Because so many SPACs raised money during the frenzy early last year, roughly 280 face deadlines in the first quarter of 2023, figures from data provider SPAC Research show. If the current pace of SPAC deal making continues, analysts estimate that a large percentage of those blank-check firms won’t find mergers…. Creators of those SPACs and other insiders together are now expected by early next year to lose $1 billion or more—money known as “at-risk capital” that they have already spent setting up the SPACs and can never get back.

Oz, McCormick Are Locked in Too-Close-to-Call Pennsylvania Race [Bloomberg]
[Mehmet] Oz, who was endorsed by former President Donald Trump, had 31.3% of the vote to [former Bridgewater Associates executive David] McCormick’s 31.1%, with 95% of the votes counted, according to the Associated Press…. “Unfortunately, we’re not going to have resolution tonight, but we can see the path ahead. We can see victory ahead,” McCormick said, adding that “tens of thousands” of mail-in ballots were still to be counted, beginning on Wednesday.

U.S. Expected to Begin Blocking Russian Bond Payments to Americans [NYT]
An exemption to American sanctions has allowed Russia to keep paying its debts since February. That exemption expires on May 25…. Russia has bond payments due on May 27 and June 24. It is not clear if it has any additional tools at its disposal to make them with the restrictions in place, which would forbid Americans from receiving interest, dividend, or maturity payments on Russian debt.

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