The fallout from the failure of SVB and Signature Bank was far-reaching and shook global markets. Much attention is now focused on the central bank’s upcoming moves and whether policymakers will be hesitant to add another rate hike to market volatility.
Wall Street was all over the board and ended up mixed. Shares opened on the back foot after steep declines overnight and amid losses of -2% on European bourses. Stocks in Asia fell. Shares of major U.S. regional banks suffered their biggest drop in three years, FRC -61.83%, Credit Suisse down 15% (it withdrew $120 billion in the three months to December 31).
With the creation of a new “BTFP” to secure the financial system, state treasury gained a a very strong offer of a flight to safetyand especially at the front end of the turn. Markets also reassessed Fed rate hike expectations, ruling out the prospect of more aggressive moves and pricing in rate cuts later in the year. American dollar was generally weaker during the session.
Investors piled into the 2-year Treasury, expecting its yield to continue rising. This was the worst three-day journey since the days after Black Monday in 1987, although it was not maintained.
- The USDIndex fell to 103.48 with losses against colleagues from the G10. Slightly higher today.
- Revenues – 2 years had their share the biggest drop since 2008to a minimum 3.935%. It closed at 3.984%, its lowest since mid-September, and is 113 bps richer only from Wednesday’s high of 5.07%, which was the highest since 2007. 10-year closed in 3.568%.
- VIX climbed on 28:35 before returning to 24.47.
- Euro settled slightly lower 1.07, Sterling held profits at 1.2160 (no effect of tight job data). Yen raised a strong refuge offer 133.00.
- Shares – $100 published a +0.45% gain, 500 USD -0.15% bottom, US30 closed in red -0.28%.
- USOil – pared losses ahead of key inflation data as the biggest collapse of US banks since 2008 continued to ripple through financial markets. That’s it $74 up 0.65%.
- Honey – jumps lower after 5% rally it $1914. Currently in 1909 dollars.
- Cryptocurrencies – BTC rose 12% to $24,815.
- Ether also climbed 6% to $1,693.
Today: US CPI report could give FOMC a chance to stay awayor at least opt for a 25 bps hike from the 50 bps that was priced firmly last Wednesday.
The biggest FX Mover @ (07:30 GMT) VIX (+6.94%). Spiked to 28.55 before settling under PP at 24.47.
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Andria Pichidi
Market analyst
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