Another Bank failed over the weekend! Along with SVB, the Fed also closed Signature Bank. The Fed announced a new funding facility on Sunday, the Bank Term Funding Program (BTFP), to stave off a possible fire sale and subsequent liquidity crisis and a run on banks when the markets reopened today following the failure of the two banks.
US equity futures rose and the USD declined so far in today’s trading after regulators weighed in to shore up the banking system and said depositors of collapsed tech sector lender Silicon Valley Bank would be fully repaid.
The Fed also announced the Discount Window is open and will apply the same margins as the new BTFP facility. Fed, FDIC, and Treasury officials also said customers of SVB will have access to all their funds, even those in excess of the $250k FDIC limit, on Monday. These quick actions significantly reduce systemic risks across the financial system and should significantly calm fears. Also First Republic Gets Additional Funding From Fed, (JPMorgan).
- USDIndex drifted to 103.43 low as rate outlook now is very uncertain. Could the Fed protect small US banks & hold back on raising rates at the next meeting?
- Goldman Sachs economists said late Sunday they no longer expected the Fed to increase rates on March 22, its next meeting.
- VIX climbed to 27.05 before retracing to 22.37.
- Euro (+0.84%) jumped to 1.0733, Sterling up at 1.2113 retesting 50-DMA. Yen declines with USDJPY to 134.50 from 133.50. USDCAD down to 1.3320 from 1.3860 high.
- The yield on the 10-year US Treasury rose to 3.704%, while the yield on the 2-year note fell 0.15% to 4.435 per cent. Yields move inversely to price.
- Stocks – US100 up by +1.65%, US500 +1.53%, US30 dropped +1.09%.
- USOil – up to $77.18, rising 0.65%.
- Gold – rebounds to $1875 on a flight to safety.
- Cryptocurrencies – BTC – up by 9.1% rallied to $22.5K! (key neckline). Cryptocurrency prices rallied after US regulators said depositors of Silicon Valley Bank and Signature Bank, a major bank for crypto companies, would get their money back.
- Ether also climbed 9% to $1,611.
Biggest FX Mover @ (07:30 GMT) BTCUSD (+9.1%). Spiked to 22,566. Next Resistance at 23,000-23,090.
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Andria Pichidi
Market Analyst
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