U.S. Treasury Yields Plunge and Fed Takes Action Amid SVB Collapse
The 10-year U.S. Treasury yield tumbled to 3.69% last week and then further to 3.47% on Monday morning, as investors sought safe-haven investments following the collapse of Silicon Valley Bank (SVB).[0] The 2-year yield plunged 50 basis points to 4.9%, as Fed rate hike odds fell.[1] To prevent a wider contagion, the Federal Reserve announced it will make additional funding available for eligible depository institutions and is prepared to address liquidity pressures that may arise.[2]
HSBC has agreed to buy the UK arm of SVB, securing the future of thousands of British tech firms.[3] The Financial Times reported that HSBC (HSBC) had averted a crisis in the UK's tech sector by rescuing the British arm of Silicon Valley Bank for the symbolic price of 1 British Pound.[4]
At Goldman Sachs, it is now expected that the Federal Reserve will hold off on rate increases at the upcoming Federal Open Market Committee (FOMC) meeting due to the heightened uncertainty surrounding the bank failure.
Goldman Sachs announced on Sunday that, due to the latest developments, the Federal Reserve would not be increasing interest rates at their upcoming meeting. Europe’s benchmark Stoxx Europe 600 Banks index, which tracks 42 big EU and UK banks, fell 5.6% by mid-afternoon.[5] Meanwhile, the Nasdaq 100 (NDX) and S&P 500 (SPX) rose 0.1% and 0.05% respectively, while the Dow Jones Industrial Average (DJIA) was up 0.3%.[6]
U.S. stock futures rose on Monday as fears of a wider contagion from the Silicon Valley Bank (SIVB) collapse faded after U.S. authorities secured depositors' funds and created a lending facility for banks to meet depositors' needs. [3]
Bitcoin saw an increase of 0.36%, reaching a price of $22,411, while ether experienced a decline[7]
On Friday, figures revealed that 311K jobs were added to the U.S. economy in the prior month, surpassing the anticipated 225K.[8] In contrast, the U.S. unemployment rate rose to 3.6% in February, instead of the predicted 3.4%.[8] Additionally, the average hourly earnings increased by 0.2% month-over-month and 4.6% year-over-year in February, which was lower than expectations of 0.3% month-over-[9]
0. “Dollar drops as Fed rate hike expectations trimmed on SVB collapse” CNBC, 13 Mar. 2023, https://www.cnbc.com/2023/03/13/dollar-slides-as-us-intervenes-on-svb-collapse.html
1. “Dow Jones Futures Fall; Regulators Protect All SVB Deposits, But Bank Stocks Keep Tumbling | Investor's Business Daily” Investor's Business Daily, 13 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-fdic-ready-after-svb-financial-collapse-watch-these-bank-stocks/
2. “US futures steady after Fed moves to restore confidence in banking system” CNN, 13 Mar. 2023, https://www.cnn.com/2023/03/13/investing/global-markets-svb-monday-intl-hnk/index.html
3. “Stock Market Today: SVB Collapse Rattles Regional Bank Stocks; Dow, S&P 500 Turn Higher” The Wall Street Journal, 13 Mar. 2023, https://www.wsj.com/livecoverage/stock-market-news-today-03-13-2023
4. “Thoughts on SVB Financial, Banking and the Fed, Markets, Earnings, Week Ahead” RealMoney, 13 Mar. 2023, https://realmoney.thestreet.com/investing/thoughts-on-svb-financial-banking-and-the-fed-markets-earnings-week-ahead-16118121
5. “Europe's banking stocks suffer biggest drop in a year” CNN, 13 Mar. 2023, https://www.cnn.com/2023/03/13/investing/european-banks-svb-collapse/index.html
6. “Stock Market News Today: Stock Rally Accelerates despite U.S. Banking Woes” TipRanks, 13 Mar. 2023, https://www.tipranks.com/news/stock-market-news-today-futures-remain-volatile-in-the-wake-of-u-s-banking-woes
7. “Treasuries Surge, Stocks Up on Bets for Fed Pause: Markets Wrap” Yahoo News, 13 Mar. 2023, https://news.yahoo.com/us-futures-rise-dollar-falls-220258722.html
8. “Fed: Another bump in interest rates coming, higher than anticipated” Detroit Free Press, 11 Mar. 2023, https://www.freep.com/story/money/business/2023/03/11/fed-another-bump-in-interest-rates-coming-higher-than-anticipated/69985511007
9. “Stocks Set to Open Higher as Fed Contains Banking Crisis, Fed Pause Bets” Barchart, 13 Mar. 2023, https://www.barchart.com/story/news/15006512/stocks-set-to-open-mixed-as-bank-shares-fall
