The surprise announcement also suggests OPEC+ may be getting more cautious about its outlook for global oil demand given the elevated threat of a potentially deep recession looming, says Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
“The UBS move is easing some of the angst surrounding the recent turmoil in the banking sector,” wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly higher following the successful merger of Silicon Valley Bank over the weekend.
First Citizens agreed to buy much of Silicon Valley Bank’s assets, and that resolution combined with larger deposit insurance chatter is helping stocks to rally this morning.
Economically, the only notable report overnight was the German Ifo Business Expectations and it was better than expected at 91.2 vs. (E) 88.0.
Today focus will remain on the banks and as has been the case, Frist Republic is the key – resolution for that bank remains the next step towards broader stability in the banking sector. Economically, today we get the Dallas Fed Manufacturing Index (E: -13.5) and have one Fed speaker, Jefferson at 5:00 p.m. ET, but neither should move markets.
What’s in Today’s Report:
U.S. stock futures are tracking European shares higher with banks notably outperforming while bonds retreat.
Bloomberg reported last night that Treasury Department officials are reviewing options to temporarily insure all bank deposits in order to avoid a potential financial crisis which is helping support risk on money flows this morning.
Economically, the German ZEW Survey was mixed but the Current Conditions Index was importantly not as bad as feared, helping risk assets extend the week’s gains.
Looking into today’s session, there is just one economic report to watch: Existing Home Sales (E: 4.170 million) and given the focus on the recent banking turmoil as well as the March FOMC meeting beginning, it is unlikely to move markets.
As such, a sense of “Fed paralysis” is likely to begin to grip markets today but any outsized moves in the broader banking sector, headline driven or otherwise, has the potential to impact the broader equity markets. To that point, if FRC can finally stabilize, that would be well received by investors today.
What’s in Today’s Report:
Markets are trading with a risk-off tone this morning amid renewed worries about the global banking system.
Credit Suisse’s 2022 annual report revealed “material weaknesses” but the bank’s chairman ruled out government assistance while the largest shareholder, the Saudi National Bank, said further financing was not an option. The negative news flow has sent Credit Suisse shares down more than 20% to a new record low this morning and that is dragging global bank stocks lower and weighing heavily on sentiment.
Economic data overnight was mostly better than expected with Housing Sales in China notably rising more than expected while the PBOC injected more liquidity into he system than anticipated, both of which helped bolster Asian markets overnight.
Looking into today’s session, focus will be on economic data early with PPI (E: 0.3%, 5.4%), Retail Sales (E: -0.3%), the Empire State Manufacturing Index (E: -7.7), and the Housing Market Index (E: 41) all due out this morning.
Regarding the data, markets want to see a further decline in inflation metrics and more slowing in growth readings to help shore up less hawkish Fed expectations, however, focus will also remain on the banking sector and if banks can’t stabilize and start to rebound broadly, the major indexes are going to have a hard time finding their own footing today.
Tom Essaye, founder and president of Sevens Report Research, joins BNN Bloomberg to discuss the latest movements in the markets after today’s jobs data. Essaye is expecting another big hike from the Fed at the upcoming meeting and discusses his take on SVP bank’s halt in trading, Silvergate’s shutdown and bitcoin. He says 2023 will be volatile and investors should remain conservative. Click here to watch the full interview.
The broad selloff was “undoubtedly an unwelcome reminder” of the 2008 financial crisis, says Sevens Report analyst Tom Essaye, noting SVB scrambled and ultimately failed to stay afloat after it was forced to sell a bond portfolio at a $1.8 billion loss because higher interest rates pushed bond prices “far below” where they were when purchased. Click here to read the full article.
What’s in Today’s Report:
Futures are little changed as markets digest the three bank failures last week and the government response.
Silicon Valley Bank (SVB) and Signature Bank of New York (SBNY) both failed over the weekend, making three bank failures last week. In response to the SVB and SBNY failures, the government announced the creation of a bank lending facility, the Bank Term Funding Program, which is helping to ease concern about a broader bank run (but doesn’t entirely solve the crisis).
Today President Biden will address the nation on the situation this morning, but the key remains stability in the regional banks and in Treasury yields (they need to stop collapsing). If regional banks (KRE) and yields stabilize, markets can rally.
What’s in Today’s Report:
Stock futures are stable as yesterday’s Powell-driven losses continue to be digested while the yield curve is hitting new cycle lows with the 2-Yr Note holding above 5% for the first time since 2007 while the 10-Yr hovers just below 4%.
Economic focus was on German data o/n as Industrial Production topped estimates while the previous Retail Sales print was revised notably higher, bolstering Bund yields.
Looking into today’s session, focus will be on labor market data early, especially considering Powell’s “data dependent” policy comments from yesterday’s testimony.
The ADP Employment Report (E: 175K) will hit the wires before the bell and then JOLTS (E: 10.6 million) will be released after the open. Investors want to see some deterioration in the jobs market but not an all-out collapse while any indication of declining wages would be well received. International Trade in Goods and Services (E: -$69.0B) will also be released this morning but is less likely to move markets.
From there, Powell’s two-day testimony continues before the House Banking Committee today at 10:00 a.m. ET and investors will continue to listen intently for further clues about policy plans and terminal rate expectations.
Finally, there is a 10-Year Treasury Note auction at 1:00 p.m. ET that could move yields and ultimately impact the bond market, specifically if the auction tails and rates move meaningfully higher.
What’s in Today’s Report:
U.S. stock futures are tracking global shares higher this morning as investors cheer better than expected economic data out of China.
Economically, China’s Manufacturing PMI jumped to 51.6 vs. (E) 49.9 in February, up from 49.2 in January, indicating the recovery process is gaining momentum. The Eurozone Manufacturing PMI, meanwhile, met estimates at 48.5.
Today, investor focus will be on economic data early beginning in Europe with the German CPI release at 8:00 a.m. ET (E: 8.7%). So far this week, European yields have led global yields higher on hot inflation data and if the German print is above estimates, expect that trend to continue and stocks to remain under pressure.
In the U.S. we will get the February ISM Manufacturing Index (E: 48.0) as well as the lesser followed Construction Spending report (E: 0.2%). Investors will want to see improving, but not overly strong growth metrics and fading price pressures to see some of the recent hawkish money flows ease.
Finally, there is one Fed speaker today: Kashkari (E: 9:00 a.m. ET), and as a voting member of the FOMC, his comments will be closely watched for any new hints at the Fed’s policy plans.