- Investors flocked to safe havens like government debt and gold while selling financial equities as the Silicon Valley Bank crisis continued to echo across trading tables despite government efforts to support the banking industry.
- In premarket trading, First Republic Bank shares fell 60% as concerns over the stability of US regional banks grew. As the bank disclosed that it had more than $70 billion in unused liquidity from the Federal Reserve and other lenders, the reductions followed. Commerzbank and Credit Suisse both lost more than 10% in Europe. HSBC lost more than 2% after paying £1 for SVB's UK division.
- Early on Monday, S&P 500 contracts rose as investors reduced their bets on rate hikes, but they later gave up their gains when bank stock falls picked up again. Among major lenders, Bank of America lost 6.7%, Citigroup was down 3.1%, and Wells Fargo decreased 3.5%. The decline in the Stoxx Europe 600 index was the largest since December, falling more than 2%, and a measure of banking stocks fell by about 6%.
- Investors sought for bonds for their protection. Treasury two-year rates fell as far as 43 basis points, to 4.17%, and are on pace to see their worst three-day slide since Black Monday in October 1987. The 10-year yield decreased to a one-month low, while the dollar's slide against important peers continued. German two-year debt's yield fell 35 basis points to 2.74%, on track to experience the greatest two-day decline ever.
- Markets have quickly reassessed where the Federal Reserve will take policy as a result of the unrest. Only 63% of swaps traders believe the central bank will hike rates at its meeting the following week. Following the failure of SVB, experts at Goldman Sachs stated that they do not anticipate a change in the policy rate. As Chair Jerome Powell spoke to lawmakers on Tuesday, anticipation for a hike of up to 50 basis points increased.
- Sky's Ed Conway: Silicon Valley Bank's UK subsidiary has been sold to HSBC.
- Peak ECB rate priced below 3.75% for the first time since February 17th.
- Traders see 54% chance of the Fed holding rates on March 22nd and 46% chance of 25 BPS hike after SVB collapse, according to market pricing Fedwatch.
