News
Latest News
news bulletin
Breaking Headlines
Israel-Gaza War Updates
Variety and Tech
Sports News
Middle East News
World News
Lebanon News
Press Highlights
Lebanon Economy
News Bulletin Reports
Other News
Breaking Headlines
Israel-Gaza War Updates
Variety and Tech
Sports News
Middle East News
World News
Lebanon News
Press Highlights
Lebanon Economy
News Bulletin Reports
Beirut
29
o
Bekaa
32
o
Keserwan
29
o
Metn
29
o
Mount Lebanon
28
o
North
31
o
South
29
o
Live
Video
Audio
Schedule
shows
العربية
watching now
Morning Talk
SUBSCRIBE
Home
Notification
Live
Video
Audio
shows
Beirut
29
o
Bekaa
32
o
Keserwan
29
o
Metn
29
o
Mount Lebanon
28
o
North
31
o
South
29
o
News
Programs
The News
Breaking Headlines
Israel-Gaza War Updates
Variety and Tech
Sports News
Middle East News
World News
Lebanon News
Press Highlights
Lebanon Economy
News Bulletin Reports
Programs
Series
Movies
Documentaries
Variety
Comedy
Talk Show
News Bulletin
Sports
Breaking News
Latest News
Highlighted News
Most Read
Videos
العربية
Watch the latest programs and the latest developments on your favorite screen
Shows
Join millions of followers
Who We Are
Contact Us
Advertise With Us
Careers
Channel frequencies
Privacy Policy
Terms and Conditions
Morning Bid: Bank stress, bond volatility and disinflation
World
14-03-2023 | 07:59
High views
Share
Share
6
min
Morning Bid: Bank stress, bond volatility and disinflation
A look at the day ahead in US and global markets from Mike Dolan
The explosion of banking stress has reshaped the entire US interest rate map, wiping expectations of further Federal Reserve rate hikes off the table and sending US Treasury bond volatility to its highest since 2009.
The release of February's US consumer price inflation report later on Tuesday had until a few days ago promised to be the biggest market mover of the week - but now it may prove to be something of a sideshow to a wider unfolding drama.
Despite weekend moves by the Fed and other regulators to protect depositors at the failed Silicon Valley Bank (SVB) and Signature Bank, and Monday's assurances from US President Joe Biden that savings in the wider system were safe, bank stocks continued to fall in the United States and around the world.
Major US banks lost around $90 billion in stock market value on Monday, bringing their loss over the past three trading sessions to nearly $190 billion. Regional US banks were hit the hardest, with shares of First Republic Bank (FRC.N) diving more than 60% as news of new financing failed to calm investors and credit rating firm Moody's reviewed it for a downgrade.
Banking stocks in Asia extended declines on Tuesday, with Japanese firms hit particularly hard. After falling almost 6% on Monday, including a 13% drop in Germany's Commerzbank (CBKG.DE) and a near 10% fall in Credit Suisse (CSGN.S), Europe's main banking index (.SX7P) was down another 1% again on Tuesday too.
But the implications of this sudden bout of financial instability - and its potential economic and policy fallout - were most clearly seen in the interest rate and bond markets.
The extraordinary volte-face has futures markets doubt whether the Fed will raise rates at all next week - pricing less than a 50% chance of a quarter point hike compared to the half-point rate rise that was fully priced only a week ago.
More striking is the fact that those same markets now suspect the whole Fed tightening cycle may be over, pricing peak rates at just 4.71% - below the upper band of the current target range of 4.50-4.75% and almost a percentage point below 'terminal rate' assumptions only last week.
What's more, futures also price almost a full percentage point of rate cuts between now and the end of the year. Implied terminal rates for the European Central Bank and Bank of England have been dramatically scaled back too - though one or two further hikes are still priced for those central banks.
Although it's regained some ground today, the dollar has weakened against the euro, pound and yen this week.
But the Fed rethink has led to seismic action on the US Treasury market, with the biggest drop in 2-year Treasury yields on Monday since the stock market crash of 1987.
At a trough of 3.83% early on Tuesday, those 2-year yields hit their lowest since September last year before rebounding to just back above 4%. As 10-year yields nudged back above 3.5%, a re-steepening of the deeply inverted 2-10 year yield curve - for many a culprit in the onset of banking troubles - stalled.
The scale of the bond gyrations was captured in a surge in the MOVE index (.MOVE) of implied Treasury market volatility to its highest since 2009 - exceeding the most stressful periods around the 2020 pandemic and the 2018 repo market shock.
Credit spreads in the corporate bond markets have also widened sharply as investors fear an economy-wide tightening of borrowing standards and financial conditions. Indices of US high-yield 'junk' bonds fell to their lowest for the year.
To the extent that this shock to the system hits business borrowing, confidence and hiring plans, the Fed will likely want some time to assess the fallout at least. It would certainly think twice about tightening policy again into this level of financial stress and bond market upheaval.
Recriminations among oversight agencies as to why SVB's problems were not spotting well in advance are likely to mount - with the Fed's remit for maintaining financial stability likely clashing with its low inflation and full employment mandates.
The Fed said late Monday it would be conducting a review of the supervision and regulation of SVB, and Chairman Jerome Powell demanded a "thorough, transparent, and swift review" by Vice Chairman for Supervision Michael Barr by May 1.
In one of the first public appearances by a Fed policymaker since the crisis, Fed Board Governor Michelle Bowman is scheduled to speak later on Tuesday.
The February consumer price report due before then - much like last week's employment numbers - may already be out of date as a temperature gauge of the economy going forward.
Reuters
Banks
Stress
Bond
Volatility
Disinflation
SVB
US
Economy
Markets
Subscribe to our VOD
SUBSCRIBE
Our visitors readings
d-none hideMe
0
Middle East News
2025-06-30
Israel interested in establishing diplomatic ties with Syria and Lebanon, foreign minister says
Middle East News
2025-06-30
Israel interested in establishing diplomatic ties with Syria and Lebanon, foreign minister says
0
News Bulletin Reports
2025-05-28
IMF mission in Beirut — will Lebanon seize its 'last chance'?
News Bulletin Reports
2025-05-28
IMF mission in Beirut — will Lebanon seize its 'last chance'?
0
Lebanon News
2025-05-07
Transport minister tells LBCI: Security 'under control' at Beirut airport, upgrades underway
Lebanon News
2025-05-07
Transport minister tells LBCI: Security 'under control' at Beirut airport, upgrades underway
0
World News
2025-06-30
US holding "preliminary talks" on a deal between Israel and Syria: Axios
World News
2025-06-30
US holding "preliminary talks" on a deal between Israel and Syria: Axios
Videos
d-none hideMe
0
Lebanon News
13:39
Massive fire erupts at unregulated dumpsite in Bchannine, Zgharta district
Lebanon News
13:39
Massive fire erupts at unregulated dumpsite in Bchannine, Zgharta district
0
Lebanon News
2025-06-10
Clash between Lebanese Army and residents of Deir Qanoun Al Nahr results in injuries (Video)
Lebanon News
2025-06-10
Clash between Lebanese Army and residents of Deir Qanoun Al Nahr results in injuries (Video)
0
Lebanon News
2025-06-04
Mexico dedicates garden around Lebanese Emigrant Statue in Beirut to mark 80 years of diplomatic ties
Lebanon News
2025-06-04
Mexico dedicates garden around Lebanese Emigrant Statue in Beirut to mark 80 years of diplomatic ties
0
Lebanon News
2025-05-19
President Aoun to seek Egyptian support for Lebanese Army in detecting explosives and tunnels
Lebanon News
2025-05-19
President Aoun to seek Egyptian support for Lebanese Army in detecting explosives and tunnels
0
Lebanon News
2025-05-15
LBCI Exclusive: US steps up pressure on Hezbollah, Morgan Ortagus details sanctions and vision for Lebanon's future
Lebanon News
2025-05-15
LBCI Exclusive: US steps up pressure on Hezbollah, Morgan Ortagus details sanctions and vision for Lebanon's future
0
Lebanon News
2025-05-11
Kuwait rolls out official welcome for Lebanon's President Aoun – video
Lebanon News
2025-05-11
Kuwait rolls out official welcome for Lebanon's President Aoun – video
0
Lebanon News
2025-05-11
Security incidents temporarily disrupt voting in several Akkar and Minieh-Danniyeh centers
Lebanon News
2025-05-11
Security incidents temporarily disrupt voting in several Akkar and Minieh-Danniyeh centers
0
News Bulletin Reports
2025-05-09
EU ambassador says 'we are not just donors, but genuine partners to Lebanon': Insights from exclusive LBCI interview
News Bulletin Reports
2025-05-09
EU ambassador says 'we are not just donors, but genuine partners to Lebanon': Insights from exclusive LBCI interview
0
Lebanon News
2025-04-23
US envoy Morgan Ortagus hails Lebanese diaspora, says country stands at a crossroads
Lebanon News
2025-04-23
US envoy Morgan Ortagus hails Lebanese diaspora, says country stands at a crossroads
Most read
d-none hideMe
24 hours
7 days
Month
1
Lebanon News
10:24
Lebanon drafts reply to US demand for Hezbollah to disarm: Sources tell Reuters
Lebanon News
10:24
Lebanon drafts reply to US demand for Hezbollah to disarm: Sources tell Reuters
2
News Bulletin Reports
13:10
Tense session: Lebanese Parliament passes key loan agreements and military grants
News Bulletin Reports
13:10
Tense session: Lebanese Parliament passes key loan agreements and military grants
3
Lebanon News
07:17
MEA adjusts flight schedule for July 2, 3, and 4 due to operational reasons
Lebanon News
07:17
MEA adjusts flight schedule for July 2, 3, and 4 due to operational reasons
4
Lebanon News
02:37
Casino du Liban director Roland Khoury detained in BetArabia investigation: Sources to LBCI
Lebanon News
02:37
Casino du Liban director Roland Khoury detained in BetArabia investigation: Sources to LBCI
5
News Bulletin Reports
12:58
Border situation: Rumors of foreign militants on Lebanon's border dismissed
News Bulletin Reports
12:58
Border situation: Rumors of foreign militants on Lebanon's border dismissed
6
Lebanon News
13:39
Massive fire erupts at unregulated dumpsite in Bchannine, Zgharta district
Lebanon News
13:39
Massive fire erupts at unregulated dumpsite in Bchannine, Zgharta district
7
News Bulletin Reports
13:00
Drug shipment: Lebanon foils smuggling of five million Captagon pills bound for Saudi Arabia via Syria
News Bulletin Reports
13:00
Drug shipment: Lebanon foils smuggling of five million Captagon pills bound for Saudi Arabia via Syria
8
Middle East News
04:18
Avichay Adraee: Special operation in southern Syria targets Iran-linked cell, weapons seized
Middle East News
04:18
Avichay Adraee: Special operation in southern Syria targets Iran-linked cell, weapons seized
Download now the LBCI mobile app
To see the latest news, the latest daily programs in Lebanon and the world
Google Play
App Store
We use
cookies
We use
cookies
to make
your experience on this
website better.
Accept
Learn More