Global Markets

The Federal Reserve makes its next policy decision on Wednesday March 22, against a highly uncertain backdrop and tame market expectations following the recent collapse of the Silicon Valley Bank

Watch today’s US Open for the initial reactions to the ECB’s 0.5% rate hike, commentary on the latest developments around Credit Suisse

The banking sector is under stress. It started with the demise of Silvergate Bank and then gained a momentum with the failure of SVB and Signature Bank last week. However, it was exacerbated yesterday with news of a growing crisis at Credit Suisse, Switzerland’s second-largest lender.

Bond yields are declining sharply as banking worries flare up again. This time its European banks which have triggered the flight to safety. The catalyst is the refusal of Credit Suisse’s biggest shareholder to invest anymore capital in the troubled bank. This, in turn, sparked selling in US regional bank shares as fears heighten that there is a distinct sensitivity to any rate increases within the sector. The CME Fedwatch…

China’s industrial production came in at 2.4% y/y. This is higher than the previous 1.3% but slightly lower than the 2.6% expected. Its retail sales printed at 3.5% y/y, a significant improvement from the previous months -1.8%. Fixed asset investment grew 5.5% y/y YTD, higher than the 5.1% for December.

Watch today’s US Open for commentary on the latest US CPI Inflation report, the collapse of the Silicon Valley Bank and more

Chair Powell’s testimony in front of the Senate and House was hawkish and aggressive. Higher for longer and faster were introduced. The market briefly priced in a possible 50bps hike for March. However, the failure of Silicon Valley Bank, lower wage inflation and the uptick in the unemployment rate has the market rethinking this. Moreover, tomorrow sees inflation data – the next piece in the puzzle. Tune in to listen…

Watch today’s US Open for insights on Fed Chair Powell’s testimony, its impact on market pricing around the central bank’s policy path and more

The 2s-10s yield curve has been inverted for 9-months and is currently at -107 bps. The last time the yield curve was this far into inversion territory was in the early 1980s. An inverted yield curve often forewarns of an economic recession, as it suggests that investors expect short-term interest rates to fall, and normalise the curve. This can be a signal that the economy is headed for a downturn.

Watch today’s US Open for insights on the dovish hike by the Reserve Bank of Australia, persistent hawkish commentary by ECB officials and more, as markets brace for Fed Chair Powell’s Congress testimony

The current housing starts index is weak. It is below its 3-month moving average and heading down. Its RSI is on the bearish side of 50.