5/21/2023 0 Comments Global meltdown![]() “I don’t think this is a systemic global banking issue. Specifics of the tech-focused bank’s abrupt collapse are still something of a jumble, but the sharp rise in Fed rates in the past 12 months, which tightened financial conditions in the start-up space in which it was a notable player, seemed front and centre. SVB, which was the 16th biggest US bank at the end of 2022, is the largest lender to fail since 2008. But Societe Generale chief currency strategist Kit Juckes said the current situation was far more similar to the US savings and loans crisis of the 1980s, in which hundreds of smaller banks folded when the Federal Reserve (Fed) increased interest rates to control inflation. Many have drawn parallels to the 2008 financial crisis, when indicators of financial market stress shot up and equities crumbled. Short-dated US Treasury yields rose 14 basis points to about 4.17%, but given that on Monday they posted their largest one-day drop since 1987, the rise on Tuesday still left yields at their lowest in six months. The MSCI All-World index was down 0.5% on the day, largely due to steep losses across Asian equity markets, while in Europe shares entered a third day of dips, down 0.1%. It has been the failure of technology sector lender Silicon Valley Bank (SVB) that has rattled investor confidence and triggered a rush into safe-haven assets such as bonds and gold.īanking stocks around the world have shed hundreds of billions of dollars in value in a matter of days, while the government bond market has seen one of its biggest rallies in decades. In less than a week, three US banks have collapsed. London - Global shares slid on Tuesday as a brewing US banking crisis prompted investors to downgrade their expectations for interest rate hikes, even ahead of important inflation data later in the day.Īs recently as a week ago, investors were just recovering from a reality check that prompted many to assume rates around the world were likely to head much higher and stay there for longer than previously expected.
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