One casualty of regulators rescuing SVB depositors? There will be no March rate hike, says Goldman Sachs.
After a frantic regulators-to-the-rescue weekend that sparked a rally for U.S. equity futures on Sunday night, the atmosphere has turned more cautious, except for still-partying tech futures. That’s as lots of banks are in the red ahead of Monday’s open.
It’s just more of the boom-bust cycle we’re stuck in, says Reid. “That being… too much stimulus -> very high inflation and an asset bubble -> aggressive central bank hikes -> inverted curves -> tighter lending standards/accidents -> recession.” They clearly aren’t alone as Fed fund futures indicate the chances of the Fed hiking interest rates by 50 basis points next week have fallen from 70% to zero in recent days.Capital Economics, meanwhile, is siding with Goldman here: “Even if the authorities are successful at putting a firewall around the problems at SVB and Signature Bank, the lags with which policy operates are a reason to adopt a more gradual approach to policy tightening from here,” said Neil Shearing, group chief economist.
The buzz At the end of a hectic weekend of negotiations, U.S. regulators say Silicon Valley Bank SIVB depositors will have access to their money, with no fallout for U.S. taxpayers, though share and bondholders appear to be out of luck. Depositors of crypto-friendly New York-based Signature Bank SBNY , closed Sunday by its state regulator, have received similar guarantees. The Fed also announced a new emergency loan program for banks in trouble to ease contagion risk.
Shares of pharma group Provention Bio PRVB are up 259% after French drugmaker Sanofi SAN said it would buy the fellow pharma group in a deal worth $2.9 billion.
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