Weekly Market Update

Treasury Yields Drift Higher on Absence of Bad News Treasury yields are drifting higher as an absence of any new banking blowups has the partial unwind of the previous flight-to-safety trade continuing today. We say partial because even if we’ve seen the last of the blowups, financial conditions have still tightened and that does warrant…

First Citizens’ SVB Deal Boosts Market Sentiment Treasury yields are finally moving higher as Friday banking jitters dissolved into upbeat feelings this morning as news that First Citizens Bank of Raleigh had agreed to buy certain assets and deposits of Silicon Valley Bank. That vote of confidence has boosted bank sector sentiment and the risk-on…

Friday Banking Jitters Return Treasury prices are moving higher once again as Friday banking jitters have investors hunting for safety as the weekend approaches. This time the catalyst was widening in credit default swaps at Deutsche Bank. The giant German-based lender is probably second only to Credit Suisse as an ongoing problem for European banking…

Fed Delivers a Dovish Hike Meeting Highlights: The Fed raised the overnight fed funds target rate by 25bps to 4.75% – 5.00%, matching the market consensus. Meanwhile, the forecast for the terminal fed funds rate was left at 5.125% (5.00% – 5.25%) same as the December forecast. This is the “dovish hike” scenario some had…

Market Gives the Fed 25bps, Will They Take It? Treasury prices drifted into the red this morning after rangebound trading in the overnight hours as investors show an understandable lack of conviction ahead of the Fed. Expectations for this meeting have been all over the place since the failure of Silicon Valley Bank, and while…

Bank Uncertainty Continues Swiss banking giant UBS bought its Swiss banking competitor Credit Suisse for $3.2 billion over the weekend but it hasn’t exactly soothed market fears much. The deal included a write down of AT1  (additional tier 1 capital) debt to zero, wiping out $17 billion in those bonds that were popularized coming out…

Banking Angst Returns Investors are again unsettled with the state of banking and that has led to another day of risk-off trading. While the infusion of $30 billion in deposits to First Republic Bank by several money center banks boosted investor confidence, that turned around after-hours and the concerns continue this morning (more on that…

Weak PPI and European Bank Turmoil Dim Fed Hiking Expectations If it’s Wednesday that must mean the banking crisis has jumped the pond and landed squarely in Europe. The catalyst for the risk-off tone today is Credit Suisse, a favorite whipping boy in the industry and seemingly in perpetual recovery mode. The bank’s largest shareholder…

Bank Industry in the Spotlight Yields are repricing lower as the fears of a widespread banking crisis gathered over the weekend. While we think the issues with Silicon Valley Bank were unique to that bank (more on that below), in the era of social media everyone is a banking expert with the view that it’s…

February Jobs Report Argues for a 25bps Hike vs. 50bps Nonfarm payroll jobs beat expectations with 311 thousand new jobs vs. 225 thousand expected but well off the 504 thousand jobs in January. The unemployment rate rose 2/10ths to 3.6% as the labor force grew with not all finding a job during the month. Job…

The Totality of Incoming Data Yields are being buffeted by Powell’s Capitol Hill testimony but for now bids are being found in early trading. While yesterday’s reaction to Powell’s hawkish testimony resulted in the 2yr – 10yr Treasury inversion reaching new cycle lows, there is a rebound in prices this morning. Powell continues his testimony…

Market Looking Ahead to Powell and Jobs Report Overseas news has yields lower as China set modest growth targets and that sent oil and other commodity prices lower, and yields are reacting to the potentially inflation-friendly news. Currently, the 10yr is yielding 3.91%, up 11/32nds in price, and the 2yr is at 4.83%, up 1/32nds…