SNB Bails Out Credit Suisse

Markets are cheered by the de facto bailout of Credit Suisse, which may bring more stability to the banking sector and shore up stock markets.

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1. A few hours ago, the second largest bank in Switzerland, Credit Suisse, which had seemed close to collapse earlier in the day as its share price reached a record low of $1.74, announced it had secured a $54 billion loan from the Swiss National Bank. This may help halt recent declines in global stock markets, especially in the banking sector which has seen steep declines in recent days on fears of contagion from the failures of Silicon Valley Bank and Signature Bank.
2. The European Central Bank is expected to raise its Main Refinancing Rate today by 0.50% to 3.50% at its policy meeting today.
3. Stock markets and treasury yields have recovered somewhat over the past day. However, the recovery looks shaky, with the US 2-Year Treasury Yield seeming unable to get established back above the 4% handle.
4. Yesterday’s key releases of US PPI and Retail Sales data will take some pressure off the Federal Reserve, as both were lower than expected, suggesting a cooling economy. Markets will likely now be more forgiving if the Fed either makes no rate hike at its next meeting on 22^nd March or hikes by only 0.25%. Expectations are now slightly in favour of a no-hike outcome.
5. Bank shares in the US saw a small recovery yesterday, which may be extended when US markets open later, on news of the Credit Suisse bailout.
6. The price of Bitcoin hit a 9-month high above $26,500 two days ago but has made a considerable bearish retracement since then. The cryptocurrency will not look bullish again until it can get re-established above the key psychological level of $25k.
7. Gold is looking quite bullish after recent strong rises but is currently struggling to get established above a key resistance level at $1917.
8. In the Forex market, the US Dollar is falling now after rising yesterday, with the Euro today looking strong while the New Zealand Dollar looks weak, driven down partly by considerably worse than expected New Zealand GDP data, which showed the economy shrinking by 0.6% quarterly compared to the 0.2% decline which had been expected.
9. Australian unemployment data released earlier today showed a stronger than expected decline in the unemployment rate, from 3.7% to 3.5%.
10. Today will see the release of US unemployment claims data.
11. The UK government budget released yesterday contained no major surprises, but the government included a forecast that the UK will avoid recession this year and that inflation will rapidly decline. The British Pound reacted by strengthening a little.