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Well, that was an interesting session..
US futures opened flat on Monday, before news of a Federal bailout of SVB depositors saw index futures soar, the Dow up over 400 points early in the session.
This didn’t last however as contagion fears saw stock sell off over the session, with only the Nasdaq able to hold onto a gain, which is not surprising considering that SVB’s biggest customers were tech related. The Russell 200 took the biggest hit, being home to many regional banks that saw large losses over the session. Many of these smaller banks activated the NYSE circuit breakers and were halted, while even the big guys took a hit, with Bank of America -5%, Wells Fargo -7% and “fortress” JP Morgan sliding over 2%
Markets repriced a big adjustment on the Feds move next week, 50bp was seen as an almost done deal only a few days ago which has now been completely priced out, with Fed Fund Futures now pricing in a 40% chance of no hike, 60% of a smaller 25bp hike.
This saw the Bonds rally strongly as yields dropped, and the USD take a hammering the Dollar index falling well below the 104 level.
A weaker USD and jittery investors also sae alternative currencies rally strongly with Bitcoin flying to top the 24k USD level and Gold up over $30, breaking through the 1900 level.
Tonight’s CPI figure was supposed to be the big news event of the week, it has taken a back seat somewhat but remains very important.. A weak reading could really cement the Fed hold narrative, a strong reading will put pressure on that.
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