Fears of a global banking meltdown looked to ease after Swiss lender UBS agreed to buy its beleaguered rival Credit Suisse for $3.23 billion over the weekend.Weakness in the pound also aided the exporter-heavy FTSE 100, while the more domestically-focussed FTSE 250 midcap index added 0.9%.
Appetite for risk is also being fuelled by expectations that the Federal Reserve may adopt a more cautious policy approach when it decides on interest rates on Wednesday. Fed bets are settling around a quarter-point hike as cracks in the global banking industry are seen discouraging more aggressive tightening. The policy-sensitive two-year US Treasury yield ended Monday 14 basis points higher, just below 4 per cent. That’s also the level where swap traders currently see the Fed’s benchmark rate ending the year — a whole percentage point below the central bank’s own estimate in December.
“Further rate hikes are no longer warranted, in our opinion,” Ed Yardeni, president of Yardeni Research Inc., wrote in a note. Fed Chair Jerome Powell will have to acknowledge that “the crisis confirms that interest rates are sufficiently restrictive and that financial conditions are rapidly getting tighter,” he said.
France Dernières Nouvelles, France Actualités
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