as much as 51 basis points to less than 4.08%, heading for their steepest three-day decline since Black Monday of October 1987, as traders bet the collapse of SVB and two other lenders will compel the Federal Reserve to halt rate hikes. The 10-year yield dropped 26 basis points to six-week low, and the dollar extended a decline against major peers. The turmoil has caused a rapid repricing in markets for where the Fed will take policy.
"The failure of SVB puts the Fed’s focus on financial stability,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets. “This is a difficult position Fed is in, on the one hand it needs to keep hiking to arrest inflation, but also it needs to protect the financial system. Feels like a lose-lose situation for the Fed and the market.”
Futures on the S&P 500 dropped 1%, reversing an earlier rally amid a rout in bank shares. First Republic Bank slumped as much as 60% in premarket trading amid growing worries about the state of US regional banks. Among bigger lenders, Bank of America Corp. and US Bancorp were down about 4% each, with Wells Fargo & Co. losing more than 3% and Citigroup Inc. slipping more than 2%.
Treasury Secretary Janet Yellen said her office would protect “all depositors” at SVB. The government actions will also include a new lending program that Fed officials said would be big enough to protect uninsured deposits in the wider US banking sector. Still, the sudden closure of New York’s Signature Bank by state regulators Sunday underscored the urgency of stabilizing the financial system.
Stocks in Europe dropped the most since mid-December, with banks leading declines. Commerzbank AG and Credit Suisse Group AG shed more than 10%. HSBC Holdings Plc fell more than 2% after buying the UK unit of SVB for £1. The yield on two-year German debt plunged 27 basis points to 2.23%, putting it on course for the steepest two-day fall on record.
_Business nice way to keep the stock market up
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Global bank stocks under pressure on Silicon Valley Bank falloutEurope’s bank shares suffered their biggest fall in over a year as global efforts to limit the fallout from the collapse of SVB failed to ease fears.
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