At the incredible end to the first quarter for financial markets, rattled by bank turmoil, some stability will be much hoped for in coming days.
“Peak rates” is coming faster than many expected, not because inflation has been vanquished, but because central banks are wary of fanning the flames of a credit crunch, right as the banking sector wobbles.A security guard stands outside of the entrance of the Silicon Valley Bank headquarters in Santa Clara, California on March 13.
As Citigroup chief executive Jane Fraser puts it, social media is a “complete game-changer” in bank runs.The logo of Credit Suisse bank is seen outside its office building in Hong Kong, China March 20.Credit Suisse’s forced takeover by UBS involved $17 billion of Additional Tier 1 debt, shock absorbers if a bank’s capital levels fall below a threshold, being wiped out.
Lawyers are assessing whether there is a case against the Swiss authorities. How this plays out in coming days will be watched closely. The saga has also rocked the $275 billion AT1 bond market, as investors scrutinise debt prospectuses for clauses that could cast doubt over recovery prospects.Jessica McGowan/Getty Images
The Fed raised rates by another quarter point on Wednesday, but recast its outlook from a hawkish preoccupation with inflation to a more cautious stance, given market turmoil that has tightened financial conditions.