Marketmind: Weighing up the global banking crisis

Written by Jamie McGeever

( Reuters )- Jamie McGeever’s analysis of the day away in Asian markets.

This week’s economic data and policy calendar for Asia is light, which may be for the best because investors’ attention is firmly fixed elsewhere — on the global banking crisis and its implications for policy, markets, and growth.

Some people may object to recent events being referred to as a” crisis ,” but take into account the fact that two of America’s top 25 banks have failed, Credit Suisse has been absorbed, concerns about Deutsche Bank are growing, and the Fed has taken urgent action and offered backstops worth hundreds of billions of dollars.

Despite the quick and audacious actions taken by U.S. and European regulators, concerns about worsening credit conditions are growing. The caution flags were raised by Fed and European Central Bank authorities on Sunday, echoing sentiments last week from the corporate field.

This serves as the tumultuous background for the quarter’s last week. Since California regulators shut down Silicon Valley Bank on March 10, there has been a lot of unrest and uncertainty in interest rates and fixed-income markets.

Asia won’t feel impervious. Economy in the region will face pressure if safe-haven choosing and rising demand for buck liquidity and security drive up the dollar.

Weakening home exchange rates raises cost forces, putting pressure on central banks to decide whether to tighten policy when growth is slowing or encourage inflation to rise. All else being equal, a stronger dollar already tightens monetary issues.

Since the start of the banking crisis, currency market uncertainty has been incredibly quiet. That might be about to increase.

Banks stocks have fallen, but overall stocks, and the desire rate-sensitive tech sector in particular, have performed better. The investment universe’s more fanciful areas, such as Bitcoin and deliver, have drastically outperformed.

The Nasdaq is up two weeks in a row and is still up 3 % for the month, while Bitcoin has increased 35 % since SVB’s demise.

Can they resist weight for little longer? Risk taste is likely to change if bond yields and implied rates are falling because a potential record shortage makes recession much more likely.

Without any further disruptions to the financial product, the Fed and other central banks may be able to obtain the lofty goal of a soft landing and implement the policies that appear to be in conflict with one another, such as promoting financial stability and combating inflation.

Perhaps.

The primary Eastern data points on Monday are trade data from Thailand and Hong Kong. The initial PMIs for March across the globe, including China, start to come around later in the week, along with the Asian GDP, a Thai interest amount decision, Chinese retail sales, and unemployment.

The following three major developments might give markets more manner on Monday:

– Germany Ifo index( March )

ECB’s Schnabel speaks

Governor Andrew Bailey of the BoE mountains

(Written by Jamie McGeever; Editing by Diane Craft)

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