Financial Markets Daily Report 14 March 2023
Concerns about the health of the banking sector and the potential implications for the trajectory of monetary policy remained the key themes during a volatile session on Monday. Money markets showed a notable correction in expectations for terminal policy rates in both the US (5% in May) and the eurozone (3% in September).
- Concerns about the health of the banking sector and the potential implications for the trajectory of monetary policy remained the key themes during a volatile session on Monday. Money markets showed a notable correction in expectations for terminal policy rates in both the US (5% in May) and the eurozone (3% in September).
- The downward revisions, in a context of “flight for safety”, triggered yet another decline in sovereign bond yields across the board, more notably in the short end of the curve. Sovereign risk premiums also expanded across the eurozone debt periphery countries while the USD depreciated against peers.
- In equity markets, stocks fell notably across Europe, led by the banking sector. In the US, bank shares also fell but stock indices were broadly flat, after the Fed set up a new emergency lending facility and bank regulators also pledged to fully protect depositors at SVB. Today, February CPI inflation data is published in the US.