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Svb: US banks under pressure, stock exchanges ko. Milan closes at -4%, 24 billion in smoke

2023-03-13T16:54:11.466Z


The US president tries to reassure the markets, Europe does not follow him: Piazza Affari is in the dark. Wall Street recovers. Investors at the window after the bankruptcy of Svb, despite the descent into the field of the American government. The Svb case before the Eurogroup (ANSA)


The US government takes the field and announces a plan to prevent the failure of Silicon Valley Bank from turning into a new Lehman Brothers.

The Treasury, the Fdic and the Fed announce - in a joint statement - that all deposits with Svb will be available from today, therefore also those above $250,000 insured by the Federal Deposit Insurance Corp. In addition, the central bank provides a new window of liquidity to help banks respond to customer requests in the event of a flight. 



But the safety net set up by the USA around the Svb case hasn't avoided the

harsh repercussion on the European stock exchanges

,

Milan loses 4% and sends 24 billion up in smoke

.

Wall Street is holding up better.



Svb, Biden: 'No loss will be borne by taxpayers'



THE MARKETS



Wall Street bets on the Fed and rises,

despite the pronounced decline of the banks.

The Dow Jones gains 0.78% to 32,159.33 points, the Nasdaq gains 1.46% to 11,300.88 points while the S&P 500 gains 0.86% to 3,893.64 points.

Investors are betting on an American central bank that is more cautious in raising the cost of money after the tensions caused by Silicon Valley Bank.



A session to forget for the Ftse Mib overwhelmed, like the rest of the European Stock Exchanges

, by the long wave of the collapse of the Californian Silicon Valley Bank.

The blue chip index, penalized by its strong exposure to the banking sector, dropped 4.03% at 26,183 points at the close, wiping out more than 24 billion in terms of capitalisation.

What is happening to US banks


BIDEN'S INTERVENTION

"Americans can rest easy: their deposits are safe."

Joe Biden says this

regarding the collapse of Svb and the tensions on the banking system "No losses will be borne by the taxpayers".

This was stated by Joe Biden regarding the "rapid" measures taken by the administration for the bankruptcy of Svb.

The US president stresses: 'The American banking system is safe'

GOVERNMENT BONDS


The change in scenario has caused government bonds to take off, the yields of which are plummeting: on average in the Eurozone over twenty points on the ten-year part, even double for France and Germany on two years.

The Italian 10-year bond falls to 4.15% (-14 basis points) but fears about Italian public debt cause an increase of almost ten points in the spread with the Bund, which rises to 189 basis points.

Concerns over new SVB cases among US regional banks are materializing on Wall Street where First Regional Bank drops more than 60% in pre-trading, despite reassurances about its liquidity position.

HSBC, which took over the British branch of the SVB for one pound, dropped 3.4%.

To measure the degree of fear on the markets is the Vix index, which measures volatility on Wall Street, which has jumped to its highest level since last October.



The Fed on the corner

.

The expected rise in interest rates of at least 0.50% at the next meeting on March 22 appears in the balance with the collapse of Silicon Valley Bank and the tensions on the financial system.

The whole roadmap of the American central bank is shaking: the trend in swaps indicates that the most probable scenario is a pause perhaps for the whole of 2023 of the aggressive campaign to raise the cost of money.

And once again there is hope of a cut in the cost of borrowing this year.

In fact, the bankruptcy of Svb and Signature Bank could push the Fed to greater caution even in the face of inflation that won't let go.

The data on consumer prices is expected for tomorrow and analysts estimate a slowdown in inflation to 6% from 6.4% in January.


The chances of the Fed not raising interest rates at its next meeting in March are 66%.

This is what emerges from the swap trend, according to CNBC reports. 


Use in the field against contagion but no save Svb



TODAY THE EUROGROUP

The Eurogroup scheduled for today will also "discuss" the collapse of the American Svb.

This was stated in an interview with Bloomberg TV by the president of the Eurogroup, Paschal Donohoe.

"The euro area's exposure to the American Svb" is "very limited", explained Donohoe, underlining that in the old continent there is a very strong framework of rules in terms of supervision and crisis management.

The Ministry of Economy and Finance

reports that Minister Giancarlo Giorgetti is closely following the developments of the events related to the Silicon Valley Bank and the decisions taken by the American monetary authorities.

And he explains that "the Italian and European banking system is regularly monitored by the supervisory and supervisory authorities, thus ensuring its stability".

"We appreciate the promptness with which the American authorities have intervened - writes the MEF - and we trust that, if necessary, the European authorities will also intervene with the same promptness, also assessing the implications for the conduct of monetary policy and for financial stability".

France's finance minister, Bruno le Maire, sees no risk of contagion for the country's banks since the collapse of SVB given that the sector "is solid".

Speaking to France Info, the minister explained that "what happened in the United States is unique, with a bank that is exclusively exposed to the technology sector".

"There is no specific alarm for the French banking sector, we are certainly following the story closely," he added.

The German finance ministry is also monitoring the situation together with the Bafin (supervisory body that corresponds to Consob in Germany) and the Bundesbank.

Source: ansa

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