SVB collapse shatters Treasury Yields
The main topic today has been the collapse of Silicon Valley Bank, with Treasury Yields and Equity Markets both finding life difficult. The 2yr US Treasury Yield fell even further and dipped below 4% earlier today, while the 10yr yield is on 3.45%. This is important to understand because the 2yr yield has lost 100bps since Friday afternoon, with markets now heavily concerned about the contagion effect it will have on the banking sector. The market has started to price in the chance of zero hikes by the FOMC next week, while the chance of a 50bps hike has gone from 100% to 0% in the past two days. Tomorrow's CPI print has become even more important and could provide the FOMC with a new headache should it be higher than expected.
Currency Update
The dollar has been under pressure against the majors, with the Yen, Aussie, and Pound all grinding out gains above 1%. The rand found it challenging to benefit from the softer dollar, as the local unit has been trading sideways for most of the day. The major benefactor has been gold, gaining 2.3% on the day, with the metal's safe-haven status providing support in an environment the VIX has risen 12% for the day.
#SiliconValleyBank #Treasury #Bankingcrisis
