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Calmer Waters 

European stock markets bounced early on Monday as relative calm returned amid the choppy seas of the banking ‘crisis’ as a buyer was found for Silicon Valley Bank’s assets. First Citizens will buy most of SVB’s assets, helping to lift sentiment across the banking sector after a rocky end to last week, though the pall of banking stress still hangs over the market. There is a not yet the sense that the market has stopped looking for its next victim. 

 

Bank Bounce 

Deutsche Bank shares rose almost 5% in early trading, topping the risers as the Stoxx Banks index rose more than 2%. That move helped push the wider indices 1% higher. The FTSE 100 touched 7,488 but was still off Friday’s high at 7,500. US futures trade firmer after Wall Street posted modest gains on Friday. Oil was a touch firmer with the improved risk tone lifting WTI (May) futures above $70, whilst gold fell to $1,966. US 10yr Treasury yields were touch higher at 3.4%. 

  

Cap’n Crunch 

Whether you call it a banking crisis or just the bubble being popped after more than a decade of free money, it ultimately comes down to the Fed. FOMC member and arch dove Neel Kashkari: "What’s unclear for us is how much of these banking stresses are leading to a widespread credit crunch. And then that credit crunch... would then slow down the economy". As stated last week, the question is how quickly we head from credit tightening to credit crunch that leads to immediate and sharp recession, pushing cuts back on the agenda. As stated many times in the last fortnight – it only stops once people stop asking who’s next. And it doesn’t seem like we’re at that stage yet.   

 

Data Doubts 

Data wise...China’s industrial profits fell a lot – down a quarter in the first two months of the year despite the easing of covid rules. Bundesbank chief Joachim Nagel and Bank of England boss Andrew Bailey are both due to speak later. I dare say there will be the usual Fed speakers cropping up on the wires, with Barr set to speak in Congress on Tuesday and Wednesday. Inflation data later this week will be the main eco event.  

And here’s a cool cat.

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