Category: Daily Instagraph

The oil price has lost 44% since June last year. Over the past weeks it has continued to weaken due to the crisis englobing SVB to Credit Suisse. As investors like easy narratives, we started to see comparisons with the behaviour of the oil price during the Global Financial Crisis. To us this looks premature … Continued

A take-over for 3 bn CHF (0.75 CHF): today’s headline on Credit Suisse in the FT reads much better than the underlying reality is. It is now clear that Credit Suisse could not have survived without this UBS take-over. Let this sink in: a modern bank run on a systemically relevant bank created a situation … Continued

Today’s graph is about a fundamental change in the bond market that occurred over the last 10 days: it summarizes the expectations for further 25 bps interest rate increases by the Fed. The trouble in the banking sector, that started with SVB but now englobed banks globally like systemically relevant Credit Suisse, has fundamentally changed … Continued

The Swiss National Bank stepped in yesterday night to allow Credit Suisse to borrow 50 bn CHF from a central bank liquidity facility and to make a tender offer to buy back up to three billion francs of dollar- and euro-denominated debt. This lifeline will probably help to take out some of the drama and … Continued

The larger US banks who are not threatened by imminent bank runs are currently earning risk-free returns as, on average, they still provide deposit rates of 0.48% while money market funds currently pay 4.42%. This means a 3.94% net interest margin while placing the deposits with little additional credit or duration risk. With such juicy … Continued

Global financial stocks have lost $465 billion in market value in two days as investors run for the exits. The mood remains downbeat throughout Asia this morning. The banks that considered the weakest are being hurt most. Close to home, Credit Suisse Group’s stock lost 9.6% on Monday. What is more worrying to us is … Continued

That was quick: late Sunday US authorities announced a new backstop for banks that should be big enough to protect all bank deposits. This news came after the closing of New York’s Signature Bank and will fully protect depositor’s money. With this important move, the risk of contagion and more bank runs has been significantly … Continued

There is some stress amongst investors in the US banking sector: the US index of banking stocks ( KBW Bank Index ) experienced its biggest drop yesterday since June 2020. Hold on a second: the current environment should be good for banks as rising interest rates support net interest margins and the profits for banks. … Continued

Economic trends in the manufacturing and service sectors have been improving worldwide in 2023 and are now solidly in expansion territory (index above 50). This is a positive sign for economic growth to come but creates a dilemma for central banks who need to tighten financial conditions in order to fight inflation. For as long … Continued

We cannot avoid writing about inflation again after the hawkish comments from the Fed Chair yesterday before Congress. The Fed has managed to shift market expectations for future Fed policy rates over the last weeks and bond investors are no longer hoping for a decrease in the magnitude of interest rate increases this year. They … Continued