The actions of the US authorities calmed the markets. Investors do not expect further downturns among local banks. Bond yields are reacting.
Yesterday, optimism returned to the markets. US bond yields rose as concerns about the spread of contagion in the financial sector eased. Shares of regional US banks rose after reports that bankrupt bank SVB was bought by another organization. This pushed 2-year US bonds above 4%. The price of gold fell below $1950 and a potential double top pattern is forming on the chart.
The US authorities will help banks
Investors were also reassured by a Bloomberg report released over the weekend that the US authorities are considering expanding an emergency loan that will provide banks with additional support. The S&P Financial Sector Index rose 1.4 percent. Meanwhile, tech stocks tumbled after a two-day gain as U.S. bond yields soared.
Top US banking regulators said on Monday they plan to brief Congress that the entire financial system remains on solid footing following the recent bank failures. At the same time, these institutions will comprehensively review their policies to prevent future collapse.
However, fears have not completely disappeared, as Federal Reserve Board member Philip Jefferson said on Monday that stress among small banks could hit small businesses hardest.
Key numbers for the Fed
The key information this week will be Friday’s PCE deflator. Recall that this is the Fed’s preferred measure of inflation, and this value will certainly affect the future path of US interest rates.
In the foreign exchange market yesterday we saw a slight weakening of the US dollar, which led to an increase in the level of the EUR/USD pair. The pair “left” above the level of 1.08. There was more going on in the commodity market. Due to the increase in US debt yields, gold lost and a potential double top formed on the chart with a neckline around $1935. Only exceeding this level will give us a negative signal. So far, the attempt to break above $2,000 has resulted in buyers capitulating twice.
Source: Wprost
I am George Brown, author at Daily News Hack. I mostly cover economy news and I have been doing this for quite some time now. I have a lot of experience in this field and I’m always looking for new opportunities to learn more.
