What happened this week

March has been a tumultuous month for the banking sector. On March 10 a classic bank run lead to the collapse of Silicon Valley Bank, US regulators intervened to take control, the consequences have been seen globally. A week later US regional bank, Signature Bank, was shut down, then a third US bank First Republic Bank. This past week saw the collapse of Credit Suisse, with UBS, Switzerland’s largest bank, swooping in with an emergency rescue deal announced Sunday evening. 

In the US there has been nearly $200 billion in direct central bank support, guaranteeing all the deposits at Silicon Valley Bank and Signature Bank the US Federal Reserve has committed $140 billion. The Swiss National Bank similarly offered Credit Suisse an emergency loan for $54 billion. 

The question now remains, what next, where are the markets heading? The stress placed on banks and the financial sector will likely have consequences on the consumer, we will likely see credit become more expensive and less available. Goldman Sachs analysts say the American economy has a 35% chance of entering a recession in the next 12 months. The world’s second-largest economy, China, is also reacting to this month’s events, the Chinese Central Bank cut minimum reserve requirements for lenders in an attempt to keep cash flowing through their economy. 

Stock markets are expected to open flat on Monday morning as investors assess the events of the weekend, and anticipate the next Interest Rate decisions by the Fed on Wednesday. Investors are split in opinion as to whether the Fed will pause rate hikes or raise by a quarter point, most analysts believe that the possibility of a half point rise in rates is gone.

Looking ahead to this week:

Tues Mar 21: Existing Home Sales

Wed Mar 22: FED INTEREST RATE DECISION

Thurs Mar 23: Initial Jobless Claims, New Home Sales

Fri Mar 24: Durable Goods