Dow went up 163, advancers over decliners about 5-2 & NAZ slid back 31. The MLP index added 2 to the 213s & the REIT index was up 1 to the 355s. Junk bond funds drifted lower & Treasuries had more selling, bringing higher yields (more below). Oil rose 1+, taking it over 70, & gold sank 25 to 1958 following recent strength..
AMJ (Alerian MLP Index tracking fund)
The IIMF warns that risks to financial stability have increased. That's the view that IMF chief Kristalina Georgieva expressed in a speech. She called for continued vigilance despite moves by advanced economies to calm market stress. The
IMF managing director reiterated her view that 2023 would be another
challenging year, with global growth slowing to below 3% due to scarring
from the pandemic, the war in Ukraine & monetary tightening. The outlook for global growth in 2024 was better, yet still below its
historic average of 3.8%, & the overall outlook remained weak. The IMF is slated to release new forecasts next month. Georgieva said policymakers in advanced economies had responded decisively to financial stability risks in the wake of bank collapses, but continued vigilance was needed. "So,
we continue to monitor developments closely and are assessing potential
implications for the global economic outlook and global financial
stability," she said, adding that the IMF was paying close attention to
the most vulnerable countries & particularly low-income countries
with high levels of debt. These shocks brought back memories of the 2008-2009 financial crisis. The banking crisis began when the FDIC shut down Silicon
Valley Bank, the nation's 17th largest, as regulators moved to protect
customers as it faced a liquidity crunch following a $2B loss. It became the largest bank failure since the financial crisis.
IMF says risks to financial stability have increased, calls for vigilance
Treasury yields climbed as gains in riskier markets such as equities made traditionally safer bonds less appealing. The yield on the 10-year Treasury was up by close to 9 basis points to 3.468% & the 2-year Treasury was trading at around 3.955% after rising by 17.8 basis points. Investors considered fresh developments in the banking sector. A report over said the weekend that the deposit outflow from small banks to industry giants like JPMorgan Chase & Wells Fargo has slowed in recent days. Meanwhile, another report said that US authorities were considering expanding an emergency lending program for banks, which could give First Republic more time to shore up its liquidity. Early today, the US Federal Deposit Insurance Corp announced that First Citizens Bank & Trust Co would purchase deposits & loans held by the now-collapsed Silicon Valley Bank. Concerns about both regional & global banks have spread rapidly in recent weeks as investors fretted about whether SVB's collapse & Credit Suisse's takeover by UBS were a sign of sector-wide contagion. The turmoil also played a role in the Federal Reserve's latest policy decision, its chair Jerome Powell said last week after the central bank hike interest rates by 25 basis points. It also hinted at a potential pause of rate increases on the horizon.
Treasury yields rise to start the week
Regional bank stocks moved sharply higher as investors were encouraged by reports that the recent strain on the sector could be easing & that additional gov support could be on the way. Shares of First Republic jumped by 13%, chipping away at the struggling firm's steep losses in Mar & shares of PacWest Bancorp rose about 2.5%, while Western Alliance gained 5.5%. These moves follow several signs that the crisis for regional banks could be easing in the US. Today's gains also follow the announcement that First Citizens BancShares agreed to buy a large chunk of SVB, including its deposits & branches. Shares of First Citizens jumped more than 40%. Parts of the smaller Signature Bank have already been purchased by New York Community Bancorp. And in Europe, Swiss officials brokered a sale of Credit Suisse to UBS, though Credit Suisse's issues appear to be largely unrelated to the US regionals.
First Republic rebounds by 13% on Monday to lead regional bank comeback
Banking officials along with the Fed & gov people are working the straighten out the banking mess. It looks like they are having some success. All this brings some degree of calm to what has been a very chaotic time for the stock market. But a lot more work needs to be done. In the meantime the economic outlook appears to be muddy.Dow Jones Industrials
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