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☆ Markets on edge as US debt ceiling talks approach crunch time
▼ + stars: | 2023-05-22 | by ( Stella Qiu | ) www.reuters.com time to read: +4 min

A failure to lift the debt ceiling would trigger a default, sparking chaos in financial markets and a spike in interest rates. In early trade on Monday, S&P 500 futures lost 0.1% while Nasdaq futures were flat. On Friday, reports that debt ceiling negotiations had reached an impasse rattled markets even as Federal Reserve Chairman Jerome Powell said U.S. interest rates might not need to rise as much given the tighter credit conditions from the banking crisis. In Asia, China is expected to keep its key lending rates unchanged on Monday even as the ongoing economic recovery disappointed. U.S. crude futures were up 0.1% to $71.6 per barrel, while Brent crude futures rose 0.2% to $75.75 per barrel.

NEW YORK, May 16 (Reuters) - Silicon Valley Bank's former CEO Greg Becker told senators at a hearing that he was unaware the bank was in trouble when he sold stock in the months leading up to the regional U.S. lender's collapse. Becker, who sold SVB shares through the first quarter - the largest sale of which occurred on Feb 27, less than two weeks before the bank collapsed on March 10, triggering a rout in banking shares globally. Responding to questions from senators, Becker painted a picture of an unprecedented, unpredictable crisis at the bank. He said the bank took risk management seriously and had liquidity of around $80 billion at the end of last year. [1/2] Greg Becker, former president and CEO of SVB, speaks at the 2022 Milken Institute Global Conference in Beverly Hills, California, U.S., May 3, 2022.

But Fed officials on Monday said the jury is very much out. Bostic said businesses in his southeastern U.S. Fed district "are telling me we think you're close to overdoing it ... Investors have consistently bet that the central bank, due to some combination of recession or a faster-than-expected drop in inflation, will be cutting rates by later this year. Minneapolis Fed President Neel Kashkari said the central bank probably has "more work to do on our end, to try to bring inflation back down." In addition, he says the full impact of Fed rate hikes has yet to be felt.

☆ Dollar rises to 5-week high on inflation worries; lira falls
▼ + stars: | 2023-05-15 | by ( Kevin Buckland | ) www.reuters.com time to read: +4 min

Worries over a debt-ceiling standoff on raising the U.S. government's $31.4 trillion borrowing limit also lent some support to the safe-haven dollar. "Now that the Fed is sort of out of the way, inflation in the U.S. has come in softer than expected. The Japanese currency dipped as low as 136.27 per dollar, and was last about 0.3% lower at 136.17 per dollar. The dollar was last up 0.28% at 19.635 Turkish lira after earlier jumping to 19.70 for the first time since March 10. The U.S. currency sank 0.72% to 33.735 baht in onshore Thai trading, and earlier dipped as much as 0.92%.

☆ Private-credit firms see opportunity as banks tighten lending
▼ + stars: | 2023-05-10 | by ( Lisa Pauline Mattackal | ) www.reuters.com time to read: +2 min

May 10 (Reuters) - Private-credit firms are eyeing fresh opportunities from a potential borrowing squeeze in the United States as battered regional banks tighten lending after the turmoil in the sector, according to fund managers and investment strategists. Such lenders see commercial and residential real estate as particularly attractive, given the prominence of regional banks in these sectors. Regional U.S. banks accounted for about 70% of outstanding loans to the commercial real estate (CRE) sector alone, according to Capital Economics. "Signature was one of the biggest providers of real estate lending in the New York area, commercial real estate is very vulnerable ... as a lender you want to be on the other side of that," Handa said. Many private credit funds have plenty of excess funds, or "dry powder" to invest, said Matt Malone, head of investment management at private investment management firm Opto Investments.

May 9 (Reuters) - Digital stablecoin tether is winning the race for the title of the crypto world's "least risky" asset. Tether is already the top performer among stablecoins -- digital tokens pegged to some fiat asset like the dollar -- and has seen its market value soar since March. Buying tether and bitcoin is really a vote against the U.S. system," says Jensen. On CoinMarketCap's database of 23,891 tokens, tether has risen to number 3 with a market cap of $82 bln and a share of 6.83%. NO NEWS IS GOOD NEWSTo be sure, tether has long been dogged by doubts about its peg being backed by dollar reserves.

☆ Standard Chartered CEO says big U.S. recession unlikely
▼ + stars: | 2023-05-08 | by ( Yousef Saba | ) www.reuters.com time to read: +3 min

[1/2] The Standard Chartered bank logo is seen at their headquarters in London, Britain, July 26, 2022. REUTERS/Peter NichollsDUBAI, May 8 (Reuters) - Standard Chartered (STAN.L) Chief Executive Bill Winters said on Monday he sees a big recession in the United States as unlikely, although a period of negative growth was possible. "I think it's less the question of a massive decline in the U.S. - I think that's very, very unlikely," Winters said at conference in Dubai, adding the economy was "extremely strong". I think unlikely. First Abu Dhabi Bank, the UAE's biggest lender, earlier this year had considered a bid to take over Standard Chartered, but later said it was no longer doing so.

☆ Warren Buffett says Berkshire is cautious on banking sector
▼ + stars: | 2023-05-06 | by ( John Mccrank | ) www.reuters.com time to read: +4 min

REUTERS/Rachel MummeyNEW YORK, May 6 (Reuters) - Warren Buffett on Saturday said Berkshire Hathaway (BRKa.N) is cautious around the banking sector, largely because of poor messaging by officials around government-insured deposits, as well as distorted incentives he said were brought on by banking regulation. "The U.S. government and the American public have no interest in having a bank fail and having deposits actually lost by people," he said. Part of the reason for that is that incentives in banking regulation are "so messed up," he said. First Republic Bank, the latest regional U.S. bank to fail, disclosed that it was offering non-guaranteed jumbo-sized mortgages at fixed rates in its annual report. "The incentives in bank regulation are so messed up and so many people have an interest in having them messed up -- it's totally crazy," Buffett said.

☆ Walmart keeps grocery prices steady amid inflation, antitrust claims
▼ + stars: | 2023-05-05 | by ( Siddharth Cavale | ) www.reuters.com time to read: +6 min

During the period, while U.S. inflation averaged 7.5% Walmart kept prices steady, the Dataweave analysis shows. Reuters Graphics Reuters GraphicsThis was during a time when world food prices hit record highs and U.S. food-at-home prices rose in the double digits. Food-at-home prices, or prices of food bought at grocery stores and supermarkets, are expected to rise a further 6.6% this year, according to the U.S. Department of Agriculture. The data set, which included batteries in the basket of goods, showed that Walmart sold Energizer batteries at a significant discount to rivals. Similarly, at least two different types of Energizer coin batteries sold at Walmart were found to be between 30% and 35% cheaper than the next lowest priced rival.

Lending standards, which were already at levels consistent with past recessions, according to several indicators in the most recent 'SLOOS' and NFIB surveys, will only tighten further. Although tighter credit conditions will weigh on economic activity, hiring and inflation, recession can still be avoided. A separate NFIB banking survey published this week shows small business owners are not hitting the panic button just yet, but concern is growing. "Small business owners are, not surprisingly, concerned about the stability of the banking system. A strong small business banking system is essential for small business owners to operate and grow their business," Holly Wade, executive director of NFIB's Research Center said.

The narrowing rate differentials between the U.S. and Europe, as markets price in more European rate increases than in the U.S., has been boosting European currencies in recent months. The Fed has guided markets away from the possibility of rate cuts this year, though markets are pricing them in nonetheless. The European Central Bank announces its rate decision later in the day. "So I think central banks, including the Fed, are at or very near the peak in their cash rates." The Norwegian crown took a short trip after Norway's central bank raised interest rates by 25 basis points as expected.

May 3 (Reuters) - PacWest Bancorp (PACW.O) is exploring strategic options including a sale or capital raising, a source familiar with the matter said, sending the shares of the bank and several other U.S. regional lenders tumbling in after-market trading. The Phoenix-based regional lender said it was "reaffirming its financial strength as well as its deposit growth guidance in response to recent industry events." PacWest stock has lost almost 90% of its value since the regional banking crisis started on March 8. Zion Bancorp (ZION.O), First Horizon (FHN.N) and Comerica (CMA.N) each slumped more than 7% and the SPDR S&P Regional Banking ETF (KRE.P) dropped 5%. The cost of insuring against further losses in regional U.S. bank stocks stood on Wednesday near a one-month high in options markets.

☆ Dollar falls after Fed signals pause; banking woes dent confidence
▼ + stars: | 2023-05-04 | by ( Rae Wee | ) www.reuters.com time to read: +3 min

"Additional tightening may be needed ... but the FOMC does not appear to be pre-committing to another rate hike on June 14." The U.S. dollar index was last 0.12% lower at 101.11, after dropping more than 0.6% in the previous session. "There are a lot of concerns in the U.S. around the banking sector and the crunch on credit. "So I think central banks, including the Fed, are at or very near the peak in their cash rates." The European Central Bank (ECB) comes under the spotlight next, where expectations are for ECB policymakers to raise interest rates for the seventh meeting in a row later on Thursday.

As each domino falls, the next weakest bank begins to wobble," billionaire investor Bill Ackman wrote in a tweet. PacWest stock has lost almost 90% of its value since the regional banking crisis started on March 8. Zion Bancorporation (ZION.O), Comerica (CMA.N) and First Horizon (FHN.N) each slumped more than 7% and the SPDR S&P Regional Banking ETF (KRE.P) dropped 5%. The cost of insuring against further losses in regional U.S. bank stocks stood on Wednesday near a one-month high in options markets. On Wednesday a source said the lender was looking at options that include a potential sale or capital raise.

NEW YORK, May 2 (Reuters) - The cost of insuring against further losses in regional U.S. bank stocks stood near a one-month high in options markets on Wednesday, even as shares of lenders saw a reprieve from their recent sell-off. Skew on the SPDR S&P Regional Banking ETF - a gauge of relative demand for puts versus calls - remained elevated, hovering near the highest level since the COVID-19 market slump, data from OptionMetrics showed. The SPDR S&P Regional Banking ETF rose about 1.9% to 39.64 in afternoon trade, though it is down 33% on the year and fell on Monday and Tuesday. "The fact that you didn't see the follow-through from some of these other regional banks, with what would appear to be such great news, really didn't inspire a lot of confidence in some of these regional banks," said Seth Hickle, a derivatives portfolio manager at Innovative Portfolios, referring to JPMorgan’s rescue of First Republic. "The problem with regionals are going to be rising interest rates,” said Matt Amberson, principal at options analytics firm ORATS.

May 1 (Reuters) - Regulators seized First Republic Bank (FRC.N) and sold its assets to JPMorgan Chase & Co (JPM.N) on Monday, in a deal to resolve the largest U.S. bank failure since the 2008 financial crisis and draw a line under a lingering banking turmoil. Shares of JPMorgan rose 2% on Monday, while those of mid-tier banks fell and the KBW Regional Banking Index (.KRX) closed down 2.7%. [1/3] People walk past a First Republic Bank branch in San Francisco, California, U.S. April 28, 2023. "This is not the world financial crisis, this is not the savings and loan crisis. The failed bank's 84 offices in eight states will reopen as branches of JPMorgan Chase Bank from Monday, it added.

May 3 (Reuters) - A look at the day ahead in Asian markets from Jamie McGeever. The U.S. regional banking index tanked 5.5% on Tuesday, its biggest fall since the depths of the crisis in mid-March. This may play into Malaysian policymakers' thinking as they prepare to deliver their latest interest rate decision on Wednesday. But that's what Asian markets will be waking up to on Thursday. Before that on Wednesday they have the Malaysian rate decision, services PMI data from Australia and India, and South Korean FX reserves to offer local direction.

May 2 (Reuters) - A look at the day ahead in Asian markets from Jamie McGeever. The White House said First Republic was "severely mismanaged," the takeover protects depositors and the current banking turmoil bears no resemblance to 2008. Anyone who went long mega tech and short regional U.S. banks on Dec. 31 will be sitting pretty today. Expectations for further tightening this year are far from certain, and are gradually being pushed into the third quarter. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Shares of JPMorgan and some of the other the largest U.S. banks rose on Monday, while those of mid-tier banks fell. [1/3] People walk past a First Republic Bank branch in San Francisco, California, U.S. April 28, 2023. "This is not the world financial crisis, this is not the savings and loan crisis. JPMorgan also entered into a loss-share agreement with the FDIC on single family, residential and commercial loans it bought, but will not take First Republic Bank's corporate debt or preferred stock. The failed bank's 84 offices in eight states will reopen as branches of JPMorgan Chase Bank from Monday, it added.

☆ Jamie Dimon says 'this part of the crisis is over' after JPMorgan Chase buys First Republic
▼ + stars: | 2023-05-01 | by ( Hugh Son | ) www.cnbc.com time to read: +2 min

Jamie Dimon, chairman and chief executive officer of JPMorgan Chase & Co., during a Bloomberg Television interview at the JPMorgan Global High Yield and Leveraged Finance Conference in Miami, Florida, US, on Monday, March 6, 2023. The crisis that led to the downfall of three regional U.S. banks in recent weeks is largely over after the resolution of First Republic , according to JPMorgan Chase CEO Jamie Dimon. JPMorgan emerged as the winner of a weekend auction for First Republic after regulators decided that time had run out on a private sector solution. In the wake of the sudden collapse in March of Silicon Valley Bank and Signature Bank, investors have punished other lenders that had similar characteristics to SVB. Shares of regional banks including PacWest and Citizens Financial slumped in premarket trading.

☆ Fed calls for rules revamp in 'unflinching' review of SVB oversight
▼ + stars: | 2023-04-28 | by ( ) www.reuters.com time to read: +2 min

Fed Vice Chair for Supervision Michael Barr called the review "unflinching," describing the U.S. central bank's oversight of the Santa Clara, California-based bank inadequate and regulatory standards too low. * Silicon Valley Bank was "acutely exposed" to risks from rising interest rates and slowing activity in the technology sector in ways that senior leaders and its board of directors did not appreciate. * In 2022, SVB failed to test its capacity to borrow at the discount window and did not have appropriate collateral and operational arrangements in place to obtain contingency funding. * Fed supervisors discussed conducting an interest-rate risk review of SVB during 2022 but decided to prioritize other exams and defer it to the third quarter of 2023. * The level of Fed resources dedicated to its regional bank oversight "proved insufficient."

☆ Moribund euro zone, Amazon outlook dent stocks ahead of rate meetings
▼ + stars: | 2023-04-28 | by ( Huw Jones | ) www.reuters.com time to read: +4 min

Oil was firmer but still heading for another monthly decline after disappointing U.S. economic data and uncertainty over interest rates. The yen fell to a nine-year low against the euro after the Bank of Japan left its ultra-easy monetary policy unchanged. The euro zone grew only marginally in the first three months of 2023, and at a rate lower than market expectations, sending the euro lower. "Futures are saying interest rates will be lower than Fed Funds by year end, indicating a decline. Markets are pricing in an 85% chance of the Fed raising rates by 25 basis points, the CME FedWatch tool showed.

☆ Cool investors buy time for First Republic fix
▼ + stars: | 2023-04-28 | by ( ) www.reuters.com time to read: +1 min

NEW YORK, April 28 (Reuters Breakingviews) - If investors are worried that stresses at First Republic Bank (FRC.N) will hurt other lenders, they aren’t showing it. Stocks of regional U.S. banks are generally faring well despite fears that the San Francisco-based lender might fail. As the government and the private sector mull a rescue, the market’s composure buys precious time for reaching a deal. The difference between now and March, when Silicon Valley Bank and Signature Bank crumpled, is marked. Regional Bank exchange-traded fund (IAT.P) closed with a 0.7% gain.

☆ Highlights from the Fed review of SVB oversight
▼ + stars: | 2023-04-28 | by ( ) www.reuters.com time to read: +2 min

☆ Factbox: Fed, FDIC reviews of US bank failures to spotlight problems, fixes
▼ + stars: | 2023-04-27 | by ( ) www.reuters.com time to read: +6 min

On Friday the banks' regulators - the Federal Reserve and the Federal Deposit Insurance Corporation - will publish their accounts of what happened at both institutions, and propose fixes to prevent a repeat. The FDIC will also publish a separate report on deposit insurance by Monday. Barr has said the Fed's report will include confidential supervisory information, including citations and exam material not typically disclosed. DEPOSIT INSURANCEThe second FDIC report could provide insight into how officials are thinking about the role of deposit insurance, currently capped at $250,000 per depositor, in financial stability. "The most interesting thing I expect to see is what the FDIC recommends about the deposit insurance cap," Phillips said.

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