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☆ Take Five: Everything Everywhere All at Once
▼ + stars: | 2023-03-17 | by ( ) www.reuters.com time to read: +5 min

Lender Credit Suisse will likely dominate a Swiss National Bank meeting and the Bank of England might place its inflation fight on hold. Some predict Credit Suisse could merge with peer UBS to rebuild Switzerland's reputation as a finance safe haven. Credit Suisse will also take centre stage when the SNB meets on Thursday. The Bank of England could be on the verge of wrapping up a 17-month campaign of raising rates to combat inflation. Labour market pressures - including wage inflation - are starting to soften.

☆ Credit Suisse managed funds' net outflows top $450 mln -Morningstar
▼ + stars: | 2023-03-17 | by ( Nell Mackenzie | ) www.reuters.com time to read: +2 min

SummarySummary Companies Net outflows seen March 14,15Data for March 16 yet to compiled -MorningstarLONDON, March 17 (Reuters) - Credit Suisse <CSGN.S> saw more than $450 million in net outflows from its U.S. and European managed funds from March 13 to 15, Morningstar Direct said on Friday, as retail and institutional counterparties pulled money out of funds managed by the embattled Swiss lender. The more than 300 European funds managed by the bank had an estimated net inflow of just over $14 million on March 13. By March 14 that had flipped to net outflows of $205 million, data provider Morningstar said. On March 15 there were net outflows of just over $211 million, it said. More than 20 U.S. funds tracked showed a $22,000 net outflow on March 13 which widened to $20 million the next day and to $29 million on March 15, Morningstar said.

LONDON, March 17 (Reuters) - Hedge funds are watching growing U.S.-Chinese geopolitical tensions and have spotted ways to trade them. Taking a short position on investment grade bonds would make up for losses on long positions elsewhere, he said. If tensions were resolved, being caught with a negative view on Chinese stocks would not be beneficial, and therefore she would not short Chinese AI firms but invest in U.S. ones instead. "The most sensitive commodity to a break down in trade between China and Russia and the West is graphite," he added. "Supply chains are already shifting to Penang, and they are receiving investment from both China and the U.S.

Separately, two days of chaos in China's $21 trillion bond market ended on Friday after Beijing allowed money brokers to resume providing data to third-party platforms. Jeffrey Gundlach, CEO of DoubleLine Capital, said he considered selling Treasuries earlier in the week but the market was "wildly illiquid." Bond market volatility spikesKEEPING WATCHThe heightened volatility has caught the eye of officials who play a role in ensuring financial markets stability. Analysts noted that bond volatility was exceptionally high not only because of a flight to safe-haven government debt, but also due to a massive repricing of rate-hike expectations. "If liquidity is deteriorating due to wild swings in safe-haven markets, that has implications for the functioning of financial markets and broader economic stability."

A round of financing on Sunday raised through JPMorgan had given First Republic access to $70 billion in funds. First Republic Bank's stock closed up 10% on news of the rescue but its shares fell 18% in after-market trading, after the bank said it would suspend its dividend. [1/2] A person walks past a First Republic Bank branch in Midtown Manhattan in New York City, New York, U.S., March 13, 2023. It said it would exercise an option to borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank, which confirmed it would provide liquidity to the bank against sufficient collateral. Since March 8, before last week's collapse of SVB, European banks have lost around $165 billion in market value, Refinitiv data shows.

☆ Credit Suisse CEO said bank's liquidity basis is "very very strong"
▼ + stars: | 2023-03-16 | by ( ) www.reuters.com time to read: +1 min

ZURICH, March 15 (Reuters) - Credit Suisse (CSGN.S) Chief Executive Ulrich Koerner spoke of the strength of the Swiss lender's liquidity basis in an interview with CNA on Wednesday, after its share price dropped more than 30% following comments by the company's lead investor. "Our capital, our liquidity basis is very very strong," Koerner said. Earlier, Credit Suisse's largest shareholder, Saudi National Bank (1180.SE), said it would not buy more shares in the Swiss bank on regulatory grounds. A 30% drop in Credit Suisse shares triggered a 6% plus fall in the European banking index (.SX7P), while five-year credit default swaps (CDS) for the flagship Swiss bank hit a new record high, highlighting increasing investor concerns. Reporting by Noele Illien; editing by Dhara Ranasinghe and Amanda CooperOur Standards: The Thomson Reuters Trust Principles.

☆ ECB goes big on rates but bank turmoil clouds central banks' outlook
▼ + stars: | 2023-03-16 | by ( ) www.reuters.com time to read: +5 min

Overall, 10 big developed economies have raised rates by a combined 3,165 basis points (bps) in this cycle to date. Reuters Graphics3) CANADAThe Bank of Canada on March 8 became the first major central bank to halt monetary tightening during this cycle. Reuters Graphics6) NORWAYNorway's central bank meets next week and is expected to raise rates by 25 bps to contain above-target inflation. Reuters Graphics10) JAPANThe Bank of Japan, the most dovish major global central bank, maintained ultra-low interest rates at its March meeting, the final one for retiring BOJ governor Haruhiko Kuroda. The BOJ resisted changing its controversial yield curve control policy, which it uses to cap interest rates on longer-term debt.

[1/2] European Central Bank (ECB) President Christine Lagarde speaks during a news conference following the ECB's monetary policy meeting in Frankfurt, Germany March 16, 2023. Reuters Graphics Reuters GraphicsPresident Christine Lagarde noted it was impossible to determine the future rate path amid "completely elevated" uncertainty stemming from market ructions. "Given financial instability risks, there's growing uncertainty on future ECB actions beyond this pre-signalled rate hike," said Daniele Antonucci, chief economist and macro strategist at Quintet Private Bank. Piet Christiansen, chief analyst at Danske Bank, said he was sticking to a call for a 4% peak ECB rate. "Unless this turns into a macroeconomic crisis then we are ripe for a sell-off and a repricing of rate hike expectations," he said.

Credit Suisse shares were indicated at 2.3 Swiss francs ($2.48), up 35% from Wednesday's close. The Swiss bank's announcement overnight helped stem heavy selling in financial markets in Asian trade on Thursday and European markets were heading for a bullish start to the day. Analysts at JPMorgan said in a note that a takeover was the most likely scenario for Credit Suisse, especially by rival UBS . "Credit Suisse is the first major bank, deemed too big to fail, to take up the offer of an emergency lifeline," Susannah Streeter, head of money and markets at Hargreaves Lansdown, said. "The $54 billion rescue wad is staunching worries about a bigger run on Credit Suisse and the repercussions for other institutions around the world exposed to its operations," she added.

Signs of calm and stability in banking stocks, which have tanked in the past week following the collapse of Silicon Valley Bank (SVB), soon paved way for renewed selling as Credit Suisse shares fell to record lows. Reuters GraphicsThe STOXX 600 (.STOXX) index fell 1.67%, while Europe's broad FTSEurofirst 300 index (.FTEU3) fell 51.58 points, or 2.91%Investors rushed back into safe haven investments. "The Credit Suisse share price is falling and government bonds are rallying on the back of that. Markets are "spooked" by Credit Suisse headlines, said Richard McGuire, head of rates strategy at Rabobank in London. "For today Credit Suisse is the dish of the day but we don't think this will be a longer lasting trend," he said.

[1/3] Switzerland's national flag flies above a logo of Swiss bank Credit Suisse in front of a branch office in Bern, Switzerland November 29, 2022. Reuters GraphicsThe STOXX 600 (.STOXX) index fell 1.29%, while Europe's broad FTSEurofirst 300 index (.FTEU3) fell 44.48 points, or 2.51%. "The Credit Suisse share price is falling and government bonds are rallying on the back of that. Markets are "spooked" by Credit Suisse headlines, said Richard McGuire, head of rates strategy at Rabobank in London. "For today Credit Suisse is the dish of the day but we don't think this will be a longer lasting trend," he said.

When bond yields fall, their price rises. But asset managers that run large government bond portfolios still expect bond yields to rise and say they are selling into the rally, expecting the European Central Bank and the U.S. Federal Reserve stay hawkish. Legal and General Investment Management (LGIM), the UK-based $1.6 trillion asset manager, is also reducing its exposure to government bonds, taking profits following the bond rally. As selling gripped bank shares on Wednesday, money market pricing suggested traders were leaning towards a 25 basis-point Fed rate increase next week. "We expect rates to rise," agreed Brian Nick, chief investment strategist at $1.1 trillion U.S. asset manager Nuveen.

☆ Credit Suisse unease sparks selloff in world stocks
▼ + stars: | 2023-03-15 | by ( Dhara Ranasinghe | ) www.reuters.com time to read: +5 min

[1/3] Switzerland's national flag flies above a logo of Swiss bank Credit Suisse in front of a branch office in Bern, Switzerland November 29, 2022. Reuters GraphicsEurope's bank index has now seen more than 120 billion euros evaporate ($127.08 billion) in since March 8. "The Credit Suisse share price is falling and government bonds are rallying on the back of that. Markets are "spooked" by Credit Suisse headlines, said Richard McGuire, head of rates strategy at Rabobank in London. "For today Credit Suisse is the dish of the day but we don’t think this will be a longer lasting trend," he said.

☆ Uneasy calm descends after SVB-triggered turmoil
▼ + stars: | 2023-03-15 | by ( Dhara Ranasinghe | ) www.reuters.com time to read: +5 min

The European Central Bank is still leaning towards a half-percentage-point rate hike on Thursday, despite turmoil in the banking sector, given high inflation, a source close to its Governing Council told Reuters. European stocks slipped 0.9% (.STOXX) in early trade but held above three-month lows reached on Monday as panic gripped world markets following SVB's collapse last week. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.9%, having slid 1.7% on Tuesday. Japan's Nikkei index was flat (.N225) while an index of Japanese banks, which has slid 8% this week, jumped over 3% (.IBNKS.T). There had been worries that stronger-than-expected data might lead the Fed to go for jumbo-sized hikes to battle inflation.

☆ JPMorgan cranks up equities "underweight" after market rout
▼ + stars: | 2023-03-15 | by ( ) www.reuters.com time to read: 1 min

LONDON, March 15 (Reuters) - JPMorgan's strategists ratcheted up the investment bank's "underweight" recommendation on equities on Wednesday and urged switching into cash following the market rout caused by Silicon Valley Bank's collapse. In a note titled "There are many carry trades, and they can't all be bailed out", JPMorgan analysts said: "We maintain a defensive tilt in our model portfolio, and further increase our UW (underweight) in equities vs. raising our cash allocation." "When the (global) economy is slowing down and financing costs are rising, all these implicit or explicit carry trades are pressured to unwind, leading to an end of the cycle. We believe we are in that stage and remain negative on risky asset classes." Reporting by Marc Jones; Editing by Dhara RanasingheOur Standards: The Thomson Reuters Trust Principles.

☆ VIEW UK budget: no recession in 2023; UK assets sink in global market turmoil
▼ + stars: | 2023-03-15 | by ( ) www.reuters.com time to read: +5 min

"Despite continuing global instability, the OBR report today that inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023." MARKET REACTION:STOCKS: The FTSE 100 (.FTSE) was down 3%, under pressure from a rout in global bank stocks, while the domestic-focussed midcap index (.FTMC) fell 2.5%. MONEY MARKETS: UK bond yields pared some of their daily declines, with the 10-year yield last down 19 basis points at roughly 3.30%, compared with a session low of 3.289% when Hunt began talking. EDWARD PARK, CHIEF INVESTMENT OFFICER, BROOKS MACDONALD, LONDON:"I would view this very much as a budget for the bond market." "When the dust settles, international investors will be constructive around the type of budget we've had today, which suggests a calmer approach to managing the UK.

The ECB has contacted banks on its watch to quiz them on their exposure to the struggling Swiss lender, two supervisory sources told Reuters. Money market pricing suggested traders now saw less than a 20% chance of a 50 basis point rate hike at Thursday's scheduled ECB meeting. That's down from as high as 90% at the start of the session , when a source-based story saying ECB policymakers were leaning towards a half-percentage-point rate hike was published. While rapidly rising interest rates across major economies have raised concern about potential pressure points, many analysts still expected a large ECB hike given high inflation. Pictet's Ducrozet said the ECB could also ease collateral rules for banks, though not as much as the Federal Reserve.

☆ Man Group CEO takes home biggest pay package since 2008
▼ + stars: | 2023-03-14 | by ( Nell Mackenzie | ) www.reuters.com time to read: +1 min

Man Group (EMG.L), as a public company traded on London's FTSE 100 index, is a rarity among hedge funds. Large investors such as pension schemes and sovereign wealth funds use hedge funds to guard against broader market volatility. The broader HFRI Composite Index, which tracks the performance of hedge funds, rose by about 12% in 2020, according to data firm Hedge Fund Research (HFR). Over the last three years, Man Group, which uses discretionary and computer led strategies to trade, has taken in $18.7 billion of new client money and made $11.5 billion in investment gains. In 2008, Peter Clarke, the former CEO of the hedge fund, took home $14 million.

☆ Quotes: Global banks under pressure as SVB triggers contagion worries
▼ + stars: | 2023-03-14 | by ( ) www.reuters.com time to read: +8 min

LONDON, March 14 (Reuters) - The health of the global banking sector as interest rates rise remained in the spotlight on Tuesday in the wake of the collapse of Silicon Valley Bank (SVB). But days of wild swings in global markets and hefty losses in bank shares, left the outlook for the sector in focus. Banks are now faced with the classic problem that has threatened banks throughout history: a mismatch in terms between assets and liabilities." Hopefully we'll go over the next few days, whether or not the financial system is going to calm down or not. "It’s been an indiscriminate sell off in banking stocks, the financial sector repriced everywhere.

Traders currently see a 50% chance of no rate hike at that meeting, with rate cuts priced in for the second half of the year. Shares of First Republic Bank (FRC.N) tumbled more than 60% as news of fresh financing failed to reassure investors, and so did Western Alliance Bancorp (WAL.N) and PacWest Bancorp (PACW.O). U.S. bank regulators sought to reassure nervous customers on Monday who lined up outside SVB's Santa Clara, California, headquarters, offering coffee and donuts. Regulators also moved swiftly to close New York's Signature Bank SBNY.O, which had come under pressure in recent days. In China, where SVB was the main go-to foreign bank for the majority of start-ups, entrepreneurs and venture funds were also scrambling for alternative funding.

SVB's meltdown sparked a partisan battle in Washington on Monday, with Democrats arguing that a Trump-era change to bank oversight rules undermined the stability of regional banks. In the money markets, indicators of credit risk in the U.S. and euro zone banking systems edged up. [1/3] U.S. President Joe Biden delivers remarks on the banking crisis after the collapse of Silicon Valley Bank (SVB) and Signature Bank, in the Roosevelt Room at the White House in Washington, D.C., U.S. March 13, 2023. On Monday morning, U.S. bank regulators sought to reassure nervous customers who lined up outside SVB's Santa Clara, California, headquarters, offering coffee and donuts. A furious race to reprice interest rate expectations also sent waves through markets as investors bet the Fed will be reluctant to hike next week.

Biden said his administration's actions over the weekend meant "Americans can have confidence that the banking system is safe", while also promising stiffer regulation after the biggest U.S. bank failure since the 2008 financial crisis. Shares in U.S. banking giants JP Morgan Chase (JPM.N), Morgan Stanley (MS.N) and Bank of America (BAC.N) nevertheless weakened. But your second thought is, how big was that crisis, how big were the risks that this step had to be taken?" U.S. regulators stepped in on Sunday after the collapse of SVB, which had seen a run after a big bond portfolio hit. [1/3] U.S. President Joe Biden delivers remarks on the banking crisis after the collapse of Silicon Valley Bank (SVB) and Signature Bank, in the Roosevelt Room at the White House in Washington, D.C., U.S. March 13, 2023.

Germany's Commerzbank (CBKG.DE) fell as much as 12.7%, while Credit Suisse (CSGN.S) hit a new record low after falling 15%. Biden said his administration's rapid actions at the weekend should reassure Americans that the U.S. banking system is safe, and promised stiffer bank regulation after the country's biggest bank failure since the 2008 financial crisis. "Americans can have confidence that the banking system is safe. But big U.S. banks including JP Morgan Chase (JPM.N), Morgan Stanley (MS.N) and Bank of America (BAC.N) also weakened. In the money markets, a closely watched indicator of credit risk in the U.S. banking system edged up, as did other indicators of credit risk in the euro zone.

[1/3] U.S. President Joe Biden delivers remarks on the banking crisis after the collapse of Silicon Valley Bank (SVB) and Signature Bank, in the Roosevelt Room at the White House in Washington, D.C., U.S. March 13, 2023. Germany's Commerzbank (CBKG.DE) fell as much as 12.7%, while Credit Suisse (CSGN.S) hit a new record low after falling more than 15%. Dowding said he did not think that a lot of the issues affecting U.S. banks would be present in European lenders. It said Silicon Valley Bank UK had loans of around 5.5 billion pounds and deposits of around 6.7 billion pounds as of March 10. U.S. banks lost more than $100 billion in stock market value late last week following SVB's failure, while European banks have now lost a similar amount, a Reuters calculation showed.

Markets remained fragile, with European bank stocks tumbling over 5% on Monday and U.S. banks set to open lower (.SX7P). Markets also moderated their view on UK rates and were pricing in a roughly 75% chance of a 25 bps hike when the Bank of England meets next week. Goldman Sachs said on Sunday the banking stress meant it no longer expected the Fed to hike rates next week. "It's not going to want to go clattering in with another 50 (bps hike) and see some other financial institution getting hosed." A new Fed bank funding scheme aimed at addressing some of Silicon Valley Bank's apparent problems with losses in its bond portfolio is expected to further help with stability for banks and bonds.

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