DEVELOPMENTS
* Ratings agency Moody's cut its outlook on the U.S. banking
system to negative from stable "to reflect the rapid
deterioration in the operating environment."
* The Republican chairman of the House Financial Services
Committee urged confidence in the U.S. banking system and said
the Federal Reserve and regulator FDIC had "acted swiftly and
boldly" within the law. Without giving specifics, he also said
he wanted to hear from both the banks and regulators.
* Regulatory scrutiny of SVB's demise intensified with the
U.S. Justice Department opening a probe, a source familiar with
the matter said. The Securities and Exchange Commission has
launched a parallel investigation, according to the Wall Street
Journal.
The SEC and a spokesperson for the Justice Department in
Washington declined to comment. SVB did not immediately respond
to a request for comment.
* Apollo Global Management Inc , Blackstone Inc and KKR & Co Inc have expressed interest in a
book of loans held by SVB, Bloomberg News reported, citing
people familiar with the matter.
* Democratic U.S. Senator Elizabeth Warren called on Federal
Reserve Chair Jerome Powell to recuse himself from an internal
review of recent bank failures, saying his actions "directly
contributed" to them.
*Senate Banking Committee Chairman Sherrod Brown urged
Congress to enact regulations to strengthen stress tests and
capital and liquidity standards for banks, and said he hoped the
Fed would not raise rates when it meets next.
* Chancellor Olaf Scholz said Germans should not have major
concerns and that regulators had learned lessons from the global
financial crisis in 2008.
MARKETS
* The S&P 500 regional banks index rebounded
1.4%, leaving it with a 26% loss over the past five sessions.
First Republic Bank surged 27%, while KeyCorp jumped over 7%.
Among large U.S. banks - to which sources say customers
have moved deposits to over the past week - Citigroup regained almost 6% and Wells Fargo added 4.6%.
* Global shares turned higher, ending a five-session rout,
as U.S. inflation data bolstered bets on a smaller interest rate
hike by the Federal Reserve next week.
* U.S. Treasury yields rose on Tuesday, a day after major
declines, as investors consolidated positions and weighed the
monetary policy impact of banking system turmoil against
stubbornly high inflation.
* Europe's banking index ended up 2.7% after posting
its biggest percentage loss in over a year on Monday.
* Euro zone government bond yields rose as investors
reckoned repricing of the European Central Bank's tightening
path in recent days might have been overdone.
* Traders currently see a 77% chance of a 25 basis-point
increase at the meeting, while expectations for no rate hike
have fallen to 23%. Early last week, a 25 basis-point hike was
fully priced in, with a 70% chance seen of 50 basis points.
* The ECB's deposit rate is seen peaking at around 3.65% .
QUOTES
* "This is part of the process of the knob being turned to
tighten financial conditions to make sure that we are on our way
to normalising a higher interest rate world," Morgan Stanley
co-president Edward Pick said on Tuesday. "But there might well
be surprises, there might well be reactions."
*"The market is having an opportunity to digest some of the
news over the last couple of days," said Matthew Keator,
managing partner, the Keator Group. "(Investors) are seeing a
coordinated effort with various government agencies, and with
hindsight, they’re feeling as if things have contained
themselves a bit."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
INSTANT VIEW 4 -Bank stocks tank, markets rethink rate-hike path "Calm down!" EU finance ministers play down SVB contagion
despite banking shares rout Biden pledges 'whatever needed' for U.S. system as banks hit by
SVB fallout FACTBOX-Which companies are affected by SVB collapse? FACTBOX-SVB collapse may prompt Fed to go slow on rate hikes EXPLAINER-What caused Silicon Valley Bank's failure? BREAKINGVIEWS-Bank rescue buys stability at a high price BREAKINGVIEWS-Bank-rule pendulum swings back to 'safety first' First Republic shares dive on contagion fear, dragging U.S.
regional banks Silicon Valley exhales after US intervenes in SVB collapse ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Compiled by Catherine Evans, Nick Zieminski and Anna Driver
Editing by Matthew Lewis)
