Asian markets could rebound on Tuesday from their sluggish start to the week, after a deal to buy the assets of stricken U.S. bank Silicon Valley Bank (SVB) prompted a relief rally in financials and allayed fears of deeper systemic stress. Regional U.S. lender First Citizens BancShares said it will take on SVB's assets of $110 billion, deposits of $56 billion and loans of $72 billion, and investors liked what they heard. The S&P 500 banking index jumped 3% - First Citizen shares leapt 54% - the MSCI global financials index rose 1.2% and euro zone banks rose 1.7%. Systemic banking crisis fears were further allayed by Fed Vice Chair for Supervision Michael Barr, who plans to tell lawmakers on Tuesday that regulators are committed to ensuring all U.S. bank deposits are safe, according to prepared remarks. Brent crude's rise of over 4% was another indication that investors may be recovering their mojo in the final week of a torrid quarter. All good news, right? Yes, but there are reasons for caution, and not just because banking crises are rarely resolved in days or weeks.
The surge of more than 20 basis points in the two-year U.S.
Treasury yield was down due to a poorly received auction as much
as due to confidence that banks have turned a corner. The notes
sold at a high yield of more than two basis points above where
they had traded before the auction, and demand was the weakest
since November 2021.
Treasury's sale of $43 billion five-year notes on Tuesday
and $35 billion of seven-year notes on Wednesday will be worth
monitoring.
And crypto shares fell after the Commodity Futures Trading
Commission said it had sued crypto exchange Binance and its CEO
and founder Changpeng Zhao for operating an "illegal" exchange
and a "sham" compliance program.
Bitcoin fell 3.5%, the third time in a week it has lost 3%
or more in a single day.
There are no central bank policy decisions on Tuesday, but
investors can expect a slew of headlines from central bank
officials around the world to hit their screens.
In Asia, Bank of Japan governor Haruhiko Kuroda gives a
speech, and finance ministers and central bank governors of the
ASEAN nations attend a three-day summit in Bali. European
Central Bank and Bank of England chiefs Christine Lagarde and
Andrew Bailey head a raft of European policymaker events.
And the Fed's Barr delivers his "Bank Oversight" testimony
to lawmakers.
Here are three key developments that could provide more direction to markets on Tuesday: - Australia retail sales (February) - ASEAN finance chiefs summit - Fed's Barr speaks on banking sector oversight <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ US 2-year yield & world bank stocks ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (By Jamie McGeever; Editing by Josie Kao)
5607Reuters Messaging: jamie.mcgeever.thomsonreuters.com@reuters.net))