Otherwise there's little sign yet of a shock to a wider economy that, if anything, was picking up steam again this year just before March. Weekly U.S. jobless numbers will again gauge the labor market temperature later on Thursday as more Fed officials emerge to give their readout on the situation.
But while U.S. regional bank stock indices have clearly suffered a hit of about 20% from the March stress, the wider S&P500 is on track to end the first quarter tomorrow some 5% higher. The tech-heavy, interest-rate sensitive Nasdaq <>IXIC> is up 14%.
Stock volatility indices have returned to levels seen just as the Silicon Valley Bank problems first hit three weeks ago - more than two points lower than where they started the year. That's partly due to an assumption a brewing credit crunch will stop Federal Reserve interest rate rises in their tracks and see easing by year-end.
That U-turn in thinking during the month saw wild swings in
the bond and rates markets, where key volatility gauges hit their highest since the 2008 crash. But even these
seismographs are down by a quarter from mid-month peaks.
Futures markets remain undecided about whether there's one
more Fed rate hike left in May - but they remain confident
easing will now come later in 2023.
Two-year Treasury yields which have now got a toehold back
above 4% are settling about 25-30 basis points below where they
started this year. The is about 1% lower so far this
year.
So the rates horizon has fallen a bit once the noisy swings
of the month are stripped out - but the economy, even though the
bulk of March data has not arrived yet, continues to surprise
more positively than at any point in almost a year. Elsewhere, European markets continued to advance on
Thursday, with banking stocks up another 2% and credit
default swaps on many banks lower too. Even battered commercial
real estate stocks, hit hard by the banking wobble, were
recovering some ground.
March inflation numbers and business sentiment surveys are
due across the continent.
H&M climbed 7.3% after the world's second-biggest
fashion retailer reported a surprise operating profit for the
December-February period but warned that overall sales for the
spring season had been delayed by cold weather.
Key developments that may provide direction to U.S. markets
later on Thursday:
* U.S. weekly jobless claims, U.S. Q4 corporate profits, Q4 GDP
revisions
* Boston Federal Reserve President Susan Collins, Minneapolis
Fed President Neel Kashkari, Richmond Fed chief Thomas Barkin
all speak
* Spanish Prime Minister Pedro Sanchez meets Chinese President
Xi Jinping in Beijing
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
U.S. two-year Treasury yields plunge on banking stress 1Q23 EM currency performance versus USD An uptick in economic activity Distress in Europe's real estate sector rises ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(By Mike Dolan, editing by XXXX mike.dolan@thomsonreuters.com.
Twitter: @reutersMikeD)
