With all the uptick in stress and a weak manufacturing
survey from the Dallas Federal Reserve on Monday, U.S. Treasury
yields fell back and futures markets upped the chances of Fed
rate cuts later in the year. The debt ceiling jitters smouldered
in the background as Republicans tried to push their new
spending cut plan through Congress.
One-month Treasury bill yields, which had plummeted over the
past week as investors tried to avoid 3-month bills likely to
get caught in any government funding crunch over the issue,
pushed back slightly higher on Tuesday.
And with Wall St now awaiting a torrent of profit updates
later today, including mega caps Microsoft and Alphabet after
the bell, stock futures were half a percent in the red.
Events to watch out for on Tuesday:
* U.S. April consumer confidence, April Philadelphia Fed service
sector survey, April Richmond Fed manufacturing survey, Dallas
Fed services survey, U.S. March new home sales, Feb house prices
* U.S. corp earnings: Microsoft, Alphabet, Visa, Northern Trust,
Moody's, PepsiCo, McDonald's, Kimberly-Clark, 3M, Invesco,
Fiserv, Danaher, UPS, Verizon, Texas Instruments, NextEra
Energy, Raytheon, GE, GM, Chipotle, MSCI, Biogen, Dow, Paccar,
Centene, Enphase Energy, Halliburton, Spotify, Boston
Properties, Chubb, United Health, Juniper Networks, CoStar etc
* U.S. Treasury auctions 2-year notes
* Bank of Spain governor Pablo Hernandez de Cos speaks
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
First Republic Bank earnings Credit Suisse's wealth assets crumble ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(By Mike Dolan, editing by Christina Fincher;
mike.dolan@thomsonreuters.com. Twitter: @reutersMikeD)
A look at the day ahead in U.S. and global markets from Mike
Dolan
Bombarded by incoming corporate earnings updates and
increasingly wary of tense geopolitics, world markets appear to
have turned sour again on financial stocks as the full extent of
March bank stress unfolds.
Shares in First Republic Bank , one of the most hit
regional banks during last month's blowup, sank 22% ahead of
Tuesday's open after it said deposits plunged by more than $100
billion in the first quarter - adding it aims to restructure its
balance sheet and lay off up to a quarter of staff.
Although First Republic said deposit flight had stabilised
since quarter-end, the echo of the March crisis reverberated
around other regional banks and global banking stocks at large.
UBS shares were down almost 3% after it said it had
set aside more money to draw a line under its involvement in
toxic mortgages, halving its first-quarter profit as it prepares
to swallow fallen rival Credit Suisse .
European bank stock indices fell 2%. Spain's
Santander fell almost 4% despite reporting higher
profits and Germany's Deutsche Bank fell 3% ahead of
its results later in the weekly.
Ironically, the latest banking wobble comes as the world's
top central banks said they will reduce the frequency of their
dollar swap operations with the U.S. Federal Reserve from May 1
as last month's volatility in financial markets had receded.
But the new bank rumble, heightened political tensions
between Western powers and the China/Russia alliance and nerves
about the standoff over the U.S. government debt ceiling have
all fed simmering investor anxiety this week.
Although the euro has been lifted against the dollar by
increasingly hawkish rhetoric by European Central Bank
officials, it's the Swiss franc which is leading European
currencies higher - hovering close to its best levels against
the U.S. currency in more than two years.
With the Bank of Japan expected to double down on its easy
monetary policy stance later this week, the Swiss franc is also
testing its strongest levels against the yen in at least eight
years.
Chinese stocks fell for the fifth straight session,
meantime, and the yuan fell to its lowest against the euro since
September 2021.
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