March 24, 2023
Good morning,
Despite a symphony of assurances by central bank officials around the world that financial institutions are stable and liquidity in their respective markets is adequate, we have yet another “run” of sorts this morning on a new name to this crisis narrative – Deutsche Bank (DB). Banks can’t get a break – investors are selling and asking questions later. Even though it is leading a decline in financials this morning, it seems that DB is not another isolated problem. Tighter financial conditions now seem almost certain globally and will likely weigh on all areas of the stock market, banks being the natural target to be hit first.
U.S. lenders are also set up for another miserable day, with Citigroup, Bank of America, and JPMorgan all down at least 2% in premarket trading. Regional banks are not any better. The 2yr Treasury is at a new reaction low in yield this morning at 3.55%, which is down from 5.05% only 2 weeks ago. S&P 500 Index Futures are off a percent.
If market liquidity is as adequate as Fed Chair Powell and Treasury Secretary Yellen have repeatedly been reporting all week, it appears that they are going to have to give more than lip-service to convince markets. And until that happens, markets are stuck.
Be well,
Mike