Just when you thought markets would move on from the SVB fallout, we are getting sucked back into the banking crisis vortex à la Credit Suisse. There’s always that saying when it comes to things like this, that if things are bad in the US, chances are it is worse in Europe. And that is what markets are kicking and screaming about.
The latest development is that Credit Suisse has come out to say that it intends to borrow CHF 50 billion from the SNB to shore up its liquidity. And the SNB itself alongside FINMA has put up a statement to try and reassure markets but they really could have and should have done so much earlier.
That leaves markets in a tough spot in trying to figure this all out, while having to deal with the ECB policy decision later today.
Up until yesterday, it was almost certain that they will deliver a 50 bps rate hike this week but now the market-implied probability is showing roughly 90% odds for a 25 bps move instead. I think at this point, a 50 bps rate hike will rattle sentiment hard even if we may have a calmer build up to the decision later.
Lagarde will definitely have plenty of questions to address in her press conference later. That’s a rather unenviable spot to be in to be honest considering the circumstances.
1315 GMT – ECB announces March monetary policy decision, statement
1345 GMT – ECB president Lagarde press conference
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.