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- The US Treasury, in conjunction with other regulatory agencies, has announced a “backstop” – a willingness to act as lender of the last resort – to all bank deposits in the US, including those deposits not insured by the FDIC. The news reversed dominant market action, sending stock markets firmly higher with the S&P 500 Index gaining by more than 1.5%, and other risky assets also made gains on the news.
- US Treasury Yields continued to fall hard following the backstop news, with 2-year and 10-year yields making unusually strong and fast drops. The 2-Year Treasury Yield has fallen from over 5% to as low as 4.343% in only 3 days, as the market begins to feel that this banking crisis will make it virtually impossible for the Fed to raise rates but has begun to stabilize.
- The US Dollar has continued to fall, as it has been doing over recent days, probably due mainly to the difficulty the Fed will now face in hiking rates any further. In the Forex market, the US Dollar is currently the strongest major currency, while the Australian Dollar is the weakest. It is not clear for how much longer this momentum will last.
- Depositors with the Silicon Valley Bank have been promised access to their full deposit amounts today.
- Some commodities are performing very well, with a few continuing to rise after having recently made significant bullish breakouts, notably Sugar.
- There are no high-impact data releases scheduled today, but markets are experiencing unusually high levels of volatility due to the US banking crisis. Newer traders may be wise to stay out of the market this week until the situation stabilizes.