Yellen at banks, rate hikes galore, SEC hits crypto
By Geoffrey Smith
Investing.com — European and Asian shares followed the overnight U.S. decline after Treasury Secretary Janet Yellen reintroduced doubt into the debate over U.S. bank deposits, while the market came to terms with the Federal Reserve’s latest rate hike and downgrades to growth forecasts. Other central banks are following the Fed’s lead, and US regulators are tightening the noose around the crypto sector. Here’s what you need to know in the financial markets on Thursday 23 March.
1. Yellen casts doubt on bank deposit coverage; unemployment claim and overdue account
Global stock markets followed the US decline overnight as investors settled on the apparent contradiction between guidance from Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell on the outlook for the US banking sector.
Yellen said in public comments that the U.S. is not planning “reinsurance” for U.S. bank deposits, directly contradicting an unconfirmed report earlier this week and implicitly acknowledging the limits of Fed action to stabilize smaller banks in the wake of this month’s collapse.
The Chicago and Kansas City Feds publish their monthly business surveys later, while checking account data and weekly jobless claims are due at 08:30 ET (12:30 GMT). A more accurate reflection of long-term trends in the labor market came Wednesday in the form of recruiting firm Indeed cutting 15% of its staff, saying that is just too much in light of the decline in employment it expects over the next couple of years.
2. Interest rate hikes galore after the Fed moved
A series of interest rate hikes worldwide follow the Fed’s decision to increase the Fed Funds target range by 25 basis points on Wednesday.
The Swiss National Bank shrugged off the weekend’s ructions with a 50 basis point rise and a warning that more may be needed, adding brusquely that it considered any financial stability concerns stemming from Credit Suisse’s ( SIX:CSGN ) collapse resolved .
Norway also rose 25 basis points, and the Bank of England is expected to follow at 08:00 ET following warm February inflation data.
In Asia, both the Hong Kong Monetary Authority and the Central Bank of the Philippines raised their key interest rates by the same amount. Turkey is set to be the only outlier, expected to hold its one-week repo rate at 8.5%.
3. Stocks to recoup some of Wednesday’s losses, Chinese Internet ADRs bounce as giant returns to growth
US stocks are set to open mixed, with some taking comfort from the fact that the Fed’s new forecast predicts a lower interest rate path over the next two years than previously.
At 6:25 a.m. ET, Dow Jones futures were actually flat, while S&P 500 futures were up 0.3% and Nasdaq 100 futures were up 0.8%. The three main cash indexes had lost about 1.6% each Wednesday after Powell’s press conference.
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Regional bank stocks are all modestly higher after heavy losses on Wednesday in response to Yellen’s comments. Chinese internet stocks are also moving higher after conglomerate Tencent (HK:0700) reported a return to revenue growth in the latest quarter, putting the government’s COVID and other regulatory measures behind it.
Elsewhere, TikTok founder Shou Zi Chew will testify before Congress in an effort to prevent the shutdown of a service that has become a powerful competitor to Meta (NASDAQ:META), Alphabet (NASDAQ:GOOGL) and others in the social media space.
4. The SEC is tightening its grip on crypto
Cryptocurrencies may be enjoying a moment in the sun as enthusiasts revel in the woes of the mainstream financial sector, but US regulators continue to tighten the noose.
The Securities and Exchange Commission on Wednesday charged TRON founder Justin Sun and a handful of celebrity promoters with illegally distributing securities and manipulating the market in them. Meanwhile, Coinbase (NASDAQ:COIN) said it expects the SEC to launch an enforcement action against its staking programs, a month after rival Kraken shut down its staking operation and paid $30 million to settle SEC charges.
Coinbase shares fell another 11% in premarket trading, but Bitcoin and other digital currencies were down a more modest 1%-2%.
5. Oil supported by dollar weakness, even as stocks near 2-year high
Crude oil prices weakened overnight but remained above the $70 a barrel threshold on support from the cheaper dollar, which improves terms of trade for most major oil importers.
At 6:15 a.m. ET, U.S. crude futures were down 0.9% at $70.27 a barrel, while Brent crude was down 0.9% at $76.03 a barrel.
The market remains under pressure after a surprise rise in US government-assessed stockpiles, which rose by more than 1 million barrels to the highest in nearly two years last week. The Fed’s downgrade of US growth forecasts for this year and next only underlined the shifting balance between supply and demand.
