Central banks keep hiking rates amid banking turmoil.“
“The Bank of England on Thursday followed the Federal Reserve and the Swiss National Bank in ploughing on with interest rates hikes, saying the UK banking sector was strong enough to withstand the instability that rippled through markets this month.
“Relentless rate hikes to rein in inflation are among factors blamed for the worst banking sector stress since the 2008 financial crisis and investors had questioned whether the central banks could press on with tightening policy.”
Update: “Deutsche Bank shares fell by more than 13% on Friday morning following a spike in credit default swaps on Thursday night, as concerns about the stability of European banks persisted.”
Americans’ faith in banks hit low after failures, says AP-NORC poll.“
“Only 10 percent of U.S. adults say they have high confidence in the nation’s banks and other financial institutions, a new poll finds. That’s down from the 22 percent who said they had high confidence in 2020.”
Bank shares slide as Janet Yellen plays down ‘blanket’ deposit guarantee.“
“…the Treasury secretary said that in the current turmoil, the Biden administration was not considering a move to broaden deposit insurance, something that would require congressional approval unless the Treasury found a way to implement it unilaterally.”
Fund Managers’ Biggest Fear Is Now a Systemic Credit Crunch.“
“A systemic credit event has replaced stubborn inflation as the key risk to markets for increasingly pessimistic investors, according to Bank of America Corp.’s latest global survey of fund managers. The most likely source of a credit event is US shadow banking, followed by US corporate debt and developed-market real estate…”
Commercial property risks rise up bank investors’ worry list.“
“Strains in the $5.6tn market for commercial real estate loans have deepened in recent months as the Federal Reserve’s year-long series of interest rate rises leads to sharply higher borrowing costs and weakening property valuations. Analysts fear any further reduction in lending… could make a perilous situation worse.”
Anxiety Strikes $8 Trillion Mortgage-Debt Market After SVB Collapse.“
“Strains in the banking sector are roiling a roughly $8 trillion bond market considered almost as safe as U.S. government bonds… But agency mortgage-backed securities, like all long-term bonds, are vulnerable to rising interest rates, which pushed their prices down last year and saddled banks such as SVB with unrealized losses.”
Macro Hedge Funds Hit by Financial Turmoil.“
“Hedge funds that bet on big-picture market moves have been hit with steep losses as a spate of recent bank failures upends bets that interest rates would remain elevated. The souring of the wager led some, including Maniyar Capital Advisors and Haidar Capital Management, to lose more than 20% this month.”
The economy is headed into a ‘Bermuda Triangle’ of risk that will bring on a crisis to rival 2008, ‘Dr. Doom’ economist Nouriel Roubini says…“
“”It’s got like, a Bermuda Triangle. You have a hit to your income, to your asset values, and then to the burden of financing your liabilities. And then you end up in a situation of distress if you’re a highly leveraged household or business firm. And when many of them are having these problems, then you have a systemic household debt crisis like ,” he warned.”
New Fed Forecasts Suggest Central Bank Is Bracing for Recession.“
“Federal Reserve Chair Jerome Powell and his colleagues are expecting a sharp dropoff in economic activity through the rest of 2023 — at least, that’s the implication from new economic projections they published this week.”
Nearly a quarter of U.S. adults sometimes don’t get enough to eat.“
“Almost 25% of American adults are food insecure, a jump of about five percentage points from a year earlier as the double whammy of high inflation and the end of pandemic benefits squeezes more household budgets, according to a new study.”
From the Bank of England MPC summary on reasons for rate decision: ‘Reflecting these developments, bank wholesale funding costs have risen in the United Kingdom and other advanced economies.’“
“Sound familiar? I got credit crunch deja vu…”
Subprime lender Amigo Loans halts all lending as it winds down business [UK].“
“Amigo Loans is winding down and halting all lending with immediate effect, becoming the latest subprime lender to go under after multiple efforts to restructure its business and the failure of a crucial fundraising.”
Germany risks running out of gas next winter, regulator warns.“
“Klaus Müller, head of the Federal Network Agency, said Germany’s power crisis “isn’t over” and much depended on whether next winter would be colder than the last. “The danger of a gas shortage is still there,” he told the Financial Times. “It depends a lot on whether we continue to curb gas use and ensure diversified supplies into Germany. And there are risks.””
Strikes roiling French power sector cause fuel shortages.“
“Industrial action disrupting French refineries has left some petrol stations short of fuel as strikes stretched into a 16th day on Thursday, also hitting liquefied natural gas (LNG) terminals, power supply and nuclear reactor maintenance.”
Bordeaux town hall has been set on fire as French protests continued over plans to raise the pension age.“
“More than a million people took to the streets across France on Thursday, with 119,000 in Paris, according to figures from the interior ministry. Police fired tear gas at protesters in the capital and 80 people were arrested across the country.”
Housing market sees biggest sales slump in 40 years [NZ].“
“The housing market has gone quiet, triggering the biggest sales slump in nearly 40 years. CoreLogic NZ’s new Housing Chart Pack indicated 60,859 properties were sold in the year to February, which was the lowest 12-month total since October 1983.”
Japan consumer price measure reaches highest level in 41 years.“
“An important gauge of Japan’s consumer prices rose at the fastest pace in 41 years in February, increasing the challenges for the incoming central bank governor to steer monetary policy while inflation has proved stickier than expected.”
Japan’s factory activity contracts for fifth month – PMI.“
“Japan’s manufacturing activity contracted for a fifth straight month in March as output and new orders remained under pressure, a survey showed on Friday, suggesting the economic recovery is fragile as global demand slows.”
Singapore’s February factory output down a sharp 8.9% in fifth month of contraction.“
“Singapore’s factory output contracted more sharply in February, dragged by a steeper production decline in pharmaceuticals and electronics, data from the Singapore Economic Development Board (EDB) showed on Friday (Mar 24).”
Global demand slowdown weighing on India’s engineering exports.“
“Engineering Export Promotion Council of India on Wednesday said that India’s engineering exports to 17 of 25 key markets such as the US and China fell in February, driven by a global economic slowdown and low demand for metals and products.”
Sri Lanka reels from aftershocks of debt crisis.“
“…Sri Lanka’s challenges are only beginning. Wickremesinghe, who rules in an improbable alliance with Rajapaksa’s party, now needs to embark on a multiyear reform programme that he calls the economy’s “last chance”. Inflation is still running at more than 50 per cent year on year, with Sri Lanka in what the charity Save the Children calls a “full-blown hunger crisis”.”
Pakistani professionals struggle with higher costs as economy teeters.“
“Naureen Ahsan earns more than twice the average wage in Pakistan, but the school administrator says she has no choice but to homeschool her daughters and delay their London-board certified final exams because she can’t afford their education.”
Tear gas, clashes as Lebanon protesters try to storm govt HQ.“
“The violence came amid widespread anger over the harsh economic conditions in the country, where mismanagement by the ruling class has been rampant for years, preceding the economic meltdown that started in late 2019.”
Oxfam warns that Yemen is on the brink of economic collapse.“
“Yemen, , declared by the UN as “the worst humanitarian crisis in the world”, is on the brink of economic collapse according to Oxfam. More than two million children are acutely malnourished, the confederation of NGOs warned, with millions more Yemenis in danger of catastrophic hunger.”
Frustrated Kenyans voice anger over economic crisis.“
“Inflation hit 9.2 percent in February, according to the latest government figures. A record drought has left millions hungry, with a sixth rainy season between March and May forecast to fail. The country’s currency, the Kenyan shilling, has sunk to historic lows, losing nearly four percent of its value against the dollar in the past month alone.”
‘Haiti can’t wait’: People on the brink as hunger levels rise, warns food security report.“
“A record 4.9 million people are projected to be in acute hunger (IPC3 and above) in Haiti – that’s nearly half the country, including 1.8 million people in ‘emergency’ phase (IPC4). “We have done everything we possibly can to bring vital food support to Cité Soleil,” says Bauer. “But we all know the situation remains fragile…””
Russia says risk of nuclear conflict at highest level in decades.“
“Russian Deputy Foreign Minister Sergei Ryabkov said on Wednesday that the risk of a nuclear clash was at its highest level in decades, warning that Moscow was in a “de-facto” open conflict with Washington over the war in Ukraine.”
You can read the previous “Economic” thread here. I’ll be back over the weekend with a “Climate” thread.
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“Russia says risk of nuclear conflict at highest level in decades.”
A very straight forward and mostly honest relation of the facts from Reuters. I think that the west is trying to distance themselves from Ukraine. Maybe a good sign.
“I think that the west is trying to distance themselves from Ukraine. Maybe a good sign.”
The West still pretty engaged, as far as I can see, Lou:
“”The EU supports Ukraine in its relentless quest for freedom,” European Council President Charles Michel said. “We stand with Ukraine as long as it takes.””
Nothing has changed since 2008 and they keep doing the same thing economically. The past year i have been calling the usa; scamnation a play off of morris berman work. I am also starting to see those buy silver commercials again and the finance guys saying we have predicted this watch our show to help you again are on the tv commercials. Hold on its gonna get really rough again.
“I am also starting to see those buy silver commercials again.” Tempted, Heather? 😆
My half-hearted attempts to understand the price movements of precious metals have always ended in confusion, not helped by the fact that the markets seem to be heavily manipulated.
The situation in France got completely out of hand last night. Clashes with riot police occurred in dozens of cities. Barricades, arson attacks from Paris to the western departmental capitals such as Rouen, Bordaux and Rennes.
Hundreds were injured by police and nearly 600 mostly ‘arnarcho autonomes’ were arrested. Everyone reacted with shock. Perhaps it will lead to a breakthrough after all. Neither the unions nor the plitike parties and the government have any interest in uprisings as we know them from the time of the ‘ yellow shirts’.
The unions are afraid of losing momentum and are now pushing for consultations with Macron and the government on work, early retirement for heavy work. Macron’s speech and arrogant TV appearance two days ago has really thrown oil on the fire.
Charles the third’s state visit has been cancelled at the last minute. He was due to arrive on Sunday, but even the companies that were supposed to put out the red carpet are on strike and state they we stand in solidarity with our English colleagues on strike in the cultural sector…. Paris where rubbish is piled metres high due to rubbish collectors’ strikes has 20% cancellations for Easter, normally one of the tourist highlights of the year.
Meanwhile, strikes in the energy sector, refineries and oil depots are paralysing half of France. Everywhere, the government requisitions workers and orderlies unblock storage tanks
Still, we are used to some things…. The next national day of action is next Tuesday… 28 March. Ah yes the Macronie!
My guess that compromises with the unions are really being sought now and there will be a moratorium on the pension bill for at least six months….. by the end of next week, peace will have returned
Well solve the banking crisis just yet….
In the link pictures of the riots… just have a look!
Zip, thank you for the on the ground intel and the pictures – lot of arson going on there.
That doesn’t look like a public with an appetite for bailing out any banks that might fail.
Well, Thank God it’s Friday
Thank God, indeed. Stiff gin & tonics all round.