Reporters reported that From the case of the closure of 3 financial institutions, namely Silicon Valley Bank (SVB), Silvergate Capital and Signature Bank, within just 1-2 weeks, the cause was due to lack of liquidity and Lending too much to risky industries such as Start-ups or Digital Assets, plus the result of the Fed raising interest rates sharply. And may have an impact on other banks as a sentiment to put pressure on stock markets around the world and cause risky assets to be sold out and invested in safer assets instead, especially gold.
As a result of such impact, Thai and foreign analysts came out to give their view of the Fed meeting on March 21-22, 2023, which is likely to slow down the rate hike in order to avoid a repeat of the effects of the three banks. say Because at present, the economy is starting to see more signs of recession, since the event of buying bonds as a safe asset. Causing the US 2-year and 10-year bond yields to drop more than 1% in just 3 days.
In addition, the latest 1-year US bond yield has dropped to 4.38%, which is lower than the current US policy rate of 4.75%, meaning that the market is looking at the next 12 months interest rates must come down to at least 0.37%, along with The Fed may not raise interest rates. Or if it is adjusted up, it may not reach the 5.75% range previously set this year.
Morgan Staley estimates that the Fed meeting on March 21-22, 2023, expects the Fed to raise interest rates by 0.50%, while JPM/Evercore ISI estimates it will raise 0.25%, Goldman, Barclays. , Natwest, PIMCO do not expect the Fed to raise interest rates this round. while Nomura Securities The Fed is expected to cut interest rates by 0.25% and may not raise it again.
Krungsri Securities Stated in today’s analysis (14 March 2023) that Markets raised expectations for the Fed to stop raising interest rates after the CME Group’s FedWatch Tool indicated that investors weighed 54.2% expecting the Fed to hold interest rates at 4.50-4.75%, unchanged at its March 21-22 meeting. This is because it is seen that the SVB problem will cause the Fed to decide to delay the rate hike for now.
Asia Plus Securities Co., Ltd. In today’s analysis That the problem of the closure of 3 financial institutions (Silvergate Capital, Silicon ValleyBank, Signature Bank) in just 1-2 weeks, the cause of the problem can be general. This is caused by the lack of liquidity and excessive lending to risky industries such as Start-ups or Digital Assets, plus the result of the Fed raising interest rates sharply. While the asset quality of financial institutions declined. These risks may extend to other banks as well.
Recently, the Fed Watch Tool gave a weight of up to 65% and interest rates may gradually decrease in the second half of 2023 considering past data. It can be seen that during the Fed’s acceleration to cut interest rates It’s usually a crisis during that time. As a result, the stock market went down after that.
While at present, we are beginning to see more signs of the economy entering a recession since the event of buying bonds as a safe-haven asset, causing the US 2-year and 10-year bond yields to fall by more than 1% in just 3 days. The yield on the US 2-year Treasury note was down 4%, while the yield on the US 10-year Treasury note was down 3.4%. The drop in short-term bonds reflected concerns over the spread of financial problems. The United States also has