DB - S&P Nasdaq Dow futures edge up yields rise as First Citizens buys SVB

2023-03-27 05:35:30 ET

Stock index futures pointed to a slightly higher open Monday with some hope for more stability in the banking arena.

S&P futures ( SPX ) +0.4% , Dow futures ( INDU ) +0.3% and Nasdaq 100 futures ( NDX:IND ) +0.2% were higher.

The FDIC arranged a deal for First Citizens ( FCNCA ) to purchase the loans and deposits of failed Silicon Valley Bank ( SIVB ). Reports over the weekend said the U.S. is considering expanding an emergency lending facility for banks . That would help First Republic, whose shares shot up 24% premarket.

The 10-year Treasury yield ( US10Y ) rose 6 basis points to 3.43% and the 2-year yield ( US2Y ) rose 11 basis points to 3,89%.

Chances of a Fed pause at the May meeting receded to 69% after shooting up to near-certainty on Friday in the wake of a spike in Deutsche Bank ( DB ) default swaps. DB was up slightly in Frankfurt today.

There is little on the U.S. economic calendar this morning.

"Economics now enters a limbo period," UBS' Paul Donovan wrote. "The data flow that we get over the next few weeks relates to the period before the recent financial volatility. There is considerable uncertainty over how the real economy is affected by that volatility."

"The optimistic case is that larger banks do not tighten bank lending standards dramatically, and consumers carry on more or less as before," he said. "The pessimistic case is that lending standards tighten, consumers are forced to spend using only their falling real wages, and fear of unemployment constrains consumption further."

"US Federal Reserve President Kashkari was essentially making the same points over the weekend , noting (in a statement of the obvious) that recession risks have risen after the financial volatility."

More on the Bank Crisis

• Moody's warns on spillover risks
• First Republic Bank: Why I Am Sticking To My Investment
• Deutsche Bank $42 Trillion Derivatives Book: A Snowflake Away From Financial Meltdown?

For further details see: