IND - US stock futures rise as fears of wider contagion from Silicon Valley Bank crash fade

2023-03-13 05:56:21 ET

U.S. stock futures rose on Monday as fears of a wider contagion from the Silicon Valley Bank ( SIVB ) collapse faded after U.S. authorities secured depositors' funds and created a lending facility for banks to meet depositors' needs.

Silicon Valley Bank ( SIVB ) was shut down after its customers' requests for withdrawals overwhelmed the lender, marking the second-largest bank failure in U.S. history after the 2008 collapse of Washington Mutual. Signature Bank ( SBNY ) was also closed , with regulators invoking a systemic risk exception.

Nasdaq 100 futures ( NDX:IND ) climbed 1.7% , S&P futures ( SPX ) rose 1% and Dow futures ( INDU ) were up 0.5% .

"Monday will surely be a stressful day for many in the regional banking sector, but regulators' action dramatically reduces the risk of further contagion," said Jefferies analyst Thomas Simons.

The Federal Reserve on Sunday said it will make additional funding available to eligible depository institutions and is prepared to address liquidity pressures that may arise.

"Because the pledged collateral is going to be valued at par, this new facility will ensure that other banks with similarly impaired hold-to-maturity portfolios will be able to easily leverage them to access liquidity, rather than have to realize significant losses and flood the markets with paper," said Simons.

Meanwhile, yields continued to fall. The U.S. 10-year Treasury yield ( US10Y ) fell 15 basis points to 3.55%, while the 2-year yield ( US2Y ) is down 35 basis points at 4.23%.

Now read SA contributor Richard Parsons' initial post-mortem analysis of the Silicon Valley Bank failure .

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