ECB rate hike expected after Swiss support for Credit Suisse

ECB rate hike expected after Swiss support for Credit Suisse

Credit Suisse sign in front of an office building in Zurich, Switzerland. March 16, 2023. REUTERS / Denis Balibouse

By Mark Jones

LONDON, Mar 16 (Reuters) – Los mercados europeos repuntaban el jueves, ya que el rescate de 50,000 millones de francos suizos (53,940 millones de dólares) al atribulado banco Credit Suisse prepared a los operators para la posterior decisión del Banco Central Europeo sobre tasas of interest.

* Credit Suisse shares jumped more than 20% and major European indices (.EU) and the Swiss franc gained around 1% in early trading, after the Swiss National Bank and financial regulator FINMA announced that action would be taken on Wednesday evening.

* European bank stocks rebounded 2.3% after suffering their biggest daily decline in more than a year in the previous session, while fixed income traders again sold bonds State safe havens ahead of the ECB’s later rate decision.

* “I fear that the ECB is not paying enough attention to this risk (banking sector problems) and that could be a mistake,” said Stefan Gerlach, chief economist at EFG bank Zurich and former vice- Governor of the Irish Central Bank. .

* Last week shows what happens when major central banks like the US Federal Reserve and the ECB raise rates by hundreds of basis points in a short period of time, he added.

* “Every time you do something this big, you know there’s a risk somewhere in the financial system,” Gerlach said. “It’s like stretching a rubber band, if you keep stretching it, will it break?”

* German two-year bond yields, highly sensitive to rate expectations, rose 16 basis points (bps) to 2.55% after falling 54 bps on Wednesday in what was a rush to safety on the whole of the market.

* Overnight, Asian stocks fell about 1%, but that was largely a rallying move, without the frenzy seen in Europe the day before.

* Wall Street futures also indicated a steady start later as demand for the dollar and gold waned, traditional investor bets during the market turmoil.

* The MSCI Asia-Pacific ex-Japan equity index fell 1% to its lowest level for the year. Shares of Japanese banks, which are also seen as vulnerable to rate hikes, recouped some of the early losses but ended up losing 3.25%.

* Two-year US Treasuries are having their best week since 1987 and yields, which fall when prices rise, are down more than 66 basis points since Friday.

* The euro rose 0.3% to $1.0612 and the Swiss franc rose 0.9% to 0.9267 to the dollar. Safety preferences continued to support the yen, which rose 0.4% to 132.89 to the dollar.

* Oil prices also recovered some ground after falling to 15-month lows the day before. Brent crude futures rose 60 cents, or 0.8%, to $74.29 a barrel, while U.S. West Texas Intermediate (WTI) futures rose to $68.08.

(Edited in Spanish by Carlos Serrano)

Melissa Galbraith
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