UBS to buy Credit Suisse in a more than $3 bln share deal, pushed into the biggest banking deal in years! The Swiss government will provide more than $9 billion to backstop some losses that UBS may incur by taking over Credit Suisse, while $17.3 billion of the so-called additional tier 1 bonds will be completely written down. Last Thursday, CS also took a $54 billion lifeline from the Swiss National Bank.
Credit Suisse’s takeover by UBS marks the end of the bank’s 167 years as an independent institution.
Global central banks announce enhanced USD liquidity arrangement. The Fed, the Bank of Canada, the ECB, the BoE, the Bank of Japan and the SNB on Sunday announced, “coordinated action to enhance the provision of liquidity, via the standing US dollar liquidity swap line arrangements”. The frequency of the 7-day maturity operations will be enhanced from weekly to daily as of March 20 until at least through the end of April “to support smooth functioning of US dollar funding-markets”.
Insignificant Exposure in China: The Swiss bank’s Hong Kong branch has assets equivalent to around $12.7 billion, less than 0.5% of the overall banking system.
Bancorp’s Flagstar Bank will take on nearly all of Signature Bridge Bank’s deposits.
In 2019, the Fed issued a warning to SVB over its risk-management systems.
Stocks – Stock markets are selling off! USA100 down to 12580, the US500 dipped to 3912, and the USA30 at 31,760. Nikkei and ASX closed with losses of -1.4%, the Hang Seng is down -3.1% and European and US futures are also sharply lower.
FX – USDIndex is at 103.40 today. EUR slightly down to 1.0636, but holds the upchannel since last Wednesday! JPY spiked below 131.00, retested S1 at 130.70. Sterling steady around 1.2190.
Commodities – USOil – dragged down with stocks, at $64.70 low.
Gold – up 2% today, breaching 3 year high territory at $2009 level.
Cryptocurrencies – BTC in a rally to $28,262 since Asia open, up more than 3%.
Today – ECB Lagarde speech, Import & Exports from New Zealand.
Biggest FX Mover @ (07:30 GMT) GOLD (+0.95%). Breached $2009! MA’s aligned higher, MACD histogram & signal line positive & rising, RSI 78 OB & rising, H1 ATR 10.05, Daily ATR 31.41.
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Andria Pichidi
Market Analyst
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