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- US regional bank stocks slide on concerns about loan fraud and CRE exposures
- European equities fall on spillovers from the US regional banks selloff
- Japanese yen strengthens as investors await political developments
- Analysts debate about Brent's $60/barrel floor
- Chinese sovereign bond yields drop on risk-off mood and abundant liquidity
- Inflation expectations rise in Türkiye
Markets turn south on US regional bank concerns
Global equities fell led by a sell-off in the banking sector as investors worried about the health of US regional banks. Shares of major US banks slid over 1.5% in premarket trading, after the KBW regional banking index fell 6.3% yesterday following news that Western Alliance and Zions Bancorporation disclosed significant credit losses tied to alleged loan fraud by borrowers. The stress was reflected in an increasing take-up at the Fed’s standing repo facility while US high yield credit spreads widened yesterday. The VIX index jumped to levels not seen since April and gold continued its ascent on the increasing risk aversion. The selling spread to European and Asian stock markets. The 10-year US Treasury yield dropped to 3.93% in early morning trade, its lowest level YTD, on safe haven flows but reversed course later this morning. On the currency front, the dollar continued to weaken while the yen strengthened past the $/150 level as investors await political developments. Analysts believe that the “Takaichi trade”—buying Japanese equities while selling the yen and bonds—has lost some momentum as markets wait for clarity on fiscal policy.
