12 March 2023 - 22:11US treasury secretary Janet Yellen speaks during a news conference on February 23 2023. Picture: SAMYUKTA LAKSHMI/BLOOMBERG
“There’s a rough ride ahead,” said Pooja Kumra, senior European and UK rates strategist at TD Securities in London. In another sign of possible contagion to other assets, stablecoin USD Coin lost its dollar peg and slumped to an all-time low on Saturday. It later recovered most of its losses after Circle, the firm behind it, assured investors it would honour the peg despite exposure to Silicon Valley Bank.US treasury secretary Janet Yellen on Sunday said she was working with regulators to respond to the implosion of SVB.
SVB could have a domino effect on other US regional banks and beyond. US regional and smaller bank shares were hit hard on Friday. The S&P 500 regional banks index dropped 4.3%, bringing its loss for the week to 18%, its worst week since 2009. In Asia, the SVB failure has left many Chinese funds and tech start-ups in the lurch, as the bank was a key funding bridge for groups operating between China and the US, the Financial Times reported on Sunday.
Investors will be laser-focused on the ECB which looks set to deliver another hefty interest rate hike on Thursday. A surprise surge in underlying inflation in February has left policymakers fretting that price pressures could prove persistent.
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