Gold, silver soar as Silicon Valley Bank disaster spurs flight to safety

“Don’t worry about failure; you only have to be right once.” —Drew Houston 

 

 

HEADLINES

 

 

• Dollar slides as Fed rate hike expectations slump on SVB collapse
• Gold, silver soar as Silicon Valley Bank disaster spurs flight to safety
• Oil prices fall in choppy trade as banking fears rattle markets
• S&P 500 rises in volatile session following U.S. rescue of SVB deposits: Live updates
• 2-year Treasury yield posts biggest 3-day decline since aftermath of 1987 stock crash
• USD/CAD may have a shot at pushing back towards 1.37 – Scotiabank
• EURJPY Near Term: Downside favored

 

Dollar slides as Fed rate hike expectations slump on SVB collapse

 

 

The dollar fell on Monday as markets bet the Federal Reserve will halt or trim its rising interest rates to curb inflation after U.S. authorities moved to limit the fallout from the sudden collapse of Silicon Valley Bank.

President Joe Biden said the administration's swift actions on Sunday to ensure depositors can access their funds in Silicon Valley Bank (SVB) (SIVB.O) and Signature Bank (SBNY.O) should give Americans confidence that the U.S. banking system was safe.

The Fed on Sunday announced it would make additional funding available through a new Bank Term Funding Program, which would offer loans of up to one year to depository institutions, backed by Treasuries and other assets these institutions hold.

 

 

COMMODITIES

 

 

Gold, silver soar as Silicon Valley Bank disaster spurs flight to safety

 

 

Gold and silver prices surged on Monday, as their safe-haven appeal drew in investors spooked by the collapse of Silicon Valley Bank, with the crisis also sparking hopes the U.S. Federal Reserve would have to slam the brakes on its aggressive monetary policy.

Global share markets tumbled, while the U.S. dollar and Treasury yields extended their declines despite efforts by regulators to control the Silicon Valley Bank and Signature Bank turmoil.

Spot gold last jumped 2.01% to $1,905.59 per ounce, the highest since early February. U.S. gold futures gained 2.34% to $1,911.00

 

 

ENERGY

 

 

Oil prices fall in choppy trade as banking fears rattle markets

 

 

Oil prices fell nearly 2% in volatile trading on Monday as the collapse of Silicon Valley Bank roiled equities markets and raised fears of a fresh financial crisis, but a recovery in Chinese demand provided support.

Brent crude futures were down $1.51, or 1.8%, to $81.27 per barrel by 1:14 p.m. EDT (1714 GMT). The global benchmark earlier fell to a session low of $78.34, its lowest price since early January.

U.S. West Texas Intermediate crude futures (WTI) dropped $1.40, or 1.8%, to $75.28 a barrel. WTI earlier declined to $72.30 a barrel, its lowest price since December.

 

 

STOCKS

 

 

S&P 500 rises in volatile session following U.S. rescue of SVB deposits: Live updates

 

 

The S&P 500 inched up Monday as traders assessed a plan to backstop all the depositors in failed Silicon Valley Bank and make additional funding available for other banks. Some bet the financial shock could cause the Federal Reserve to pause interest rate hikes.

The broad index gained 0.3% after falling as much as 1.4% at one point. The Nasdaq Composite advanced nearly 1%. The Dow Jones Industrial Average added 67 points, after dropping as much as 284 points earlier in the session.

The Cboe Volatility index (VIX) , Wall Street’s preferred fear gauge, reached a level not seen since late 2022 and neared territory considered highly risky. It was last up about 2 points at 26.56.

 

 

2-year Treasury yield posts biggest 3-day decline since aftermath of 1987 stock crash

 

 

Investors swarmed into U.S government bonds Monday after the collapse of Silicon Valley Bank and subsequent government backstop of the banking system. The rush sent Treasury yields tumbling.

The yield on the 2-year Treasury was last trading at 4.06% down 53 basis points. (1 basis point equals 0.01%. Prices move inversely to yields.)

The yield has fallen 100 basis points, or a full percentage point, since Wednesday, marking the largest three-day decline since Oct. 22, 1987, when the yield fell 117 basis points. That move followed the Oct. 19, 1987 stock market crash — known as “Black Monday” in which the S&P 500 plunged 20% for its worst one-day drop. The move was bigger than the 2-year yield slide of 63 basis points that took place in three days following the 9/11 attacks.

The yield on the 10-year Treasury was down by just under 20 basis points at 3.498%.

 

 

ANALYSIS

 

 

USD/CAD may have a shot at pushing back towards 1.37 – Scotiabank 

 

 

“Price action Friday strongly suggested that the broader USD uptrend in place over the past month or so may be stalling. But the intraday rebound in the USD from session lows – so far – looks quite constructive on the short-term charts and underlying trend momentum remains USD-bullish.” 

“If USD/CAD gains are capped around 1.38 intraday, the CAD may have a shot at pushing back towards 1.37.” 

“Persistent USD strength above the figure will likely prompt a retest of 1.3850/60.”

 

 

CHART

 

 

EURJPY Near Term: Downside favored

 

 

Technical View: Short position below 143.36. Target 141.89. Conversely, break above 143.36, to open 143.99.

Comments: The pair hits support and bounces.

Source: Trading Central 

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

Footnotes
https://www.reuters.com/markets/currencies/dollar-slides-us-intervenes-svb-collapse-2023-03-13/
https://www.cnbc.com/2023/03/13/safe-haven-gold-accelerates-as-traders-assess-svb-fallout.html
https://www.reuters.com/business/energy/oil-prices-slip-concerns-over-rate-hikes-rattle-investors-2023-03-13/
https://www.cnbc.com/2023/03/12/stock-market-futures-open-to-close-news.html
https://www.cnbc.com/2023/03/13/us-treasury-yields-investors-assess-the-state-of-the-economy.html
https://www.fxstreet.com/news/usd-cad-may-have-a-shot-at-pushing-back-towards-137-scotiabank-202303131225