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Significance
Markets expect the US Federal Reserve (Fed) and ECB to raise rates by mid-year but are less certain about the trajectory thereafter. Tighter credit markets could pose a particular problem for US regional banks that have hefty exposure to commercial real estate, which is vulnerable given the rise in working from home since the pandemic.
Impacts
Japan’s Topix Banks equities index is down 11.1% since March 9 on fears of some regional banks making big losses when interest rates rise.
The OPEC+ oil cartel cutting output by more than 1 million barrels per day to shore up demand risks re-fuelling commodity price inflation.
Illustrating the volatility, the policy-sensitive 2-year Treasury yield fell from 5% to 3.7% in March before stabilising close to 4%.
Keywords:
International,
INT,
United States,
economy,
equities,
finance,
investment,
property,
Banks,
Capital markets
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2023
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