Cryptos, Bonds Rally, European Markets Face Pressure

Despite the serious weakness of the dollar as the Federal Reserve has to step in against collapses in the banking systems which in turn significantly reduced also rate hike expectations, the EUR/USD rate retraced again below the 1.07-threshold as the common European currency was after the greenback the second-worst performing major currency so far during this week with pairs like the EUR/CHF, EUR/JPY and EUR/GBP all heading lower.

On Tuesday Italian industrial production data will be published. This data will also be available for the eurozone the next day. Other data releases on Wednesday will include also the French consumer price index (CPI) and the German wholesale price index and current account balance.

Gold prices rose to a new five-weeks high as gold traded in the spot markets almost $100 higher compared to a week ago, which is a price increase of more than five per cent. A factor could be the intervention of the Federal Reserve in order to save depositors of the defunct Silicon Valley Bank, which also significantly lowered expectations for future rate hikes. The 10-year U.S. T-Note benchmark for example rapidly declined from levels around four per cent just a week ago to a yield of just around 3.5%. Lower yields in turn reduce the opportunity costs of holding non-yielding assets like precious metals.

Other precious metals were also appreciating with platinum surpassing again the $1,000-threshold and silver prices increasing by more than eight per cent over the past week.

After a short period of consolidation by the end of last week, the downside move in oil prices intensified on Monday with the price of a barrel of WTI crude oil at times declining towards the $72-range, and getting support only around the low from the previous month.

A factor in this move could be also concerns about the U.S. banking system, after the SVB and Signature Bank collapse were the biggest bank failures since the financial crisis almost fifteen years ago.

As usual on Tuesday the American Petroleum Institute (API) publishes its Weekly Statistical Bulletin that increase also data on crude oil, gasoline and distillate stockpiles in the U.S. Then on Wednesday the Energy Information Administration (EIA) follows up with a similar dataset in its Weekly Petroleum Status Report.

Stock market indices were still under pressure with indices like the US 500 again subject to significant intraday volatility. Initially it did look like the intervention of the Federal Reserve to announce that SVB deposit holders will be made whole did help the market, though at the end of the day the index closed almost unchanged compared to market close levels on Friday, despite this intervention and rapidly declining yields and rate hike expectations. The latter stem from concerns about further contagion of the banking crisis and the possibility that the economy could enter a recession.

Bank stocks (US Banks ETF -10.16%) were still under pressure with other banks like First Republic Bank, Zions Bancorporation and others losing well over ten per cent of their value during the session on Monday.

Stemming against the bearish market sentiment, Illumina (+16.97%) rose to a new year-to-date high. This move occurred after activist investor Carl Icahn criticised the acquisition of cancer screening company Grail and intends to nominate three people for Illumina’s board of directors.