US shares tumbled in broad selling with the yield on the US 10-year note plunging more than 20 basis points. Bitcoin falls below $US20,000.
Shares fell in New York after the banking and tech sectors were hit by the failure of Silicon Valley Bank, and on news the economy added more jobs in February than expected, though wage growth eased.
The collapse of SVB reflects in part the surge in interest rates in the last year as the Federal Reserve has sought to rein in persistently high inflation. After ratcheting higher their bets on the peak for interest rates, traders abandoned them on Friday in New York and yields plummeted. SVB became the biggest US financial failure in more than a decade, Bloomberg reported. It’s the second regional lender to fold this week after Silvergate Capital announced it was voluntarily liquidating its bank.Tesla +0.4% Apple -1.6% Amazon -1.6%“The focus will fall on SVB contagion risks and Tuesday’s inflation report,” Oanda’s Edward Moya said in a note. “As long as we don’t see a scorching hot inflation report, the Fed should continue with its quarter rate point hiking pace.
Capital Economics said: “SVB’s troubles are a timely reminder that when central banks throw their rate hammer around with abandon, things tend to break – if not in the real economy, then in the financial system.”The US economy added 311,000 jobs last month, more than expected. However, wages grew a mere 0.2 per cent, the slowest pace since February of last year, and it was a tick beneath consensus expectations, Scotiabank’s Derek Holt said.
As for the US CPI report on Tuesday , TD Securities said: “Core prices likely gained momentum in February with the index rising a strong 0.5 per cent m/m, as we look for the recent large relief from goods deflation to start normalising.“Shelter inflation likely remained the key wildcard, while slowing gasoline and food prices will likely dent non-core CPI inflation. Our m/m forecasts imply 6.1 per cent/5.5 per cent y/y for total/core prices.
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