MNI EUROPEAN OPEN: Some Hope As SVB Finds A Buyer & More Support For U.S. Banking Sector Touted

EXECUTIVE SUMMARY

• FED’S KASHKARI SAYS BANK STRAINS BRING RISK OF RECESSION CLOSER (BBG)
• FED’S BARKIN SAYS ‘CLEAR’ CASE FOR RAISING RATES THIS WEEK (BBG)
• US MULLS MORE SUPPORT FOR BANKS AS IT GIVES FIRST REPUBLIC TIME (BBG)
• FIRST CITIZENS BANK TO BUY SVB'S DEPOSITS, LOANS FROM FDIC (RTRS)
• NEARLY $100 BILLION IN DEPOSITS PULLED FROM BANKS; OFFICIALS CALL SYSTEM 'SOUND AND RESILIENT' (CNBC)
• ECB'S DE GUINDOS: BANK TURMOIL MAY RESULT IN LOWER GROWTH AND INFLATION (RTRS)
• ECB’S SCHNABEL WARNS OF ‘STICKY’ INFLATION (IRISH TIMES)
• ECB'S CENTENO: DON’T SEE RATE HIKES EXTENDING BEYOND WHAT’S IN MARKET (BBG)
• PUTIN SAYS MOSCOW TO STATION NUCLEAR WEAPONS IN BELARUS FOR THE FIRST TIME SINCE THE 1990S (RTRS)
• CHINA's HOUSING MARKET SLUMP MAY DRAG ON, MAJOR DEVELOPER SAYS (BBG)G ON, MAJOR DEVELOPER SAYS (BBG)
  

Fig. 1: S&P 500 & NASDAQ 100 E-Mini Contracts

Source: MNI - Market News/Bloomberg

UK

FISCAL: Delaying the rise in the UK state pension age until 2044-46 risks costing the government more than £60bn, according to research by a leading think-tank. (FT)

FISCAL: British oil and gas companies are next week expected to be offered the prospect of windfall tax relief, as prime minister Rishi Sunak looks to boost investment and improve the country’s energy security. (FT)

ECONOMY/BREXIT: Leaving the European Union had an impact on the UK economy equivalent to the coronavirus pandemic and likely reduced output by 4%, the chairman of the Office for Budget Responsibility told the BBC. (BBG)

SCOTLAND: The winner of the contest to succeed Nicola Sturgeon as SNP leader is to be announced later. (BBC)

EUROPE

ECB: The "impression" of the European Central Bank is that recent turmoil in the banking sector may result in lower growth and inflation rates, the European Central Bank's vice president Luis de Guindos said. "Our impression is that they will lead to an additional tightening of credit standards in the euro area. And perhaps this will feed through to the economy in terms of lower growth and lower inflation," he told Business Post in an interview posted on the ECB's website. (RTRS)

ECB: While inflation has started to fall across the euro area, underlying price growth is proving stickier than expected, European Central Bank (ECB) executive board member Isabel Schnabel has warned. Ms Schnabel, who has long said that inflation may be more persistent than estimated, noted that the recent fall in energy prices had been slow to improve medium-term prospects for inflation. (Irish Times)

ECB: European Central Bank Governing Council Member Mario Centeno said he doesn’t see the data available today justifying “an extension beyond what is in the markets” of the process of rising interest rates. (BBG)

ECB: Europe's banking system is not showing signs of the growing financial tensions seen outside the euro zone, although it is not completely isolated, ECB Governing Council member Mario Centeno said on Friday. (RTRS)

EU: Germany reached an agreement with the European Union on a landmark regulation that requires new cars to be carbon neutral by 2035, resolving a dispute that threatened to undermine the bloc’s ambitious blueprint to reduce greenhouse gas emissions. (BBG)

GERMANY: A top union boss in Germany justified a massive strike planned for Monday as a "matter of survival" for many thousands of people fighting for higher wages as inflation soars, according to an interview published in the Bild am Sonntag newspaper. (RTRS)

FRANCE: Marine Le Pen’s far-right party has been the biggest beneficiary of French discontent over President Emmanuel Macron’s decision to raise the minimum retirement age, according to a survey of voting intentions by pollster Ifop for Le Journal du Dimanche newspaper. (BBG)

SWEDEN: The Swedish central bank might have underestimated inflationary pressure and will likely have to stick to its forecasts of another interest rate hike in April, Riksbank Governor Erik Thedeen said on Sunday. (RTRS)

RATINGS: Sovereign rating reviews of note from after hours on Friday included:

• Fitch affirmed Malta at A+; Outlook Stable
• S&P affirmed Germany at AAA; Outlook Stable
• DBRS Morningstar confirmed Finland at AA (high), Stable Trend
• DBRS Morningstar confirmed France at AA (high), Stable Trend

BANKS: Deutsche Bank AG shares fell and the cost of insuring its debt against default rose in sudden moves that some attributed to hedge funds seeking to profit from the broader turmoil roiling the financial industry. (BBG)

BANKS: The Swiss government was compelled to intervene to save Credit Suisse Group AG as the troubled bank wouldn’t have survived another day of trading amid a crisis of investor confidence, Finance Minister Karin Keller-Sutter said. (BBG)

BANKS: More than three-quarters of Swiss voters want the combined mega bank created by UBS’s emergency takeover of rival Credit Suisse to be split up by new legislation. (FT)

BANKS: The global regulatory regime for “too big to fail” banks set up after the 2008 crisis does not work, according to Switzerland’s finance minister. (FT)

BANKS: Credit Suisse Group AG faces the threat of a possible probe and disciplinary action over how top managers ran the bank in the lead-up to its collapse and takeover by UBS Group AG, Switzerland’s banking regulator told NZZ am Sonntag. (BBG)

BANKS/BONDS: The decision by Swiss authorities to fully write down Credit Suisse’s Additional Tier 1 (AT1) notes, without imposing full losses on the bank’s equity, does not imply that EU and UK authorities will treat insurers’ Restricted Tier 1 (RT1) instruments the same way, Fitch Ratings says. (Fitch Ratings)

U.S.

FED: Federal Reserve Bank of Minneapolis President Neel Kashkari said recent bank turmoil has increased the risk of a US recession but that it was too soon to judge what it means for the economy and monetary policy. (BBG)

FED: Federal Reserve Bank of Richmond President Thomas Barkin said the case for raising interest rates at the central bank’s meeting this week was “pretty clear,” emphasizing that inflation remains too high. (BBG)

FED: The Federal Reserve said on Friday that rising interest costs cut into the amount of money it handed back to the Treasury last year compared to what it handed back in 2021. (RTRS)

FED: The collapse of Silicon Valley Bank likely marks the start of a broader period of financial turmoil that could convince the Federal Reserve to cut rates before year end, former Kansas City Fed President Thomas Hoenig told MNI. (MNI)

FED: The Federal Reserve’s decision Wednesday shows the central bank is strongly considering a halt to monetary tightening including an end to balance-sheet runoffs because of what could prove a substantial drag on the economy and inflation from the recent banking crisis, Fed advisor Diane Swonk told MNI. (MNI)

BANKS: US authorities are considering expanding an emergency lending facility for banks in ways that would give First Republic Bank more time to shore up its balance sheet, according to people with knowledge of the situation. (BBG)

BANKS: The surge of deposits moving from smaller banks to big institutions including JPMorgan Chase and Wells Fargo amid fears over the stability of regional lenders has slowed to a trickle in recent days, CNBC has learned. (CNBC)

BANKS: Regulators again assured the public that the banking system is safe, as fresh data showed customers recently pulled nearly $100 billion in deposits. Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and more than a dozen other officials convened a special closed meeting of the Financial Stability Oversight Council on Friday. (CNBC)

BANKS: President Joe Biden said on Friday that federal deposit insurance could be tapped for deposits above $250,000 if other U.S. banks fail. Biden said U.S. banks are in "pretty" good shape and said he doesn't see an industry ready to explode. (RTRS)

BANKS: First Citizens Bank & Trust Co will buy all of Silicon Valley Bank'deposits and loans from the Federal Deposit Insurance Corporation (FDIC), the regulator said in a statement. (RTRS)

BANKS: Bill Isaac, former head of the Federal Deposit Insurance Corporation, told MNI the failures of regional lenders like Silicon Valley Bank and Signature Bank are unlikely to lead to bigger problems for the U.S. financial system because authorities acted with alacrity to stem concerns. (MNI)

OTHER

BANKS/MACRO: Some investors and analysts are calling for more coordinated interventions from central banks to restore financial stability, as they fear that tumult in the global banking sector will continue amid rising interest rates. (RTRS)

BANKS: ANZ Bank chief executive Shayne Elliott described the instability playing out in the global financial system as a modern version of the savings and loan crisis that swept through the US banking sector in the 1980s, as financial markets turn their attention to apparent contagion at Deutsche Bank. (AFR)

GLOBAL TRADE: Turkish President Tayyip Erdogan spoke by phone with Russia's Vladimir Putin and thanked him for his "positive attitude" in extending the Black Sea grain deal, the Turkish presidency said on Saturday. (RTRS)

GLOBAL TRADE: Decoupling from China will push global inflation higher and risks sparking a widespread recession, according to Yi Xiaozhun, former vice minister of the Ministry of Commerce and former deputy director general of the WTO. (MNI)

U.S./CHINA: US officials now expect that a phone call between President Joe Biden and China’s President Xi Jinping won’t happen as soon as they had hoped, as ties between the world’s two biggest economies continue to fray, according to people familiar with the matter. (BBG)

U.S./CHINA: U.S. House of Representatives Speaker Kevin McCarthy said on Sunday lawmakers will move forward with legislation to address national security worries about TikTok, alleging China's government had access to the short video app's user data. (RTRS)

U.S./CHINA: China's attitude towards developing a healthy, stable and constructive Sino-U.S. relationship remains unchanged, while it hopes the United States will stop using "unscrupulous means" to contain and suppress China, China's foreign minister Qin Gang said on Saturday. (RTRS)

CHINA/TAIWAN: China established diplomatic ties with Honduras on Sunday after the Central American country ended its decades-long relationship with Taiwan, while Taiwan's foreign minister accused Honduras of demanding exorbitant sums before being lured away by Beijing. (RTRS)

GEOPOLITICS: The United States and Canada must together build a North American market on everything from semiconductors to solar panel batteries, in the face of growing competition, including from an "increasingly assertive China," Prime Minister Justin Trudeau said on Friday. (RTRS)

GEOPOLITICS: Russia and China are not creating a military alliance, Russian President Vladimir Putin said in an televised interview broadcast on Sunday, stating that the two countries' military cooperation was transparent, news agencies reported. Putin also said Western powers were building a new "axis", bearing some resemblance to Germany and Japan's World War Two alliance. (RTRS)

JAPAN: The Japanese government's plan to soften the impact of inflation on households and businesses is expected to cost about 2.2 trillion yen ($16.83 billion), Kyodo news agency reported on Saturday citing the leader of a party in the ruling coalition. (RTRS)

RBA: The Reserve Bank of Australia review is poised to recommend shaking up the board and that the governor devolve powers to other RBA directors, who would formally take on more responsibilities beyond setting interest rates. The three reviewers are due to hand their report by this Friday to Treasurer Jim Chalmers, who will release the findings and an initial government response before the federal budget on May 9. (AFR)

AUSTRALIA: The Australian Labor Party in New South Wales state claimed power in an election on Saturday night, with voters backing the centre-left party’s pledges on anti-privatisation and cost of living relief. (RTRS)

AUSTRALIA: Within hours of Labor claiming victory over the NSW Coalition after 12 years in power, Unions NSW called the political change an opportunity “to restart how we do industrial relations and deliver public services” in the state as Labor prepares to scrap a public-sector wage cap of 3 per cent. The move is likely to embolden public sector workers in Victoria, where the Andrews Labor government has a 1.5 per cent wage cap. (AFR)

AUSTRALIA: Mortgage borrowers are starting to show the first signs of strain, as the effect of ten consecutive interest rate rises compounds growing cost of living pressures, forcing banks to proactively call customers who are at risk of getting into trouble on their repayments. (AFR)

AUSTRALIA/CHINA: Victorian Premier Daniel Andrews will travel to China this week for a trade mission, his first since the state’ss Belt and Road agreements were torn up. (ABC)

RBNZ: RBNZ has published an assessment of banks’ residential mortgage exposures to flooding risk, Deputy Governor Christian Hawkesby says in statement. (BBG)

SOUTH KOREA: South Korea extends eased financial rules, including loan-to-deposit regulations, to end of June as uncertainty in external and internal financial markets remains, Financial Services Commission says in an emailed statement. (BBG)

SOUTH KOREA: South Korea is likely to announce hikes in electricity and gas charges on March 31, Yonhap News says, citing unidentified sources. (BBG)

NORTH KOREA: North Korea fired two short-range ballistic missiles (SRBMs) toward the East Sea on Monday, Seoul's military said, as a U.S. nuclear-powered aircraft carrier plans to hold joint drills in waters near the peninsula. (Yonhap)

NORTH KOREA: Japanese Chief Cabinet Secretary Hirokazu Matsuno said North Korea may dial up its testing activity further with more missile launches or even conducting its first nuclear test since September 2017. (AP)

ASIA: China’s economy is on track to recover this year, S&P says in a statement. Maintain cautiously optimistic outlook for Asia-Pacific as China’s performance will dampen but not offset the hit of slower growth in the US and Europe, the fading impact of domestic re-opening post the pandemic, and higher interest rates. (BBG)

MEXICO: Mexico’s Supreme Court accepted a challenge from the country’s Electoral Institute INE against the electoral reform passed by President Andres Manuel Lopez Obrador’s supporters in congress, temporarily suspending its application while it assesses its constitutionality. (BBG)

BRAZIL: Brazilian President Luiz Inacio Lula da Silva has cancelled his trip to China, which was previously scheduled for March 27-31, due to medical reasons, according to his press secretary on Saturday. (RTRS)

RUSSIA: Russia will station tactical nuclear weapons in neighboring Belarus, President Vladimir Putin said on Saturday, marking the first time since the mid-1990s that Moscow will have based such arms outside the country. (RTRS)

RUSSIA: The U.S. Department of Defense said on Saturday that there are no indications that Russia is preparing to use nuclear weapons after Moscow's announcement to station tactical nuclear weapons in Belarus. (RTRS)

RUSSIA: A top security adviser to Ukrainian President Volodymyr Zelensky warned on Sunday that Russian plans to station tactical nuclear weapons in Belarus would destabilise that country. "The kremlin took Belarus as a nuclear hostage," Oleksiy Danilov, the head of Ukraine's National Security and Defence Council, wrote on Twitter. (RTRS)

RUSSIA: NATO on Sunday criticised Russia for its "dangerous and irresponsible" nuclear rhetoric, a day after Russian President Vladimir Putin said Russia would station tactical nuclear weapons in Belarus. (RTRS)

RUSSIA: EU foreign policy chief Josep Borrell on Sunday urged Belarus not to host Russian nuclear weapons, saying it could face further sanctions if it did. (RTRS)

RUSSIA: Russia's parliament speaker on Saturday proposed banning the activities of the International Criminal Court (ICC) after the court issued an arrest warrant for President Vladimir Putin, accusing him of the war crimes. (RTRS)

RUSSIA: A drone that hit the centre of a Russian town on Sunday, injuring two people, was a Ukrainian Tupolev Tu-141 Strizh and was packed with explosives, the TASS news agency quoted a law enforcement source as saying. (RTRS)

RUSSIA: Germany wants European Union nations to introduce end-user controls on technological and electronic goods that Russia could be using for military purposes in Ukraine, the country’s economy minister said. (BBG)

SOUTH AFRICA: South Africa’s state-owned utility Eskom Holdings SOC Ltd. resumed power outages Sunday after suspending rotational blackouts for most of the day. (BBG)

ISRAEL: Israeli Prime Minister Benjamin Netanyahu fired his defense minister on Sunday, as he attempts to rein in growing dissent within his own party over a judicial overhaul that has divided the country. (WSJ)

PERU: Peru’s central bank says it can tame inflation by the end of the year and bring it back to its target range, but only just barely. (BBG)

PERU: Peru's government expressed qualified interest in tapping the international bond market later this year in a bid to better manage liabilities, Economy Minister Alex Contreras said on Friday. (RTRS)

PER/IMF: The International Monetary Fund (IMF) on Friday commended Peruvian authorities for decisively addressing high inflation and advised continuing to implement monetary policy in a flexible and well-communicated manner. (RTRS)

ARGENTINA/RATINGS: Fitch downgraded Argentina to C

IMF: IMF managing director Kristalina Georgieva has warned of increased risks to financial stability and the need for vigilance following the recent banking sector turmoil in advanced economies. (FT)

MARKETS: The US Securities and Exchange Commission has raised concerns over Rokos Capital Management after the hedge fund was forced to hand over large amounts of cash to its banks as collateral when an outsized bet on US government bonds backfired earlier this month. (FT)

MARKETS: Chris Rokos has reduced risk in his macro hedge fund in response to double-digit losses this month, which could become his second-worst since the start of the money pool. (BBG)

EQUITIES: Banking turmoil and recession risks are spelling trouble for the global IPO market, keeping it mired in a slump even after investors started the year thinking that the worst of the stocks rout might be over. (BBG)

METALS: Trading in London Metal Exchange nickel contracts resumed Asian-hours trading on Monday, marking a crucial step in efforts to repair the market after last year’s unprecedented turmoil. (BBG)

OIL: Russia is very close to achieving its target of cutting crude oil output by 500,000 barrels per day (bpd) to around 9.5 million bpd, Deputy Prime Minister Alexander Novak said on Friday. (RTRS)

OIL: Iraq halted crude exports from the semi-autonomous Kurdistan region and northern Kirkuk fields on Saturday, an oil official told Reuters, after the country won a longstanding arbitration case against Turkey. (RTRS)

OIL: The head of Libya’s state oil company said he had the backing of both the government in Tripoli and the renegade general Khalifa Haftar who controls the east of the country, as he outlined plans to attract investment and boost production. (FT)

CHINA

ECONOMY: China can achieve its economic target of “around 5%” growth this year and monetary policy has room to maneuver as inflation remains mild, said Han Wenxiu, executive deputy director of the office of the Central Committee for Financial and Economic Affairs, at the China Development Forum 2023 on Saturday. (MNI)

ECONOMY: China’s economic rebound is weaker than expected as consumers emerge “stunned” from pandemic-led disruptions and a real estate meltdown last year, according to the head of AP Møller-Maersk. (FT)

ECONOMY: China will focus on key areas such as artificial intelligence (AI), biological manufacturing and smart vehicles, and cultivate new industrial chains and supply chains, a senior government official said on Monday. (RTRS)

FISCAL: China will intensify efforts to implement a strong fiscal policy and efficient taxation system this year to stabilise the economy, according to Liu Kun, China's Finance Minister. (MNI)

FISCAL: China’s growing debt will not severely hamper economic growth as the government's relatively healthy balance sheet helps offsets any issues, said Li Yang, chairman of National Institution for Finance and Development, told the China Development Forum 2023 on Saturday. (MNI)

FISCAL: China should expand and implement a full real estate taxation system as soon as the economy returns to normal, according to ex-finance minister Lou Jiwei. (MNI)

FISCAL: The most important task China faces is improving the social welfare system to address demand-side challenges as the population declines, Cai Fang, a member of monetary policy committee of People’s Bank of China, told MNI on the sideline of the China Development Forum 2023 on Saturday. (MNI)

PBOC: China still has further room to cut banks’ reserve requirement ratio this year, China Securities Journal reports, citing analysts. (BBG)

PBOC: China needs to relax restrictions on consumption of mid-and-high-end goods and services to boost domestic demand amid weak external demand, said Wang Yiming, a member of monetary policy committee of People’s Bank of China, at the China Development Forum 2023 on Saturday. (MNI)

PBOC: China should alleviate the shortage of basic public services to unleash potential demand, particularly equalising services for nearly 300 million migrant workers, Liu Shijin, a member of monetary policy committee of People’s Bank of China, told MNI on the sidelines of the China Development Forum 2023 on Saturday. (MNI)

ECONOMY/POLICY: China's economic development faces challenges and it is implementing effective solutions to solve them, the head of the state planner said on Sunday. China will strengthen coordination of fiscal, monetary, employment, industrial, consumption and other policies, Zheng Shanjie, head of the National Development and Reform Commission, said at a China Development Forum in Beijing. (RTRS)

POLICY: Chinese Vice Premier Ding Xuexiang used a speech to global executives to reassure participants that China would continue to open up as international companies increasingly complain of market-access challenges. (BBG)

FDI: China will hold a ceremony Tuesday to launch promotional events for its “Invest in China Year,” an initiative to attract foreign investment, according to a statement from the Ministry of Commerce. (BBG)

PROPERTY: A major Chinese developer expects the country’s housing market may slump again this year, suggesting the record property slowdown isn’t over yet. (BBG)

IMF: The head of the International Monetary Fund struck a positive note on China’s outlook, describing it as one of the “green shoots” in the world economy and urging authorities to rebalance the economy toward consumption. (BBG)

CHINA MARKETS

PBOC NET INJECTS CNY225 BILLION VIA OMOS MONDAY

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Flag	Country	Event
27/03/2023	0800/1000	***		DE	IFO Business Climate Index
27/03/2023	0800/1000	**		EU	M3
27/03/2023	0845/0945			UK	BOE Treasury Select Committee Hearing on Silicon Valley Bank
27/03/2023	1000/1100	**		UK	CBI Distributive Trades
27/03/2023	1340/1540			EU	ECB Elderson Speech at Foreign Bankers' Association
27/03/2023	1430/1030	**		US	Dallas Fed manufacturing survey
27/03/2023	1500/1700			EU	ECB Schnabel in Conversation at Columbia University
27/03/2023	1530/1130	*		US	US Treasury Auction Result for 26 Week Bill
27/03/2023	1530/1130	*		US	US Treasury Auction Result for 13 Week Bill
27/03/2023	1700/1800			UK	BOE Bailey Speech at LSE
27/03/2023	1700/1300	*		US	US Treasury Auction Result for 2 Year Note
27/03/2023	2100/1700			US	Fed Governor Philip Jefferson