MNI EUROPEAN OPEN: Thursday's Events Dominate, Japanese Meeting On Banks Eyed

EXECUTIVE SUMMARY

• BANKS BORROW $164.8 BILLION FROM FED IN RUSH TO BACKSTOP LIQUIDITY (BBG)
• WALL STREET RIDES TO THE RESCUE AS 11 BANKS PLEDGE $30 BILLION TO FIRST REPUBLIC BANK (NBC)
• SWISS CABINET MET WITH CENTRAL BANK, REGULATOR TO DISCUSS CREDIT SUISSE (RTRS)
• CREDIT SUISSE TELLS STAFF SNB FACILITY DOES NOT TRIGGER A 'VIABILITY' EVENT (RTRS)
• UBS, CREDIT SUISSE OPPOSE IDEA OF FORCED COMBINATION, SOURCES SAY (BBG)
• ECB FEARED THAT DITCHING HALF-POINT HIKE MIGHT PANIC INVESTORS (BBG SOURCES)
• CREDIT SUISSE RESCUE GAVE ECB CONFIDENCE TO HIKE RATES (RTRS SOURCES)
• BOJ, MOF, FSA PLAN MEETING ON MARKETS AFTER SVB (NIKKEI)
• CHINA DOES U-TURN ON BOND FEEDS AFTER SUDDEN HALT ROILED MARKET (BBG)

Fig. 1: ICI U.S. All Money Market Fund Assets

Source: MNI - Market News/Bloomberg

UK

FISCAL: Chancellor Jeremy Hunt has abandoned plans to make sovereign wealth funds pay corporation tax on property and commercial enterprises after cabinet warnings that the move would hit inward investment and depress growth. (FT)

FISCAL/POLITICS: NHS unions have reached a pay deal with the government in a major breakthrough that could herald the end of strikes by frontline staff in England. (Sky)

BREXIT: The DUP has said it still has concerns over EU law applying in Northern Ireland before a vote on Rishi Sunak’s Brexit deal on Wednesday. (Telegraph)

EUROPE

ECB: Fears that anything but a half-point hike would trigger panic among investors helped settle the European Central Bank’s interest-rate decision on Thursday, according to people familiar with the talks. (BBG)

ECB: European Central Bank policymakers only agreed another major increase in interest rates on Thursday after Credit Suisse secured a lifeline and markets calmed, four sources familiar with the matter told Reuters. (RTRS)

BANKS: The Swiss government met officials from the Swiss National Bank (SNB) and the financial market regulator FINMA on Thursday to discuss the Credit Suisse crisis. "This afternoon the Federal Council was briefed by FINMA and the SNB on the situation at Credit Suisse," a spokesperson told Reuters. No information would be provided on the content of the meeting, the spokesperson added. (RTRS)

BANKS: UBS Group AG and Credit Suisse Group AG are opposed to a forced combination, even as scenario planning for a government-orchestrated tie-up continues, according to people with knowledge of the matter. (BBG)

BANKS: Credit Suisse Group AG told staff on Thursday that the emergency backstop from the Swiss central bank does not trigger a "viability event," according to documents seen by Reuters. The bank also gave an update on how much money it had returned to investors in its supply chain finance funds, according to the document dated March 16. The document gave talking points to staff for client conversations. Credit Suisse declined to comment on the memo.(RTRS)

BANKS: U.S. shareholders of Credit Suisse Group AG sued the Swiss bank on Thursday, claiming that the bank defrauded them by concealing problems with its finances. (RTRS)

BANKS/RATINGS: DBRS Morningstar became the first global rating agency to cut Credit Suisse’s credit score on Thursday, less than a day after a major share price plunge saw Switzerland’s central bank provide emergency support to the lender. (RTRS)

GERMANY: German Chancellor Olaf Scholz sought to assuage fears that the collapse of Silicon Valley Bank and problems at Credit Suisse might trigger a new financial crisis, saying a more resilient banking system and stronger economy ensured savings were safe. (RTRS)

BUNDS: The market for German government securities is functioning well, although current market volatility could affect how banks participate at auctions, the German debt agency told Reuters on Thursday. (RTRS)

FRANCE: French unions plan another day of strikes and demonstrations against President Emmanuel Macron's pension reform, a union spokeswoman said on Thursday. (RTRS)

ITALY/BANKS/RATINGS: Italy’s five largest banks are firmly positioned to weather the effects of the economic slowdown, says Fitch Ratings in a new report, as domestic economic growth is likely to slow to 0.5% in 2023 from 3.7% in 2022. (Fitch Ratings)

RATINGS: Sovereign rating reviews of note slated for after hours on Friday include:

• Moody’s on Greece (current rating: Ba3; Outlook Stable) & Luxembourg (current rating: Aaa; Outlook Stable)
• S&P on Belgium (current rating: AA; Outlook Stable), Croatia (current rating: BBB+; Outlook Stable) & Spain (current rating: A; Outlook Stable)
• DBRS Morningstar on Latvia (current rating: A, Stable Trend) & the Netherlands (current rating: AAA, Stable Trend)

U.S.

FED: The Federal Reserve is most likely to take a break in its interest rate increases at its March meeting because of the turmoil in global financial markets that has resulted from troubles at U.S. regional banks and worries about Credit Suisse, William English, a former director of the Fed's division of monetary affairs, told MNI. (MNI)

FED: WSJ Fed reporter Timiraos tweeted the following on Thursday: “The "smoothed" version (unweighted series) of the Atlanta Fed wage growth tracker held steady at 6.1% in Feb for the third straight month. The huge gap between job switchers and stayers has been narrowing with the former coming down and the latter going up” (MNI)

FED/BANKS: Banks borrowed a combined $164.8 billion from two Federal Reserve backstop facilities in the most recent week, a sign of escalated funding strains in the aftermath of Silicon Valley Bank’s failure. (BBG)

BANKS: A group of financial institutions has agreed to deposit $30 billion in First Republic Bank in what’s meant to be a sign of confidence in the banking system, the banks announced Thursday afternoon. (NBC)

BANKS: Many of the institutions involved in the bailout of the beleaguered First Republic Bank are also said to be looking to make a possible purchase of the San-Francisco-based institution, Fox Business has learned. (Fox Business)

BANKS: Spreading the risk of financial contagion to achieve “a false sense of confidence” in First Republic Bank is “bad policy”, Pershing Square’s Bill Ackman said in a tweet. (BBG)

BANKS: Federal regulators and the Treasury Department on Thursday welcomed a decision by 11 larger banks to deposit $30 billion into regional bank First Republic Bank and said it showed the resilience of the U.S. banking system. The Fed also underscored its overall support for the banking sector, saying: "As always, the Federal Reserve stands ready to provide liquidity through the discount window to all eligible institutions." (RTRS)

BANKS: U.S. Treasury Secretary Janet Yellen and JP Morgan CEO Jamie Dimon first discussed using deposits from large banks to support First Republic Bank on Tuesday, and drummed up participation by other banks over the past two days, sources familiar with the rescue effort said on Thursday. (RTRS)

BANKS: “A more general problem that concerns us is the possibility that if banks are under stress, they might be reluctant to lend where they’re worried about shoring up liquidity and capital,” the Treasury chief said. “And we could see credit become more expensive and less available.” (BBG)

BANKS: The Credit Suisse crisis is not related to the current economic environment, the White House said on Thursday. "This is a distinct issue," White House spokesperson Karine Jean-Pierre told reporters at a briefing. (RTRS)

BANKS: The White House said on Thursday it would have more to say on regulatory changes regarding bank deposits in the coming days. (RTRS)

BANKS: Treasury Secretary Janet Yellen said on Thursday that stress tests are one tool to measure banks' health after the recent collapse of two large U.S. banks, but supervision of banks is critical. Yellen also told the Senate Finance Committee that stress tests focus on capital, not on liquidity - which was the underlying problem of the bank failures. She also supports tailoring bank supervision to the institution. (RTRS)

BANKS: Bipartisan group of senators ask the Federal Reserve to examine how how the central bank and other regulators missed warning signs in their oversight of Silicon Valley Bank before its collapse. (BBG)

BANKS: The effort to wind down Silicon Valley Bank was marred by an unmotivated seller, infighting between regulators and, ultimately, a failed auction. (BBG)

BANKS: Startups and investors say the newly created entity that took over from Silicon Valley Bank is offering some flexibility when it comes to deposit requirements for borrowers. (WSJ)

BANKS: With Credit Suisse Group AG having wobbled this week and a handful of regional US banks collapsing, company executives are getting more concerned about where they can safely keep their cash. (BBG)

BANKS: Federal government officials wanted a joint statement to include a reference to regulatory shortcomings that they believe helped lead to the bank’s demise. (New York Times)

FINANCIALS: Charles Schwab Corp. was hit with $8.8 billion in net outflows from its prime money market funds this week as investors scrutinized the brokerage’s resilience amid questions about the health of the wider financial industry. (BBG)

MARKETS: Money-market funds attracted their biggest weekly influx of cash since the early part of the Covid pandemic as depositors pulling their money away from more at-risk US banks sought a place to park their dollars. (BBG)

FISCAL: Treasury Secretary Janet Yellen said Thursday that China would be among the first in line to get paid under a Republican proposal to prioritize some U.S. debt obligations over others, calling it a “dangerous idea” that would technically cause the U.S. to default on its bonds. (CNBC)

ECONOMY: U.S. business creation and job growth will likely continue the boom that began following the pandemic even with a potential credit squeeze after the fall of Silicon Valley Bank, former Census Bureau chief economist John Haltiwanger told MNI. (MNI)

HOUSING: Some homebuyers are returning to the market as mortgage rates decline from the four-month high they reached last week, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. (Business Wire)

RATINGS: S&P affirmed the U.S. at AA+; Outlook Stable

OTHER

GLOBAL TRADE: More than 50 U.S. agriculture and food groups on Thursday urged Congress and to approve new legislation that will clear the way for the United States to negotiate more free-trade agreements, arguing that without them American agriculture was falling behind global competitors. (RTRS)

U.S./CHINA: Even as TikTok’s Chinese owners publicly resist pressure from the Biden administration to sell the wildly popular video app, conversations between TikTok and potential buyers are heating up, sources told On The Money. (New York Post)

EU/CHINA: The French government is planning to ask cabinet ministers to avoid using TikTok and similar apps on their personal phones, according to two people with direct knowledge of the discussions. (BBG)

NATO: President Recep Tayyip Erdogan to meet Finnish President Sauli Niinisto at 2:30pm in Ankara, state-run Anadolu Agency Reports. (BBG)

JAPAN: The Bank of Japan, Finance Ministry and Financial Services Agency plan to meet Friday evening to discuss markets in the wake of the collapse of Silicon Valley Bank, Nikkei reports without attribution. (BBG)

JAPAN: Japan's government is closely coordinating with the Bank of Japan and financial authorities overseas to prevent fallout from the crisis of confidence engulfing banks in the West, Finance Minister Shunichi Suzuki said on Friday. (RTRS)

JAPAN: Japan’s main labor unions are set to win their biggest wage hikes in decades as employers acquiesce to government calls to lift pay amid rising inflation. (BBG)

JAPAN/SOUTH KOREA: Japan is looking to ease export curbs of key semiconductor materials to South Korea, but it has not yet decided whether to assign its neighbor ‘white nation’ status again, Japan’s trade minister says. (BBG)

RBNZ: Deputy Governor Christian Hawkesby says we are aware of the current issues with a small number of banks internationally. The Reserve Bank of New Zealand is monitoring the situation closely, and is in regular contact with other regional regulators and regulated entities. (RBNZ)

NEW ZEALAND/CHINA: New Zealand is following other nations in banning the TikTok app from parliament-issued devices, Radio New Zealand reports. (BBG)

NORTH KOREA: North Korea said that Thursday's launch was its largest Hwasong-17 intercontinental ballistic missile (ICBM), fired during a drill to demonstrate a "tough response posture" to ongoing U.S.-South Korea military drills, state media reported. (RTRS)

ASIA: Direct exposures to Silicon Valley Bank (SVB) and Signature Bank among Fitch Ratings’ portfolio of rated banks in APAC appear limited, says Fitch. (Fitch Ratings)

TURKEY/RATINGS: Sovereign rating reviews of note slated for after hours on Friday include:

• Fitch on Turkey (current rating: B; Outlook Negative)

MEXICO: Mexico’s financial system is safe from the problems with liquidity facing banks in other countries after the collapse of Silicon Valley Bank because its lenders have weathered crises before and have behaved in a cautious manner, the country’s finance minister said. (BBG)

MEXICO: Mexico Central Bank Governor Victoria Rodriguez Ceja, speaking at the Banking Convention in Merida, Yucatan, said the bank doesn’t expect recent US and global banking events to negatively impact the country’s banking system. (BBG)

MEXICO: Mexico’s banks are “well capitalized” and “well managed” and not at risk of contagion, Banxico’s Deputy Governor Irene Espinosa said to reporters at a banking conference in Merida, Yucatan. (BBG)

MEXICO: Mexico President Andres Manuel Lopez Obrador, speaking at the national banking convention, said he expects remittances from Mexicans living abroad to reach a new annual record by surpassing $60b this year. (BBG)

MEXICO: Mexico has launched of a new sustainable "M" bond, Deputy Finance Minister Gabriel Yorio said on Thursday while speaking at a banking conference in the southern city of Merida. (RTRS)

BRAZIL: Brazil President Luiz Inacio Lula da Silva’s plan to unveil a new fiscal outline that would limit government spending is unlikely to persuade the central bank to cut its benchmark interest rate any time soon, according to one of the bank’s former presidents. (BBG)

RUSSIA: Poland on Thursday pledged it would send four MiG-29 fighter jets to Ukraine, the first NATO member to do so, in a significant move in Kyiv’s battle to resist Russia’s onslaught. (CNN)

RUSSIA: The U.S. State Department has approved the potential sale of AGM-114R2 Hellfire missiles and related equipment for an estimated cost of $150 million, the Pentagon said on Thursday. (RTRS)

RUSSIA: The United States on Thursday released a de-classified video showing Russia's intercept of a U.S. military surveillance drone downed over the Black Sea two days ago, images that the White House said exposed how Moscow was lying about what happened. (RTRS)

COLOMBIA: Colombia’s monetary policy stance is tight enough to bring the fastest inflation in nearly a quarter century down to its target range by the end of 2024, according to a top central banker. (BBG)

PERU: Peru’s economy is accelerating and recovering from crippling anti-government protests, Finance Minister Alex Contreras said on Thursday in remarks broadcast on social media. (BBG)

ARGENTINA: Argentina's central bank board said it agreed to hike the country's benchmark interest rate by 300 basis points to 78% on Thursday after annual inflation hit 100% for the first time in over three decades. (RTRS)

ENERGY: Spanish energy firm Repsol SA has abandoned the idea of expanding a liquefied natural gas terminal on Canada’s east coast, saying the cost of shipping gas there is too high. (BBG)

OIL: The US is committed to replenishing the Strategic Petroleum Reserve but won’t rush to do so immediately despite the recent decline in oil prices, a top Biden administration official said. (BBG)

CHINA

ECONOMY/POLICY: China’s economic rebound isn’t yet solid and requires more fiscal support, monetary policy incentives and aid to industries, according to state-run China Securities Journal. (BBG)

ECONOMY/POLICY: China's economic recovery lacks stability as the external environment is more complex than last year and confidence among firms and consumers is down, according to Lian Ping, chairman of the China Chief Economist Forum. (MNI)

PBOC: China’s reference lending rate is expected to remain steady as the ongoing recovery keeps the central bank on the sideline with ample tools to boost growth if needed, while also monitoring any impact on the yuan or cross-border capital flows from the collapse of Silicon Valley Bank, economists and analysts said. (MNI)

FDI: The government is launching initiatives to boost foreign investment into the country, including a series of expos, tours and match-making events aimed at attracting overseas investors, according to the Ministry of Commerce (MOFCOM). (MNI)

FISCAL: China needs policies to support the estimated 147.39 million workers aged between 60-69 years old, which will help alleviate the pressures of ageing on society, according to Yicai. (MNI)

BONDS: Traders in China were able to access widely used bond price feeds again after an abrupt suspension of the data earlier in the week roiled the $21 trillion market. (BBG)

BONDS: It is unlikely that the overseas banking crisis creates waves in China’s financial system because of its healthier liability structure with lower exposure to bonds, the official Shanghai Securities News reported, citing analysts. (BBG)

PROPERTY: An investor that profited from the aftermath of China’s first dollar bond default by a developer nearly a decade ago is turning its back on the nation’s distressed property debt, after losing more than its peers in the past two years. (BBG)

CHINA MARKETS

PBOC NET INJECTS CNY165 BILLION VIA OMOS FRIDAY

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Flag	Country	Event
17/03/2023	0700/0800	**		SE	Unemployment
17/03/2023	0930/0930	**		UK	Bank of England/Ipsos Inflation Attitudes Survey
17/03/2023	1000/1100	***		EU	HICP (f)
17/03/2023	1230/0830	*		CA	International Canadian Transaction in Securities
17/03/2023	1230/0830	*		CA	Industrial Product and Raw Material Price Index
17/03/2023	1315/0915	***		US	Industrial Production
17/03/2023	1400/1000	***		US	University of Michigan Sentiment Index (p)