MNI US OPEN - Swiss Bank Tie-Up Gets Moody Market Reception

NEWS

CORPORATE (MNI): SNB Confirm Loan Facility as UBS Buys Credit Suisse

The Swiss National Bank confirmed Sunday it will provide an additional SFR 100 billion liquidity assistance availability to facilitate UBS's takeover of Credit Suisse. As the deal progresses, both Credit Suisse and UBS can access the facility with privileged creditor status in bankruptcy for a total amount of up to CHF 100 billion. Furthermore, and based on the Swiss Federal Council’s Emergency Ordinance, the SNB can grant Credit Suisse a liquidity assistance loan of up to CHF 100 billion backed by a federal default guarantee.

RUSSIA/CHINA (MNI): Putin and Xi Publish Articles For Each Other’s State Media

Putin will welcome Xi in Moscow today as the Chinese leader begins his 3-day visit to Russia. Ahead of the visit, Putin and Xi published articles for each other’s state media. Putin and Xi will speak to reporters on Monday and have a closed meeting to discuss sensitive issues including international affairs, according to Russian officials. On Tuesday, Xi will attend a meeting with Russia’s prime minister, participate in talks and be treated to a state dinner at the Kremlin.

CENTRAL BANKS (MNI): Central Banks Announce Enhanced Liquidity Provision

The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Federal Reserve, and the Swiss National Bank Sunday announced a coordinated action to enhance the provision of liquidity through standing U.S. dollar liquidity swap line arrangements. The six central banks have agreed to increase the frequency of 7-day maturity operations from weekly to daily starting Monday and continuing "at least" through the end of April, a statement from the Fed said.

ECB (MNI): Swift Swiss Action a Financial Stability Boost: ECB

The European Central Bank "welcomes" the swift action taken by the Swiss authorities leading to UBS's announced takeover of Credit Suisse, bank President Christine Lagarde said Sunday. The actions will be "instrumental" in restoring orderly market conditions and ensuring financial stability, Lagarde said in a statement by email following the announced deal.

JAPAN (MNI): BOJ Sees Stable Financial System, Wary of Risks

Bank of Japan officials view the turmoil in the U.S. and European banking systems as unlikely to undermine the stability of Japan's financial system, though they are alert to global growth risks and will provide an update in April's Financial System Report, MNI understands.

JAPAN (MNI): BOJ Worried About Rising CPI - Summary of Opinions

At least two Bank of Japan board members were worried about stronger-than-expected consumer prices at the March 9-10 policy-setting meeting, the summary of opinions released by the BOJ on Monday showed. “Firms have continued to pass on cost increases to selling prices, and the year-on-year rate of change in services prices excluding imputed rent has risen to the range of 1.5-2.0 percent. Going forward, it is necessary to pay full attention to upside risk to prices,” one member said.

JAPAN (MNI): Uchida, Himino Appointed BOJ Deputy Governors

Japan's government on Monday officially appointed Shinichi Uchida, a former Bank of Japan executive director, and Ryozo Himino, a former commissioner of the Financial Services Agency, as Bank of Japan deputy governors. The deputy governors in confirmation hearings brushed aside the chance of an imminent change in easy policy, saying the BOJ needs to maintain its easy policy as the 2% price target hadn’t been achieved.

CHINA (MNI): Rate Hikes a Threat to Financial Stability - PBOC Xuan

Risks exposed by a few banking institutions in the U.S and Europe showed the rapid shift in monetary policy in major economies is generating spillover effects, said Xuan Changneng, deputy governor of the People's Bank of China on Saturday at the Global Asset Management Forum.

CHINA (MNI): China's March Loan Prime Rate Unchanged

China's reference lending rate remained unchanged on Monday, according to a statement on the People's Bank of China website, which was in line with market expectations as the central bank kept a key policy rate steady on March 15 amid robust credit expansion and an economic rebound.

CHINA (MNI): China to Allow Foreign Financial Firms to List

China will allow foreign financial institutions to list in the domestic equity market when “conditions are ready” given the positive outlook for further opening up of its financial markets, said Lou Jiwei, director general of the Global Asset Management Forum and China’s former finance minister.

AUSTRALIA (MNI): RBA's Kent Says Aussie Banks Unquestionably Strong

Australian banks remained "unquestionably strong" and domestic financial markets continued to function well despite the global banking turmoil, said Reserve Bank of Australia Assistant Governor (Financial Markets) Chris Kent at a conference on Monday.

DATA

GERMAN DATA (MNI): PPI Continues to Ease in Feb as Energy Prices Decline

• GERMANY FEB PPI -0.3% M/M (FCST -1.4%); JAN -1.2%r M/M
• GERMANY FEB PPI +15.8% Y/Y (FCST +14.5%); JAN +17.6%r Y/Y

German factory-gate inflation cooled for a fifth consecutive month in February, albeit to a lesser degree than consensus expectations as prices fell by -0.3% m/m, easing by 1.8pp to +15.8% y/y. Underlying price pressures have slowed but remain expansive, with PPI ex. energy up +0.5% m/m and inching down by a slower 0.5pp to +10.2% y/y in February. On the month, prices accelerated slightly for all subcategories except for energy; intermediate goods (+0.1%), capital goods (+0.4%), consumer goods (+0.2%) and non-durable consumer goods (+0.9%).

FOREX: JPY on Top as Haven Trade Persists

• JPY is comfortably the outperformer early Monday, with equities sliding on the open and providing a boost to haven currencies across G10. This extends the USD/JPY pullback off the early March highs, with horizontal support at 129.81 the next downside target for bears. Last week's break and close below the 50-dma was a bearish signal, making the YTD lows printed in January at 127.23 a more realistic prospect over the medium-term.
• European bank stocks traded heavy from the off, with the UBS - Credit Suisse merger agreement being poorly received by markets due to the heavy dilution of AT1 bond holders and the much lower-than-market price being paid for the Credit Suisse assets. Heavy equity trade translated to weakness in the single currency on the opening bell, however much of the down-move has been reversed headed through the NY crossover.
• Growth and risk proxy FX are at the bottom-end of the G10 pile, putting NZD, AUD lower against most others. AUD/JPY weakness as put the cross at fresh 2023 lows, with 87.03 a key level going forward. Weakness through here opens levels not seen since H1 2022.
• Datapoints are few and far between Monday, with the deluge of CB risk to come later this week. The Fed, BoE, SNB, Norges Bank decisions start on Wednesday, with a number of EM banks also on the docket (namely Brazil, Philippines, Turkey and Taiwan). ECB's Lagarde and Centeno are set to be speaking later today, as the ECB President appears in front of European Parliament.

BONDS: Up On Contagion Risks, But Off The Highs

• In the Asian session the overarching view of the UBS takeover of Credit Suisse was viewed as a positive with Treasuries moving lower as the risk of further bank failures seemed to be lower - and this was where the markets focus was.
• However, the focus has changed in early European trading. Markets are now focused on the near wipeout of CS' AT1 bonds - and AT1 bonds are getting hit across the board. The big discount to the CS takeover relative to Friday's close has also spooked bank equity holders.
• So it appears as though the market is now viewing the probability of contagion bringing further bank failures as lower, but the costs to AT1 bond holders and equity holders in the event of a bailout being greater than previously perceived.
• This change in view led to a reversal in macro markets with Treasuries and Bunds seeing a sharp rally in early European trading. Bund futures hit a high of 140.30 (around 210 ticks above Friday's close), TY1 hit a high of 116-24 (around one whole figure above Friday's close and two above the Asian lows).
• Core fixed income has since moved off these highs but remains notably higher on the day with German and US curves bull steepening.

EQUITIES: Equity Futures Fail to Find Support From Credit Suisse Takeover

The Eurostoxx 50 futures outlook remains bearish following recent weakness and the contract is trading lower today. Recent short-term gains were considered corrective. The break of the 4000.00 handle signals scope for weakness towards 3865.00, the Jan 4 low and further out towards the 3800.00 handle. Initial resistance is seen at 4129.90, the 20-day EMA. Key resistance has been defined at 4268.00, the Mar 6 high. The trend condition in S&P E-Minis remains bearish and recent short-term gains appear to be a correction. Price has recently cleared a key short-term support at 3960.75, Mar 2 low to confirm a resumption of the bear cycle that has been in place since Feb 2. The move lower signals scope for an extension towards 3822.00 next, the Dec 22 low. Initial firm resistance is seen at 4026.76, the 50-day EMA. A break of this EMA would alter the picture.

• Japan's NIKKEI closed lower by 388.12 pts or -1.42% at 26945.67 and the TOPIX ended 30.12 pts lower or -1.54% at 1929.3.
• Elsewhere, in China the SHANGHAI closed lower by 15.636 pts or -0.48% at 3234.91 and the HANG SENG ended 517.88 pts lower or -2.65% at 19000.71.
• Across Europe, Germany's DAX trades lower by 129.3 pts or -0.88% at 14638.16, FTSE 100 lower by 80.84 pts or -1.1% at 7254.71, CAC 40 down 38.09 pts or -0.55% at 6884.9 and Euro Stoxx 50 down 26.31 pts or -0.65% at 4038.68.
• Dow Jones mini down 186 pts or -0.58% at 31887, S&P 500 mini down 18.75 pts or -0.48% at 3928.75, NASDAQ mini down 32 pts or -0.25% at 12614.25.

COMMODITIES: WTI Futures Print Fresh One-Year Low, Attention on $62.43 Fibonacci Projection

WTI futures remain vulnerable and the contract is trading lower this morning. Last Wednesday’s sell-off resulted in the break of key support at $70.86, the Dec 9 low. The breach confirms a resumption of the medium-term downtrend and reinforces current bearish conditions. Note too that price has also cleared the psychological $70.00 handle. Attention is on $62.43, a Fibonacci projection. Initial resistance is at $69.64, Monday’s high. A strong rally in Gold Friday saw the yellow metal trade to fresh YTD high of $1989.4. This confirms a resumption of the uptrend that has been in place since late September 2022. Today’s rally has resulted in a break of the psychological $2000.0 handle and this further strengthens the current uptrend. It opens $2034.0 next, a Fibonacci projection. On the downside, Friday’s low of $1918.3 marks firm support.

• WTI Crude down $1.69 or -2.53% at $64.97
• Natural Gas up $0.04 or +1.63% at $2.374
• Gold spot up $5.14 or +0.26% at $1995.85
• Copper up $0.05 or +0.01% at $389.1
• Silver up $0.02 or +0.1% at $22.6358
• Platinum down $5.5 or -0.56% at $973.72