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Bank Industry Worries Back at the Forefront

Posted March 24, 2023 at 10:00 am
Patrick J. O’Hare

Equity futures have seen only modest improvement at the morning progressed. The S&P 500 futures are down 22 point and are trading 0.6% below fair value. The Nasdaq 100 futures are down 42 points and are trading 0.3% below fair value. The Dow Jones Industrial Average futures are down 224 points and are trading 0.8% below fair value.

The stock market is poised for a lower open as investors weigh concerns over the bank industry, again. Deutsche Bank’s (DB) credit default swaps shot to a four-year high, according to Reuters, driving strong selling interest. DB is down more than 10%, hitting its lowest level since early October.

Also, loans to the Fed’s discount window fell to $110.2 billion while borrowing from the Fed’s Bank Term Lending Program rose to $53.7 billion, according to Bloomberg, adding to the financial industry angst.

Treasury yields are down sharply in a flight to safety trade. The 2-yr note yield is down 22 basis points to 3.62% and the 10-yr note yield is down 13 basis points to 3.30%.

Durable goods orders fell 1.0% month-over-month in February ( consensus 1.6%) following a downwardly revised 5.0% decrease (from 4.5%) in January. Excluding transportation, durable goods orders were unchanged month-over-month ( consensus 0.3%) following a downwardly revised 0.4% increase (from 0.7%) in January.

The key takeaway from the report is that it could invite questions about the strength of the manufacturing sector since it showed an unexpected decrease in headline orders while the January decrease was revised even lower.

  • New orders for nondefense aircraft and parts declined 6.6% month-over-month after falling 56.3% in January   
  • New orders for primary metals increased 0.3% month-over-month after increasing 1.0% in January.
  • New orders for machinery fell 0.5% month-over-month after increasing 0.7% in January.
  • New orders for fabricated metal products increased 0.4% month-over-month after decreasing 0.3% in January.
  • New orders for computers and electronic products decreased 0.1% month-over-month after increasing 0.2% in January.

Other economic data today is limited to: Preliminary March IHS Markit Manufacturing PMI (prior 47.3) and preliminary March IHS Markit Services PMI (prior 50.6) at 9:45 a.m. ET

Originally Posted March 24, 2023 – Bank industry worries back at the forefront

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