Last week, the world appeared to be on the brink of an international banking crisis. The situation might have stabilized with Silicon Valley Bank filing for Chapter 11 bankruptcy, First Republic Bank receiving aid in the form of deposits from major players, and Credit Suisse obtaining a CHF 50B lifeline from SNB. Despite these developments, market reactions suggest investors may be positioning for worse outcomes ahead. In the currency markets, Yen emerged as the clear winner due to risk aversion and a boost from falling benchmark treasury yields in US and Europe. Swiss Franc, Dollar, and Euro were the weakest performers as the crisis unfolded on two fronts. Australian and New Zealand Dollars showed surprising resilience, but this is likely because they were not at the center of the storm. |
