This is the first time the MOVE index has reached 200 with a VIX index below 40!
It is very rare that the volatility of the Treasury bond market (MOVE Index) is much higher than the volatility of the equity market (VIX Index)! The current level of the MOVE index should be accompanied by a VIX above 30 at least! How long will this dichotomy last? Source : Macrobond
St. Louis Fed Financial Stress Index rises to 1.575 - a level seen only four times during the last 30 years
In every case VIX hit at least 45. During the last two spikes, it hit 80. Source: Bloomberg, Oktay Kavrak, CFA
German Ifo business confidence shows economy's resilience against the recent banking crisis
German Ifo business confidence shows economy's resilience against the recent banking crisis, w/all 3 Ifo components rising in March. Data highlight that industry is holding up as the threat of an energy crunch recedes. BUT all 3 indexes remained a bit below long-term avg of 96.6. Source: HolgerZ, Bloomberg
One of the best bank deals of our time?
First Citizens's shares jumped 54% after NCarolina lender took over SVB's $56.5bn in deposits as well as $72bn in loans at discount of $16.5bn. FDIC will help finance deal w/$35bn loan & $70bn credit line to help cover pot depo flight. Source: DJ, HolgerZ, Bloomberg
Used car prices increased again for the 5th month in a row
Prices continue to firm up at historical levels, despite being down about 2% on a year-over-year basis. Inflationary forces remain stubbornly high due to structural macro drivers. The Fed just erased 5 months of QT in two weeks. Will it add fuel to the inflation fire? Source: Tavi Costa, Bloomberg, Crescat Capital
The spread between 30-year and 5-year US Treasury yields is positive again!
The difference between the 30-year and 5-year U.S. Treasury yields has risen sharply, which is another signal sent by the market regarding the FED's monetary policy (reduction by the end of the year?) and concerns about the current situation of the U.S. economy. It is interesting to note that the last time the US yield curve (30y-5y) was in negative territory before rising sharply was just before the internet crisis (2001) and the global financial crisis (2008)... More volatility ahead? Source: Bloomberg
The European rate market sends a signal to the ECB!
For the first time in this rate hike cycle, the German 2-year yield is below the ECB deposit facility rate. Furthermore, the difference between the German 2-year yield and the ECB deposit facility rate is at its lowest level (-0.53%) since 2008. Another market signal of an ECB monetary policy mistake? Not sure, considering the current level of inflation in Europe. Source: Bloomberg
Highest interest rate volatility since GFC!
The MOVE index, which measures interest rate volatility, has reached its highest level since the Global Financial Crisis. Tensions are extreme in the bond market between the stress in the US financial system triggered by the collapse of the Sillicon Valley bank and inflation that remains high. Uncertainty around the next FED decision next week has rarely been so high and especially in opposite directions: hike, pause, cut, everything remains open. But how will the market react if the Federal Reserve does not raise rates when the CPI core services ex shelter index was released today at its highest level since September? Source : Bloomberg.
