Global risk appetite deteriorated this past week. On Wall Street, the Dow Jones, S&P 500 and Nasdaq 100 sank 4.44%, 4.55% and 4.71%, respectively. Things were not looking much better across the Atlantic Ocean. The DAX 40 and FTSE 100 fell 0.97% and 2.5%, respectively. In Asia, Australia’s ASX 200 and Hong Kong’s Hang Seng Index dropped 1.91% and 6.07%, respectively.
A lot of the pessimism was traced back to the United States. The collapse of SVB Financial and news that Silvergate Capital Corp, a crypto-specialized bank, would be winding down operations triggered risk aversion. As a result, we saw Treasury yields tumble across the curve as markets priced in a less-hawkish Federal Reserve.
In fact, market pricing is now looking at lower odds of a 50-basis point rate hike this month. Markets also priced in a 25-basis point rate hike by the end of this year. Anti-fiat gold prices fared well. The anti-fiat yellow metal soared 2.06% on Friday, the most over 24 hours since November 10th. Sentiment-linked crude oil prices did not fare well.
Whether or not the collapse of SVB Financial triggers a chain reaction remains to be seen. But, it is understandable that markets are on edge. The fastest pace of tightening in decades will reveal weaknesses in the economy and create uncertainty. Just look at the VIX market ‘fear gauge’, which soared 34% last week. That was the most since January 2022.
A lot of the pessimism was traced back to the United States. The collapse of SVB Financial and news that Silvergate Capital Corp, a crypto-specialized bank, would be winding down operations triggered risk aversion. As a result, we saw Treasury yields tumble across the curve as markets priced in a less-hawkish Federal Reserve.
In fact, market pricing is now looking at lower odds of a 50-basis point rate hike this month. Markets also priced in a 25-basis point rate hike by the end of this year. Anti-fiat gold prices fared well. The anti-fiat yellow metal soared 2.06% on Friday, the most over 24 hours since November 10th. Sentiment-linked crude oil prices did not fare well.
Whether or not the collapse of SVB Financial triggers a chain reaction remains to be seen. But, it is understandable that markets are on edge. The fastest pace of tightening in decades will reveal weaknesses in the economy and create uncertainty. Just look at the VIX market ‘fear gauge’, which soared 34% last week. That was the most since January 2022.