Wall Street is worried about what may be next to topple following the second and third-largest bank failures in U.S. history, and stocks are swinging sharply as investors scramble to find someplace safe to park their money.
“So far, it seems that the potential problem banks are few, and importantly do not extend to the so-called systemically important banks,” analysts at ING said.
Stock markets were mixed in Asia after the U.S. government announced its plan to protect depositors at banks, but the losses deepened as trading headed westward through Europe. Germany’s DAX lost 3% as bank stocks across the continent sank. On Wall Street, a measure of fear among stock investors touched its highest level since October.
The two-year yield, which moves more on expectations for the Fed, had an even more breath-taking drop. It fell to 4.09% from 4.59% Friday. “At this point in time, depending on reactions in financial markets and eventual fallout on the overall economy, we wouldn’t rule out that the hiking cycle could even be over and that the next move by Fed officials may be lower not higher,” said Kevin Cummins, chief U.S. economist at NatWest.
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