Investors took some heart from the rescue of troubled lender Credit Suisse by its Swiss rival UBS, though concerns lingered about the risk of shockwaves further damaging credit markets and smaller U.S. banks. | Reuters
“The current situation in U.S. regional banks and Credit Suisse has raised concerns about contagion risk,” said Grace Tam, chief investment advisor Hong Kong at BNP Paribas Wealth Management. “This time, major central banks have been reacting very swiftly to backstop liquidity. U.S. officials are also studying ways to temporarily guarantee all bank deposits if the banking crisis expands.
Wall Street’s S&P 500 banks index recovered 0.6 percent, and other regional U.S. lenders rose. PacWest Bancorp jumped almost 11 percent after saying deposit outflows had stabilized and its available cash exceeded total uninsured deposits. Traders have now increased their bets the Fed will pause its hiking cycle on Wednesday to try to ensure financial stability, but on the whole remain split over whether the Fed will raise its benchmark policy rate.
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