News items related to SVB, Signature Bank failures and the US authorities' response. Read from the bottom up for the chronology:

Other items:

The news of impact during the session, and ahead of it over the weekend, were the woes at Silicon Valley Bank, the market expectation of some sort of Fed/US government intervention to limit systemic contagion, and the realisation of that with a new Fed fund to guarantee stricken depositors.

Currencies started trading higher against the US dollar in the very early hours with only New Zealand forex markets active. This continued as Australian forex opened. The move higher was based on expectations of some sort of rescue/bailout.

Within minutes of US futures markets opening for the new week (CME Globex opened at 2200 GMT (6pm US Eastern time on Sunday, 7am on Monday in Tokyo)) the much-awaited announcement was made. Check the links above for the details but in summary:

  • All depositors of Silicon Valley Bank and Signature Bank will have access to their funds
  • Shareholders and certain unsecured debtholders will not be protected
  • A new Fed facility was announced with $25 billion from ESF to backstop bank deposits, the Bank Term Funding Program (BTFP)

The BTFP, in essence:

  • allows banks to pledge collateral at par
  • this means holdings of long-dated Treasuries or MBS with mark-to-market losses can unlock liquidity based on original value

The news reverberated through markets for the balance of the session, with further legs higher for ‘risk’ assets and FX against the USD.

There was little else of note. I will add that there was a report that US President Biden will announce that he will not permit (or will at least limit) oil drilling in 16 million acres in Alaska and the Arctic Ocean. AP had the info citing a US administration official speaking on Sunday.


The USD (DXY index shown here) dropped on the session:

dxy fed svb guarantee