What is the most suitable refuge when the storm hits the financial markets? The same umbrellas do not always apply, even if the yellow metal has proven to be the right dress for any occasion.
In this new round of panic on the markets, this time due to the collapse of Silicon Valley Bank and the New Yorker Signature Bank, investors are frantically searching for shelter goods, selling all this could create problems.
In the balance sheet of investors today on the plate of purchases have gone their and bond market on expectations of a slowdown in monetary tightening, on the sales plate instead they put the dollar and bags.
Gold splashes and breaks the psychological threshold of 1900 dollars an ounce
The yellow metal, in the waves of generalized sales, instead reaped good results. The most coveted safe-haven asset was bought hands down, so much so that this afternoon it managed to break the psychological threshold of 1.900 dollars an ounce, up to 1908.86, up 1,36% compared to the previous session.
Government bond purchases: general decline in yields
Strong purchases also on government bonds around the world, driving yields down as investors bet on a turn in the central banks' restrictive monetary policy in order to defuse the risks of contagion linked to the default of the SVB. The most important tears are recorded on the two-year government bonds of the Eurozone, with the yield of the German Bund falling by 44 basis points and that of the French Oat by 46 while for the BTP the drop is "limited" to 29 points . Traders see the ECB's terminal rate 'collapse' to 3,56%.
“When it rains, it pours” : the dollar under pressure
“When it rains, it pours” say the English and the sales were disseminated throughout the day and everywhere: although President Biden said he was certain of the security of the US financial system, some investors fear the "contagion effect" and have triggered sales above all on American assets, also putting pressure on the dollar, which instead in other situations was seen as a hard currency and therefore as a refuge. Thus the single currency returns above 1,07 dollars, to the levels of mid-February, and changes hands at 1,0722 (1,0586 at Friday's close). Now, the eyes of the operators are all focused right on technical level of 1,075, which would open the door to a test of the 1,08 round target. The dollar index lost as much as 0,55% against a basket of currencies, near a one-month low at 103,67.
Eyes on the next moves of the central banks
Sales also on stock lists throughout Europe with Milan wearing the black shirt, with the drop in the Ftse Mib reaching 3,2%, sunk by the weight of the banks on the index. The US government has announced several measures already during the first Asian trading, stating that all customers of SVB will have access to their deposits starting today.
Authorities also said depositors at New York's Signature Bank, which was closed by New York's financial regulator on Sunday, would be compensated with no loss to taxpayers.
La Fed announced that it will make additional funds available through a new funding program, called the Bank Term Funding Program, which will offer loans of up to one year to depository institutions, backed by Treasuries and other assets held by the institutions themselves.
The market turmoil due to the collapse of Svb has led investors to speculate that the Fed it will no longer raise interest rates by 50 basis points this month. Attention will now turn to Tuesday's inflation data to gauge how likely a Fed's aggressive monetary policy is.
Goldman Sachs he said he no longer expects a rate hike from the Fed at its March 22 meeting.
