US stocks and NY Dow fall for 4 days in a row Silicon Valley Bank collapse raises financial anxiety

3/11 (Sat) morning market trends (compared to the previous day)

traditional finance

- NY Dow: $31,909 -1%
- NASDAQ: $11,138 -1.7%
- Nikkei Average: ¥28,143 -1.6%
- USD/JPY: 134.9 -0.8%
- US dollar index: 104.6 -0.6%
- 10 year US Treasury yield: 3.7 -5.5% annual yield
- Gold Futures: $1,872 +2%

crypto assets

Bitcoin: $20,101 -1%
Ethereum: $1,425 -1%

Today’s New York Dow fell for the fourth day in a row. The Nasdaq and S&P 500 also fell across the board. The US employment data for February was released before the opening of trading, and the market temporarily eased concerns about the Fed’s hawkish pace of interest rate hikes after the weaker data than in January.

employment statistics

U.S. employment rose more than expected in February, while wage growth slowed on a month-on-month basis. Nonfarm payrolls (establishment survey, seasonally adjusted) increased by 311,000 from the previous month in February, exceeding the expected increase of 225,000, but up from the previous month’s increase of 504,000. Width is greatly reduced. On the other hand, the unemployment rate rose to 3.6%, better than market expectations of 3.4%.

In addition, the average hourly wage increased by 0.2% from the previous month (0.3% in January), and increased by 4.6% from the same month of the previous year. The slowest growth in a year on a month-over-month basis also likely justifies January’s strong reading as a temporary outlier. The latest statistics show that the employment market is still tight, but with the unemployment rate rising slightly, in the CME interest rate futures market, the next FOMC rate hike is expected to rise by 0.50 points from just under 80% the day before to 40%. plummeted to less than 100%. Fed Chairman Powell’s hawkish remarks this week have fueled market fears that interest rates will continue to rise after May.

We have two economic indicators coming up next week, the CPI and PPI.

Economic indicators for March (Japan time)

March 14, 21:30 (Tuesday): US February Consumer Price Index Core Index (CPI)
Wednesday, March 15, 21:30: U.S. February Retail Sales
Wednesday, March 15, 21:30: U.S. February Wholesale Price Index (PPI)
March 23, 3:00 (Thursday): US Federal Open Market Committee (FOMC) interest rate announcement, chairman’s regular press conference

connection: What is the CPI (Consumer Price Index) that attracts attention in the virtual currency market?

US stocks

SVB goes bankrupt

The stock price of bank holding company SVB Financial Group, whose financial problems have become prominent this week, continued to plunge even in after-hours trading on the morning of the 10th, and the trading of stocks was suspended.

After that, California banking regulators shut down Silicon Valley Bank (SVB), a subsidiary of SVB Financial Group. The Federal Deposit Insurance Corporation (FDIC), the US government agency that protects bank deposits in the event of a bank failure, has announced that Silicon Valley banks have ceased operations and placed deposits under control. The FDIC said in a statement that Silicon Valley Bank’s headquarters and all branches will reopen on the 13th and will begin accepting deposit withdrawals by the morning of the 13th at the latest. At the end of 2022, total assets were $209 billion (approximately ¥28.2 trillion) and deposit balance was $175.4 billion.

Silicon Valley Bank ranks 16th in the U.S. by assets and is expected to be the largest bank failure in the United States since the 2008 financial crisis.

Silicon Valley Bank deals with about half of U.S. venture capital-backed startups, including tech companies. etc. was purchased. However, due to the Fed’s bullish interest rate hike policy from 2022, the prices of US Treasuries and other securities fell (interest rates rose), and it became clear that they had unrealized losses. The company said it sold the entire amount of $21 billion, resulting in an after-tax loss of $1.8 billion. SVB Financial Group now appears to be considering a sale that includes Silicon Valley Bank.

In response to this rapid development, US ministries and agencies related to finance have also taken action. Yellen met with officials from the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency (OCC) on Monday to discuss Silicon Valley banks’ developments. According to a Reuters report, Yellen said: “We have full confidence that banking regulators will respond appropriately, the banking system remains resilient, and regulators have effective tools in place to respond to events like this. I am doing it,” he said.

In the US stock market today, the S&P 500 regional bank stock index was down 4%. Meanwhile, there were buybacks at some of the big banks. JP Morgan +2.5%, Wells Fargo +0.5%, Bank of America -0.8%, USB -3.9%.

In addition, compared to the previous day for individual stocks of IT Tech, NVIDIA -2%, c3.ai -6.3%, Big Bear.ai -1.3%, Tesla +0.3%, Microsoft -1.4%, Alphabet -1.8%, Amazon -1.6 %, Apple -1.4%, Meta -1.2%, Coinbase -8%, Silvergate Capital -11.5%.

connection: Bitcoin fell after Powell congressional testimony, “positive correlation” with US stock index is on a downward trend

Impact on the cryptocurrency industry

Due to the bankruptcy of Silicon Valley Bank, a large amount of withdrawals were temporarily observed in stablecoin USDC. Nansen data shows that over the past 24 hours, three types of wallets – smart money, funds and market makers – have withdrawn more than $900 million in total USDC from centralized exchanges. It seems that there is a move to redeem to the US dollar.

Circle, which issues USDC, and Tether, which issues USDT, have said they have no exposure to Silicon Valley banks. Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank, Signature Bank, Silicon Valley Bank, Silvergate Bank. Circle said this week that it had moved assets to another bank following Silvergate’s liquidity problems, but it’s unclear at this time how much money is left at Silicon Valley Bank.

connection: U.S. cryptocurrency service provider Silvergate Capital announces liquidation of banking business

Shift to decentralized stablecoins?

In addition, as concerns about the asset status of centralized stablecoins increased again, the inflow of funds into decentralized stablecoins increased, and the prices of some related stocks soared. Liquity (LQTY), which issues decentralized stablecoin LUSD, increased by 18.5% from the previous day, and TrueFi (TRU) related to TUSD increased by 8.8% from the previous day.

connection: Recommended for cryptocurrency investors, advantageous shareholder benefits “10 selections”

dollar-yen plunge

The dollar-yen exchange rate is 134.9 yen per dollar, down 0.8% from the previous day. The dollar/yen exchange rate fell sharply from the previous day’s high of 136.9 yen, falling below 135 yen, as the unemployment rate and bank management problems, which were higher than expected, intensified selling.

Yesterday, the dollar/yen surged to 136.98 at one point after the Bank of Japan announced it would maintain its current monetary easing policy.

Source: Yahoo! Finance

connection: Why did the Japanese government start promoting “Web3 policy”?Summary of important points and related news

connection: Commentary on the relationship between government bonds and interest rates, and the impact on the cryptocurrency market

GM radio on Thursdays

The 12th GM Radio will be held this Thursday. We invited Mousser Rahmouni, Head of Marketing & Sales at Striga, to talk about “Cryptocurrency Banking Infrastructure and Regulation”. Recently, problems such as the bankruptcy of Silver Gate have attracted attention.

connection: “GM Radio” European virtual currency infrastructure company “Striga” will participate next time

Click here for Wednesday’s radio archive.