Overnight the Swiss National Bank announced that it would provide Credit Suisse with CHF50B (US$54B) of lending support in a bid to boost confidence in the beleaguered bank after Saudi interests cut them off from additional funding. Credit Suisse initially popped 20%-30% on the news, depending on the source, but it has been backsliding through the morning, and it is currently up only 4.9% in US premarket trading. Similarly, while the FTSE and DAX are up 0.9% and 0.6% respectively, they have come down from levels reached earlier in their trading day.
The Euro has also been trying to mount a rebound this morning with a 0.25% bounce from yesterday’s selloff, but it is also down from its early morning peak. The spotlight has now shifted to the European Central Bank, who is due to announce its latest interest rate decision at 9:15 am EDT, later than usual in North America due to last weekend’s time change. The ECB, who is still playing catchup on tightening relative to other central banks, is widely expected to announce a 0.50% rate increase to 3.50%. Investors may look to any differences from expectations as an indicator of what the Fed may do next week, and also for any comments in the statement or in ECB President Lagarde’s 9:45 am EDT press conference related to turmoil in the financial sector, inflation, the economy, or support for banks.
US index futures are mixed this morning with Dow Futures down 0.2% and NASDAQ futures up 0.2%. Regional banks continue to struggle in premarket action with First Republic down 29.6%, and PacWest down 15.6%. National banks like Citigroup, JPMorgan, and Bank of America appear to be stabilizing with current premarket gains of around 0.5%.
Today’s US economic news has been mixed. Weekly initial jobless claims dropped back under 200K (192K vs street 205K), and US housing starts beat expectations (1.45M vs street 1.31M), both of which were encouraging. The Philadelphia Fed Manufacturing Survey (-23.2 vs street -14.5 and previous -24.3), however, came in worse than expected and only marginally not quite as bad as last month.