Coffee With Greta: More Bank Worries
DJIA Futures: -323 (-1.0%)
SPX Futures: -34 (-0.9%)
NASDAQ Futures: -70 (-0.5%)
Good morning friends!
Futures are dropping due to renewed worry about the global banking system.
Let’s get right to it!
Banks Fall Again
Bank stocks are falling again today amid fresh concerns about the global banking system.
The SPDR S&P Regional Banking ETF (KRE) is down 2.0% ahead of the open with the Financial Select Sector SPDR ETF (XLF) falling 1.8%.
The fresh concern was prompted by a spike in credit default swaps at German lender Deutsche Bank overnight.
Deutsche Bank’s (DB) U.S. shares are down 10.1%.
Credit default swaps are a form of insurance for a company’s bondholders against its default.
Those jumped to 173 basis points Thursday night from 142 basis points on Wednesday.
Treasury Yields Fall On Bank Concerns
U.S. Treasury yields are falling as investors buy up bonds amid the latest developments in the banking sector.
The 2-year yield is down 25 basis points to 3.60% while the 10-year yield is down 11 basis points to 3.31%.
Investors are also weighing the impact of the Fed’s interest rate policy on the economy.
CME Group’s FedWatch Tool shows traders betting the central bank is done hiking rates with over 98% predicting a pause at the next meeting.
Oil Prices, Energy Stocks Slide
Oil prices are sliding this morning on concerns about potential oversupply.
West Texas Intermediate crude futures are down 3.7% to $67.37 bbl while Brent crude futures are down 3.4% to $73.33 bbl.
Energy stocks are sliding amid the drop in oil prices with the Energy Select Sector SPDR ETF (XLE) down 1.8% in premarket trade.
The U.S. Energy Secretary told lawmakers on Thursday it may take several years to refill the U.S. Strategic Petroleum Reserve.
The stockpile is at the lowest level since 1983 but she said it will be difficult to take advantage of the low oil prices this year.
But the White House said in October that it would buy back oil for the SPR when prices were at or below $67-$72 per barrel.
With the U.S. not currently buying oil, prices are expected to slide further due to oversupply.
Durable Goods Orders Fall
Durable goods orders fell more than expected in February due to lower demand for passenger planes and cars.
The Commerce Department reported orders fell 1% last month vs expectations for a 0.3% decline.
Orders were up 2.3% year over year, the smallest increase since 2020.
Airplane orders dropped 6.6% while new car orders fell 1%.
Durable goods orders excluding transportation were unchanged.
But business investment rose for the second month in a row, with core orders up 0.2%.
That shows the industrial sector is still expanding but at a slower pace.
In Case You Missed It
- New home sales rose in February as buyers took advantage of a dip in mortgage rates. The Census Bureau reported Thursday that new home sales jumped 1.1% to a seasonally adjusted annual rate of 640,000 units last month. That was basically in line with expectations and January’s data was revised lower to an SAAR of 630,000 units from 670,000 previously. New sales were still down 19% year over year. The number of new homes for sale at the end of February slipped 1.1% from January but still represented an 8-month supply at the current sales pace.