The FED’s next move

#1

The collapse of SVB has turned the focus back to regulation and to the FED’s next move! Jerome Powell’s FED has taken a hawkish view to combat inflation, but the increase in interest rates has largely affected the value of fixed income securities.

It is very important to point out that SVB’s collapse was due to several factors, not just an increase in interest rates. Nonetheless, it is interesting to think how will this be balanced out since there is a lot to factor in.

Will the FED keep pushing? Will it reduce the hikes? Has the market priced-in the next move?

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#2

Great question @enrique.marcilio, so much to unpick, but only time will tell.
I expect this will put some pressure on the FED to avoid any drastic interest rate increases, we can see how sensitive some firms are to those increases, despite us being told how well capitalised the banks are these days.
Another angle I’m considering is how robust our own neo-banks are, and whether this will lead to more business customers of banks taking a risk-averse view and moving accounts and funds back to the traditional banks?

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