The deposit guarantee scheme requires all banks to pay a yearly fee to local DGS funds to reach a preset target. But what countries are missing their targets, and who will have the hardest time at year-end?
Several US regional banks fell victim to the waning confidence from depositors who ultimately pulled the plug. Are European banks really safeguarded by better legislation, or are we taking comfort in a false sense of security?
Given the lack of an imminent economic crash risk, bond bears have been back in the driver’s seat. No news is bond bearish news, which in turn is likely to exacerbate the already worsening root cause of the deposit crisis. We are on high alert for the ramifications of the price action in the USD.
When the dust settles on this deposit crisis, banks will have to buy more bonds as financial authorities are likely to tighten LCR rules and ask banks to re-calibrate modeled outflows from corporate deposits. Lower for longer in core rates, while Italy is at risk?
It’s been another of those macro weeks that makes you 10 years older in a matter of days. We look at the timeliest indicators of the deposit flight crisis and assess how to deal with it.
The US inflation print yesterday would have been a CLEAR 50bp data print, but markets and we remain convinced that the credit event will force the Fed to rethink. The ECB is, on ther other hand, not awake yet.