Financial sector uncertainty remains ahead of the weekend

General trend

- US banks’ emergency borrowing from the Fed still elevated (see below); Weekly borrowing from the FHLB declined.

- Generally quiet FX session seen; Yen higher amid safe haven demand.

- Was the Aussie PMI data impacted by recent banking industry developments?

- Equity markets trade generally lower after US markets lost momentum; Modest moves seen.

- Financials decline.

- Local governments in China announce measures to support the auto industry amid recent price war.

- CN/HK corporate earnings due today include [BAIC Motor, China Everbright Bank, China Merchants Bank, China Resources Beer, Meituan, Sinopec].

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 opens -0.3% at 6,945.

-*(AU) Australia Mar preliminary PMI manufacturing: 48.7 V 50.5 PRIOR (1st contraction in 35 months, lowest since May 2020).

-(AU) Australia sells A$500M v A$500M indicated in 4.25% Apr 2026 bonds; Avg Yield: 2.8595%; bid-to-cover: 4.97x.

-(NZ) New Zealand Ministry: Economy may have contracted in Q1, cites cyclone [implies technical recession].

China/Hong Kong

-Hang Seng opens -0.6% at 19,919.

-Shanghai Composite opens -0.1% at 3,282.

-(CN) China Wuhan Economic & Development Investment establishes CNY50B ($7.3B) auto fund - financial press.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY7.0B v CNY64B prior in 7-day reverse repos: Net drain CNY173B v drains CNY45B prior.

-(CN) China PBOC sets Yuan reference rate: 6.8374 v 6.8709 prior [strongest CNY fix since Feb 15th].

-(CN) China reportedly launched stress test into securities firms - press.

-(CN) Mintz Group's [US corporate due diligence firm] office in Beijing was raided; 5 China staff members were detained - financial press.

-(HK) Hong Kong Monetary Authority (HKMA): Need to monitor situation carefully for any further volatility; HK does not have any 'direct' exposure to AT1 bonds.

-HSBC: China Banking and Insurance Regulatory Commission (CBIRC) Chairman met with the co's CEO, the regulator welcomes HSBC to expand investment in China.

Japan

-Nikkei 225 opens -0.2% at 27,368.

-*(JP) Japan Feb national CPI Y/Y: 3.3% V 3.3%E; CPI ex-fresh food (core) Y/Y: 3.1% V 3.1%E; CPI ex-fresh food/energy (Core-Core) Y/Y: 3.5% v 3.4%e [fastest pace since Jan 1982].

-*(JP) Japan Mar preliminary PMI manufacturing: 48.6 V 47.7 prior [5th straight contraction].

-(JP) Japan releases weekly flows data [period ended Mar 17th]: Japan buying of foreign bonds +¥3.3T; Foreign buying of Japan bonds: +¥4.1T [Japan sees record weekly foreign inflow].

-(JP) Japan Fin Min Suzuki: Confirms to use >¥2.0T in COVID reserves on price measures.

Korea

-Kospi opens -0.1% at 2,421.

-(KR) South Korea Finance Min Choo: Seeks to expand flights between South Korea and Japan.

Other Asia

-*(TW) Taiwan Central Bank (CBC) raises benchmark interest rate by 12.5bps to 1.875%; not expected.

North America

- (US) Fed releases factors affecting reserve balances (H.4.1): Discount window borrowing declined to $110.2B v $152.9B w/w; Banks have borrowed $53.6B v $11.9B w/w from new BTFP facility.

-SVB Financial: Citizens Financial said to prepare bid for co's private banking unit; Customers Bancorp said to consider bid for Silicon Valley Bank - financial press.

-(US) Treasury Sec Yellen: Not job of treasury to be overseeing bank supervisors at Fed or FDIC; There are tools that we could use again, for an institution of any size.

-(US) Treasury Sec Yellen: Prepared for additional deposit actions if warranted, important anti-contagion tools can be used again - House testimony.

- Reportedly JPM and Citi tell staff not to solicit clients from vulnerable banks - press.

Europe

-ECB and SNB tapped Fed's USD swap facility in the week through March 22nd.

-(EU) ECB: Likely to increase scrutiny of bank funding including clarity on deposit stickiness.

Levels as of 01:20 ET

- Nikkei 225, -0.3%, ASX 200 -0.2% , Hang Seng -0.4%; Shanghai Composite -0.5%; Kospi -0.5%.

- Equity S&P500 Futures: +0.2%; Nasdaq100 +0.1%, Dax -0.5%; FTSE100 -0.7%.

- EUR 1.0838-1.0817 ; JPY 130.94-130.05 ; AUD 0.6689-0.6659 ;NZD 0.6255-0.6228.

- Gold -0.1% at $1,994/oz; Crude Oil -0.2% at $69.81/brl; Copper +0.5% at $4.1245/lb.