Global attention on US/Europe bank developments: CS bought by UBS

Asia market update: Global attention on US / Europe bank developments: CS bought by UBS; Fed + Major CB coordination; Markets on edge, looking ahead to Wed night Fed rate decision & comments.

General trend

- Financials trade generally lower in Asia amid Credit Suisse takeunder.

- Financial sector outlook remains uncertain.

- Over the weekend it was announced that UBS agreed in coordination with the Swiss National Bank to purchase troubled Credit Suisse.

- Monday morning Asia time the US Fed announced that it would be coordinating with other major CBs [ECB, BOE, BOC, BOJ and SNB ]to enhance liquidity via US$ swap lines (daily vs weekly prior).

- Finance Ministers and CB executives around Asia reiterate that their own country’s banks are “in good shape” as they attempt to reassure the market.

- RBA’s Kent commented on Apr policy meeting ahead of the central bank’s minutes release [March 21st ].

- US equity FUTs slightly up.

- UST yields are up, but off their Asian highs.

- Attention is firmly on Wed night’s US Fed rate decision (now mostly expected to be 25bps) and comments.

- However, Fed Funds FUTs have remained volatile.

- USD trades mixed.

- Credit Suisse raises concerns about AT1 bonds [ Credit Suisse has been informed by FINMA that FINMA has determined that Credit Suisse’s Additional Tier 1 Capital (deriving from the issuance of Tier 1 Capital Notes) in the aggregate nominal amount of approximately CHF 16 billion will be written off to zero.].

- China cut the RRR, inline with CN press speculation; Was the move impacted by global events?

Headlines/economic data

Australia/New Zealand

- (AU) ASX 200 opens -0.3% at 6,974.

- (AU) RBA Asst Gov Kent speech: Long and variable monetary policy lags; Australian banks are unquestionably strong – commented on Apr monetary policy ahead of RBA Minutes release Mar 21.

China/Hong Kong

- (HK) Hang Seng opens -0.9% at 19,352.

- (CN) Shanghai Composite opens up 0.1% to 3,254.

- (HK) HKMA and HKSFC to stay in close touch with Swiss Authorities.

- (CN) China PBOC monthly Loan Prime Rate (LPR) leaves 1-year and 5-year rates unchanged (as expected).

- (CN) China PBOC Open Market Operation (OMO): Sells CNY30B v CNY180B prior in 7-day reverse repos: Net drains CNY11.0B v injects CNY165B prior.

- (CN) China PBOC sets Yuan reference rate:6.8694 v 6.9052 prior.

- (CN) Financial News [PBOC-backed]: China RRR cut aims to stabilize growth (Cut 25bps on Mar 17).

- (CN) China President Xi: Peaceful resolution to Ukraine needs to comply with UN Charter, respect security concerns of involved sides - Russia Press.

- (CN) China said to warn against price increases by property developers – update.

- (CN) Report states "improper" for China local governments to subsidize car purchases - financial press.

- Evergrande [3333.HK]: Requests 4-month adjournment to winding-up trial; creditors to access term sheets by as early as Wed [Mar 22nd].

Japan

- (JP) Nikkei 225 opens -0.3% at 27,253.

- (JP) Bank of Japan (BOJ) March Meeting Summary of Opinions: Reiterates must be patient and maintain monetary easing until price target achieved.

- (JP) Japan Fin Min Suzuki: Will carefully examine UBS impact on Japan.

- (JP) Bank of Japan (BOJ) offers to buy 5-10 year JGBs at fixed rate of 50bps; Opens window to buy unlimited amount of 10-year JGBs at 0.50% [as expected].

- (JP) Bank of Japan (BOJ) appoints Nagoya Branch Manager Takeshi Nakajima to Exec Director; Seichi Shimizu to oversee Monetary Policy - financial press.

- (JP) Bank of Japan (BOJ): Received zero bids for USD funding operation.

South Korea

- (KR) Kospi opens -0.2% at 2,391.

- (KR) South Korea sells 10-year bonds; Avg Yield: 3.340%.

- (KR) Bank of Korea (BOK) sells 3-month Monetary Stabilization Bonds (MSBs): Yield 3.370%.

- (KR) North Korea conducts nuclear counterstrike drill - North Korea media.

Other Asia

- (SG) Monetary Authority of Singapore (MAS): Credit Suisse and customers continue to trade without interruption.

- (PH) Philippine Fin Secretary Diokno: No reported exposure of Philippine banks to SVB.

- (TH) Follow Up: Thailand Dep PM: Elections may be held on May 7 or 14th.

- (ID) Indonesia bourse to return to pre-Covid hours from Apr 3 - Indonesia press.

- (TW) Taiwan Central Bank (CBC) Dep Gov Yen Tzung-ta: Current wave of inflation is not short-term phenomenon.

- (TW) Former Taiwan Pres Ma Ying-Jeou to visit China Mar 27 - Taiwan press (First visit by former or current leader since 1949).

North America

- (US) US Fed, ECB, BOE, BOC, BOJ and SNB announce coordinated action to enhance liquidity via US$ swap lines.

- (US) Mid-Size Bank Coalition of America asks US FDIC to insure on all deposits for 2 years; Notes confidence eroded in all but the largest banks – press.

- The FDIC received equity appreciation rights in New York Community Bancorp, Inc., common stock with a potential value of up to $300 million.

- FDIC: Subsidiary of New York Community Bancorp to assume deposits of Signature Bridge Bank.

- The FDIC estimates the cost of the failure of Signature Bank to its Deposit Insurance Fund to be approximately $2.5 billion.

- (US) US Official: Bank deposits have stabilized with outflows either slowing, stopping or in some cases reversing.

- (US) Fox Business' Gasparino: Rumors that Warren Buffett is meeting with mid sized banks for a deal to quell the crisis.

- (US) Former Pres Trump: Expecting 'arrest' on Mar 21st, calls for protests; Cites 'illegal leaks' from the Manhattan district attorney's office.

Europe

- Credit Suisse [CSGN.CH]: Confirms to merge with UBS; shareholders of Credit Suisse will receive 1 share in UBS for 22.48 shares in Credit Suisse [CHF0.76/share v ~CHF0.50 speculated]; the merger consideration is CHF3.0B.

- 19 Mar (AT) ECB's Holzmann (Austria, hawk): I fear ECB rate will be above 4%, expecting a few more rate hikes; The extent of further hikes would be data-dependent; Sees no global financial crisis like in 2008.

- (UK) Mar Rightmove House Prices M/M: 0.8% v 0.0% prior; Y/Y: 3.0% v 3.9% prior.

Levels as of 01:20 ET

- Nikkei 225 flat; ASX 200 -1.4%; Hang Seng -2.54%; Shanghai Composite flat; Kospi -0.54%.

- Equity S&P500 Futures flat; Nasdaq100 flat, Dax -0.31%; FTSE100 -1.01%.

- EUR 1.0665-1.0690 ; JPY 131.69-132.65 ; AUD 0.6680-0.6730 ; NZD 0.6245-0.6289.

- Gold +0.33% at $1979.6/oz; Crude Oil -0.78% at $66.41/brl; Copper -0.17% at 3.894$/lb.

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