Banking liquidity crunch; G-4 growth picks up; battery-makers turn to iron

Banking liquidity crunch; G-4 growth picks up; battery-makers turn to iron

Today is Tuesday, April 04, 2023, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.

In this edition of Insight Weekly, we keep the spotlight on the liquidity crunch in the banking sector. US bank bond portfolios remained deeply underwater in the fourth quarter of 2022, reducing banks' access to liquidity in the fist quarter of 2023. Amid funding concerns, bank borrowing from the Federal Reserve's newly created Bank Term Funding Program jumped to $53.67 billion through March 22, up from $11.94 billion the week prior. The recent failures of Silicon Valley Bank and Signature Bank, both of which had large amounts of uninsured deposits, have prompted debate about the future of deposit insurance limits. In Europe, large banks entered the industry turmoil with liquidity levels that were well above regulatory minimums and that improved, on average, in the most recent quarter.

S&P Global's provisional Purchasing Managers' Index survey data for March points to resilience of economic growth across the four major developed world economies. Business activity rose across the G-4 economies for a second successive month, with growth accelerating at the fastest rate since May 2022. Growth hit 10-month highs in the US and the eurozone, while a nine-month high was recorded in Japan.

Energy storage and electric vehicles suppliers are turning to batteries rich in iron amid concerns over looming shortages, prices and sustainability of other essential energy transition feedstocks. Lithium-iron-phosphate batteries will rise to nearly 50% of global demand for EV batteries by 2027, according to a new report from S&P Global Commodity Insights.  

Liquidity Crunch in Focus

Bank failures raise questions about future of FDIC deposit insurance limit

The recent failures of Silicon Valley Bank and Signature Bank have prompted debate about if deposit insurance limits should be raised or if the Federal Deposit Insurance Corp. should take a more unusual approach to address uninsured deposits.

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—Read the full article from S&P Global Market Intelligence

European banks show liquidity strength amid market turmoil

Strong liquidity at Europe's banks, together with coordinated action by central banks, has shored up confidence in the continent's lenders.

—Read the full article from S&P Global Market Intelligence


Deep Dives

In-depth features looking at the impact of major news developments in key industries.

Financials

Silicon Valley Bank buy stands to double First Citizens' tangible book value

The discount in the deal is larger than the one New York Community Bancorp received in its recent acquisition of failed lender Signature Bank.

—Read the full article from S&P Global Market Intelligence

Fatigue, regulation will break up US bank M&A logjam

Banks will remain cautious about M&A in the near term but will increase consolidation again to better deal with heightened regulatory requirements, industry observers said.

—Read the full article from S&P Global Market Intelligence

US bank troubles may decouple Asian central banks from the Fed

While a few central banks in Asia were already close to the end of their rate hike cycle, the possibility of fewer hikes in the US will help Asian central banks pause their tightening cycles.

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—Read the full article from S&P Global Market Intelligence

 

Insurance

US insurers' investment exposure to failed banks, other regionals under $5B

US-based insurance underwriters hold trillions of dollars in investable assets overall and only $4.61 billion in direct investment exposure to regional banks that have recently failed or been put under review for potential ratings downgrades.

—Read the full article from S&P Global Market Intelligence

 

Fintech

Fate of Signature's blockchain platform unclear; customers seeking alternatives

Some customers of Signet, a real-time blockchain payment network, are pursuing alternatives after the platform was not included in the sale of Signature assets to Flagstar Bank, a unit of New York Community Bancorp.

—Read the full article from S&P Global Market Intelligence

 

Real Estate

CorEnergy suspends, 7 other US REITs slash dividends

About 40% of publicly traded US equity real estate investment trusts still have lower dividends compared to their pre-pandemic levels, while 60% of REITs now have equal or higher dividend payouts than before.

—Read the full article from S&P Global Market Intelligence

 

Credit and Markets

Flash PMI data signal accelerating developed world economic growth in March

Business activity rose across the US, UK, eurozone and Japan for the second month in a row in March.

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—Read the full article from S&P Global Market Intelligence

Overheated job market defies Fed's rate push even as construction openings fall

Although signs point to construction jobs peaking, there is a long way to go to reverse the tightness in the sector and the broader US labor market.

—Read the full article from S&P Global Market Intelligence

Banking turmoil drives investors to mega-cap tech stocks

The Nasdaq 100, a group of large, mostly tech companies, is up 16.7% since the start of 2023.

—Read the full article from S&P Global Market Intelligence

Assessing the debt market fallout from banking sector instability

Bond market conditions have improved following UBS's takeover of Credit Suisse and with US authorities providing further guidance designed to ease fears of loss among corporate and larger high net worth depositors with regional banks.

—Read the full article from S&P Global Market Intelligence

 

Energy and Utilities

Holiday 2022 winter storm raises reliability, generation diversity questions

Unplanned outages in wholesale markets prevented utilities in the US Southeast from importing power when demand soared during a cold snap Dec. 23–24, 2022.

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—Read the full article from S&P Global Market Intelligence

Weekly Pricing Pulse: Commodities down amid market turmoil

Oil prices declined after the collapse of Silicon Valley Bank amid market concerns that the fallout will hit economic growth and lower demand for oil. 

—Read the full article from S&P Global Market Intelligence

Institutional investors cautious on renewable energy stocks in Q4 2022

Institutional investors bought a net 1 million shares of 10 renewable energy companies tracked by S&P Global Market Intelligence during the fourth quarter of 2022.

—Read the full article from S&P Global Market Intelligence

New US wind power capacity plummeted in Q4 2022, fell 56% annually

Despite the slowdown, the US wind industry has a five-year project pipeline of 77.2 GW through 2027.

—Read the full article from S&P Global Market Intelligence

 

Technology, Media and Telecommunications

451 Research: Mobile World Congress 2023: Trends and Observations

Mobile World Congress got back on its feet with full stands and extensive crowds. Discussions on the floor felt more pragmatic than years past, especially on topics like Open-RAN or Open Radio Access Network technology.

—Read the full article from S&P Global Market Intelligence

 

Metals and Mining

Metals and mining Research: Mining M&A in 2022 – Copper targets favored over gold

Reversing a four-year trend, buyers spent more on base metals than on gold, with copper driving the difference.

—Read the full article from S&P Global Market Intelligence

Iron age: Battery-makers turn to most mined metal on Earth

Makers of lithium-ion and alternative batteries are parlaying the advantages of iron into a wave of new US factories and contracts, leveraging new federal manufacturing incentives.

—Read the full article from S&P Global Market Intelligence

 

The Week in M&A

New York Community accelerates transformation with Signature Bridge Bank deal

Read full article

Deal for failed Silicon Valley carries record estimated cost to FDIC at $20B

Read full article

Brookfield fund's Australian utility deal builds decarbonization portfolio

Read full article


The Big Number

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Trending

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—Read more on S&P Global Market Intelligence and follow @ericwolff on Twitter

 

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Written and compiled by Roma Arora.

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