The largest bank failure | 17 March 2023

#SP500:

Traders were on guard for signs of contagion in the financial sector and beyond in the wake of troubles for SVB and crypto-focused Silvergate, which this week disclosed plans to wind down operations and voluntarily liquidate. The markets appeared to be dialing down their expectations for Fed hawkishness, pricing in a 40% chance that the central bank will raise rates by 50 basis points at their March 21-22 meeting, according to CME's Fedwatch tool. Those odds stood at around 70% as recently as Thursday, but abated on Friday after investors saw the employment data and gained more clarity on the extent of SVB’s troubles.

Trading recommendation: buy 3815 and take profit 4000.

XAUUSD:

The rapid unraveling of SVB Financial Group has blindsided the banking industry after years of stability. SVB's plight could lead to a loss of confidence, tougher regulation and investor skepticism about the financial health of smaller banks that were seen as adequately capitalized after regulators forced banks to hold more capital in the aftermath of the 2008 crisis. A sequence of events led to SVB's failure including it selling U.S. Treasuries to lock in funding costs due to expectations of higher rates, resulting in a loss of $1.8 billion. SVB, which did business as Silicon Valley Bank, also had 89% of its $175 billion in deposits uninsured as the end of 2022. The FDIC insures deposits up to $250,000. The growth of financial tension has a positive impact on the value of gold.

Trading recommendation: buy 1858 and take profit 1876.

#WTI:

Traders are closely monitoring export cuts from Russia, which decided to trim oil output by 500,000 barrels per day in March. Money managers cut their net long U.S. crude futures and options positions in the week to Feb. 28, the U.S. Commodity Futures Trading Commission said. Oil prices are fluctuating wildly on renewed fears of Fed interest rate increases. Fed Chair Jerome Powell has warned of higher and potentially faster rate hikes, saying the central bank was wrong in initially thinking inflation was "transitory". Its next monetary policy meeting is planned for March 21-22.

Trading recommendation: range 75.00 -77.50.