Credit crunches are not new | 31 March 2023

#SP500:

The multi-regulator U.S. Financial Stability Oversight Council agreed that the U.S. banking system remains "sound and resilient" despite stress on some institutions, the U.S. Treasury said in its latest statement to calm jittery markets and bank depositors. "The Council discussed current conditions in the banking sector and noted that while some institutions have come under stress, the U.S. banking system remains sound and resilient," the Treasury said in a statement. Three Federal Reserve bank presidents said in separate remarks that there was no indication that financial stress was worsening last week.

Trading recommendation: buy 3935 and take profit 4089.

XAUUSD:

Federal Reserve Chair Jerome Powell said Silicon Valley Bank's collapse and the banking system upheaval it triggered are likely to result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes. Credit crunches are not new. They are frequent fellow travelers with recessions, but not always so. They also come with varying severity and durations, key factors Powell said remain unknown at the current time. Some small and concentrated crunches can weigh on growth without bringing the full economy to a standstill. Deeper lending clamp-downs can hobble the economy for years. Treasury Secretary Janet Yellen again sought to calm fears of further bank deposit runs, telling U.S. lawmakers that she was prepared to repeat actions taken in the Silicon Valley and Signature Bank failures to safeguard uninsured bank deposits if failures threatened more deposit runs.

Trading recommendation: range 1920 -2010.

#WTI:

Oil prices rose about 3% as the dollar slid to a six-week low after the U.S. Federal Reserve delivered an expected small rate hike while hinting that it was on the verge of pausing future increases. The Fed raised interest rates by a quarter of a percentage point, but indicated it was on the verge of pausing further increases in borrowing costs amid recent turmoil in financial markets spurred by the collapse of two U.S. banks. The Organization of the Petroleum Exporting Countries and its allies like Russia, a group known as OPEC+, is likely to stick to its deal on output cuts of 2 million barrels per day until the end of the year.

Trading recommendation: buy 68.00 and take profit 72.50.