US Macro Strategy: Exploring Recent Fed & Bank News

Recent Developments (keeping it very simple)…

The Backdrop:
• Markets re-learn bond math (higher rates/lower bond prices)
• A specific bank business model gets questioned and suffers acute deposit withdrawals and lack of liquidity, the bank fails

The Banks:
• Now we see 2 regional banks been taken over by the FDIC
• Banks are sitting on unrealized losses linked to fast Fed hike
• Deposit migration has seen cash move into money markets

The Fed:
• Working with other government agencies, Fed launch BTFP
• The BTFP is aiming to instill confidence for bank depositors
• Market has repriced Fed rate expectations, is the Fed done?

Bottom-line: We caution not to extrapolate idiosyncratic risks