Bankrupt Silicon Valley Bank was acquired and the market sentiment eased! Golden Week plunged at the beginning of Silicon Valley Bank_Sina Finance_Sina.com

First Gold.com, March 28th, on Monday yesterday, some investment institutions believed that it is too early to bet on interest rate cuts within this year; the news that the previously bankrupt Silicon Valley Bank was acquired yesterday also greatly eased market concerns.

The rebound of spot gold at the 1980 mark was blocked on Monday, and the European and American markets fluctuated downward, and the lowest fell to 1945 US dollars in the evening; it rebounded again above 1960 on Tuesday morning. As of press time in the afternoon, the price of gold was quoted at $1955 per ounce.

The bankrupt Silicon Valley Bank was acquired, and the market sentiment eased!Big Diving at the beginning of Golden Week

On Monday, U.S. regional bank First Citizens Bank said it had acquired the assets of the previously defunct Silicon Valley Bank, prompting a strong rebound in the banking sector and alleviating concerns about the outlook for the banking industry.

Earlier this month, the sudden collapse of Silicon Valley Bank, which focused on tech start-ups, unleashed the worst banking shock since the 2008 global financial crisis, implicating some of Europe’s biggest lenders and sounding alarm bells about the health of the sector .

But signs that authorities were addressing Silicon Valley bank failures and the absence of new trouble over the weekend helped boost sentiment, especially among vulnerable U.S. regional banks, whose shares rose sharply on Monday.

First Citizens Bank said it acquired all of Silicon Valley Bank’s loans and deposits by giving the Federal Deposit Insurance Corporation (FDIC) equity appreciation rights in the bank worth up to $500 million.

First Citizens said it would take in $110 billion in assets, $56 billion in deposits and $72 billion in loans, and expand in California.

Shares of First Citizens surged about 54% on Monday as the bank also reached an agreement with regulators to share some potential losses.

The FDIC estimates that the cost of the failure of Silicon Valley Bank to its Deposit Insurance Fund (DIF) is about $20 billion.

The fund takes no U.S. taxpayer money, but is funded by levying fees on the entire banking industry.

On the same day, Barr, the Fed’s vice chairman for financial supervision, will tell Congress that the regulator is committed to ensuring the safety of all bank deposits in the United States and is prepared to use its tools to protect the banking system on institutions of any size if necessary.

In prepared testimony, Barr added that the banking system was “strong and resilient.” But he also said the Fed was reviewing its actions leading up to the Silicon Valley bank failure and how it would tighten rules on banks going forward.

Institutions believe that it is too early to cut interest rates this year, and gold plunges sharply

On Friday last week, the three hawkish officials of the Federal Reserve successively stated that they would raise interest rates. Among them, St. Louis Fed President Bullard said that U.S. economic data in the first quarter was stronger than expected. Given the continued strength of the economy, he raised his forecast for the peak interest rate this year.

Bullard explained that his previous expectation for the end of the interest rate was 5.375%, and now it is expected to be 5.625%, so it is an increase of 25 basis points.

Yesterday, S&P Global Ratings said in a report that despite the challenges, current conditions suggest that the U.S. economy is resilient.

Standard & Poor’s believes that although the long-anticipated U.S. economic recession in recent years has not yet turned into reality, the collapse of Silicon Valley Bank on March 10 has increased the possibility of a hard landing for the U.S. economy.

S&P pointed out that the weakness of the U.S. economy in 2023 will lower the job market later this year, and inflation may have peaked in the third quarter of 2022.

Inflation is expected to remain elevated due to ongoing supply chain disruptions in certain industries. Due to the high degree of uncertainty, the federal funds rate is still expected to reach a peak of 5.00%-5.15% in May.

First Gold Network