Highlights: Despite regulators’ actions to backdrop depositors in the recently failed banks, bank stocks remain under pressure, dragging down the major indexes. Many bank stocks were halted multiple times throughout the day for volatility. The 2-year Treasury also fell sharply over the last three days, posting the most significant decline since 1987.

2-year Treasury yield posts biggest 3-day decline since aftermath of 1987 stock crash (4 min read)

The collapse of Silicon Valley Bank caused investors to flock to US government bonds, resulting in a tumble in Treasury yields. The 2-year Treasury yield fell 0.53%, marking the largest three-day decline since 1987. Regulators backing Silicon Valley Bank’s depositors raised fears of contagion across the banking sector, leading many to rethink the Fed’s rate hike strategy.  Goldman Sachs no longer thinks the Fed will hike rates, while other Wall Street banks are expecting a 0.25% increase at the FOMC meeting next week.

Biden seeks to calm Americans after government intervenes in bank collapses (6 min read)

US President Joe Biden assured that the US banking system is secure after the latest bank collapses. He approved a plan to provide depositors at Silicon Valley Bank and Signature Bank New York with access to all their money, but the protection does not extend to the bank investors. He confirmed that rules will be strengthened to prevent such failures from happening again. Despite the effort to calm the public, bank stocks continue to sell-off as investors are concerned over the next bank to collapse. 

Three U.S. Banks Down. One More in Focus. Does It End Here? (4 min read)
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Silicon Valley Bank, Signature Bank New York, and Silvergate, have all collapsed in a week due to bad bets and lack of diversification, shaking the international business and economic circles. Although regulators have guaranteed deposits from SVB and Signature Bank New York, concerns about the next bank to collapse persist. Speculation surrounds the First Republic Bank of San Francisco. The bank has reassured customers and investors that its capital and liquidity positions are strong, but its stock still plunged over 60% and were halted repeatedly on Monday.

Pfizer looks past COVID with $43 bln deal for cancer drug maker Seagen (3 min read)
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Pfizer has bought Seagen for around $43 billion in cash, its largest acquisition yet. The deal will help Pfizer expand its portfolio of cancer treatments after the expected loss of exclusivity for some of its top-selling products and a decline in Covid-19 product sales. Seagen has four approved cancer therapies with almost $2 billion of combined sales in 2022. Pfizer expects more than $10 billion in "risk-adjusted" sales from Seagen in 2030. The deal is expected to be completed in late 2023 or early 2024 and is unlikely to face major antitrust challenges.

Global Markets Wrap: Europe ETFs Remain in Focus (2 min read)
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Global equity funds have attracted $28.5 billion so far this year as investors are turning to international ETFs, seeking better-valued stocks overseas with lucrative returns. Particularly, European ETFs are in focus as equity valuations and performance remain strong. The STOXX Europe 600 has surged more than 15% this year, boosted by talks between the US and European Union. The JPMorgan BetaBuilders Europe ETF (BBEU) and the Vanguard FTSE Europe ETF (VGK) are among the popular funds with the most inflows year-to-date.

What Is ETF Rebalancing? Benefits & Costs (6 min read)
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ETF rebalancing refers to the process of adjusting the ETF holdings to maintain its desired asset allocation. It can help maintain investment objectives and reduce the risk of significant losses during downturns. Investors can rebalance their ETF portfolios by selling overweighted ETFs and buying underweighted ETFs or using new contributions. However, investors need to keep in mind the transaction costs associated with buying and selling shares and the potential tax implications of selling ETFs. More details on ETF rebalancing are available in the article.

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Thomas

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