MyStratWeekly – March 28th 2023

Topic of the week: How to monitor bank liquidity risk

• The SVB and Credit Suisse cases have awakened old and bad memories, but we think the situation is solid;
• Below is a list of indicators that can be used to estimate whether there is a liquidity crisis in the European banking system;
• The data we have is more than reassuring about the possibility of a systemic crisis. For the moment there is almost no sign of abnormal stress. To be continued.

Market review: The risk of financial dominance

• The Fed keeps guidance for higher rates;
• Fed balance sheet up $ 400 Bn in past two weeks;
• Bank stocks under pressure amid confidence crisis;
• Fed injects $165 Bn.

Stéphane Déo's podcast

• What

Chart of the week

For the second week in a row, commercial banks massively requested the Fed's loan facilities and this for a total amount of $163.9 billion, the week ending March 22, an amount almost identical to the previous week (164.8 billion ).

Banks' recourse to the Fed's Discount Window moderated, after reaching an amount well above the 2008 peak, to remain very high (110.2 billion). Banks, on the other hand, made more use of the loan facility created on March 12, following the bankruptcy of SVB and Signature Bank. The Bank Term Funding Program was requested to the tune of 53.7 billion against 11.9 billion the previous week.