Bank stocks struggle to shake off selling pressure as the outlook remains clouded by a lack of banking confidence.
Over the weekend, UBS said it will buy Credit Suisse for 3 billion francs and assume up to US$5.4 billion in losses, a shotgun merger engineered by Swiss authorities that investors hope can head off an even bigger mess in global markets. “We’ve got to get confidence back into that banking sector, and probably more needs to be done or a week from now we’ll still be facing the same sorts of issues.”
US Treasuries were sold too, to wind back some of last week’s wild rally. Dealers said the outlook remains clouded by the fragility of banking confidence.Firstly, authorities efforts to calm things down haven’t been entirely successful yet and have also drawn attention to the scale of problems. “Investors are trying to price out stability risks, but also having to process having their assets written down to save depositors,” said Damien Boey, chief equity strategist at Sydney-based investment bank Barrenjoey.
Benchmark 10-year Treasury yields rose nine basis points to 3.49%. Two-year yields rose 10 bps to 3.94%. US interest rate futures were bouncing around, and by mid morning in Hong Kong had pared half their early losses.
Source: Loan Digest (loandigest.net)
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