Aurelia Butler

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.An unholy trinity of U.S. developments on Tuesday – poor corporate earnings, a bank’s value going up in smoke and slumping consumer confidence – will likely set an extremely gloomy tone for Asian markets on Wednesday.This will be the backdrop to trade figures from Thailand and New Zealand, industrial production data from Singapore and inflation figures from Australia.The three main indexes on Wall Street closed down between 1% and 2% – the Nasdaq’s 2% fall was its steepest in six weeks – as fears over recession and the banking sector intensified. (Graphic: First Republic Bank (NYSE:FRC) shares collapse – https://fingfx.thomsonreuters.com/gfx/mkt/gkvlwabagpb/FRC.png) The travails at First Republic Bank should be a wake-up call to anyone who thought the U.S. banking turmoil had somehow been cleared up in a matter of weeks.After reporting on Monday a plunge of more than $100 billion in deposits in the first quarter, shares on Tuesday plunged 50% at the bank – the 15th largest in the country at the start of the year. The bank has lost 93% of its value this year.The wider U.S. regional banking index’s 4% slide – its fourth straight decline – took its year-to-date decline to 25%. (Graphic: US regional banking share index – https://fingfx.thomsonreuters.com/gfx/mkt/zdvxdkqkrvx/RegionalBanks.png) Notably, the plunge in U.S. bond yields and Fed expectations on the back of this did not weaken the dollar – safe-haven buying pushed it up 0.5% for one of its best days since the banking shock in mid-March.Safe-haven flows dominated trading on Tuesday, with the Japanese yen, Swiss franc, government bonds and gold all posting strong gains.If there is a tailwind for Asian markets on Wednesday amid the headwinds it will be the after-hours results from Google’s parent company Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT). Profits at both tech giants topped Wall Street estimates, and shares in both rose 4% in after hours trading.On the economic data front on Wednesday, Australian weighted annual CPI inflation is expected to have finally slowed in the first quarter to 6.9% from a 33-year high of 7.8%. (Graphic: Australian weighted CPI inflation – https://fingfx.thomsonreuters.com/gfx/mkt/movakdwdkva/AUSinflation.png) Here are three key developments that could provide more direction to markets on Wednesday:- Australia CPI inflation (Q1)- Singapore manufacturing (March)- Thailand trade (March) (By Jamie McGeever; Editing by Josie Kao) More

(Reuters) – The Federal Reserve Bank of New York on Tuesday added new limitations to the terms governing who can access a well-used tool it uses to help manage short-term interest rates. The bank said that firms that want to use its reverse repo facility should only apply for access if it is consistent with the existing business model of the firm, a move that appears aimed at cutting off access to investment entities set up specifically to take advantage of the tool. Accessing the reverse repo facility “should be a natural extension of an existing business model, and the counterparty should not be organized for the purpose of accessing [reverse repo] operations,” the bank said. Money market funds that “in the sole judgment of the New York Fed, are organized for a single beneficial owner, or exhibit sufficient similarities to a fund so organized, generally will be deemed ineligible to access reverse repo operations,” the bank said. The New York Fed did not say in its statement what prompted it to clarify the terms of access for reverse repo counterparties. The last time the Fed issued a statement on the reverse repo tool was two years ago, when it clarified some of the conditions a firm must meet to use the reverse repo tool. The Fed’s reverse repo facility is one of two tools the central bank uses to help keep its overnight federal funds rate, the main lever of monetary policy, where officials want it to be. The Fed currently pays deposit-seeking banks 4.9% to park cash at the central bank, in turn setting the high end of the interest rate range. The reverse repo facility, now at 4.8%, sets the low end of the range. The federal funds rate is currently set at 4.75% to 5% and is likely to rise by a quarter percentage point at next week’s policy meeting.The Fed’s reverse repo facility has seen massive inflows of cash since the spring of 2021, and since June, eligible firms, which are mainly money market funds, have parked at least $2 trillion per day at the Fed. The surge of interest has been tied to the reserve repo facility generally offering a better rate than private money market investments, making it safer and easier to park money at the central bank. Fed officials have long argued that as they raise rates and normalize monetary policy, they expect money to drain out of the reverse repo facility. But that has yet to happen in any meaningful way, and on Tuesday the tool took in $2.275 trillion. The Fed has pushed back at other firms who have set up operations that some view as specifically designed to take advantage of the monetary policy toolkit. More

The median of consumers’ inflation expectations for the next 12 months fell to 3.7% in April from 3.9% in March, according to the Bank of Korea’s monthly survey of consumers. It was the lowest reading since May 2022. The consumer sentiment index, meanwhile, rose to 95.1 from 92.0 in the previous month, hitting the highest since June 2022. Among its sub-indexes, the ones on current living conditions and future living conditions, which usually show high correlation with inflation, jumped by 1.1 points and 0.8 point, respectively, leading the headline figure higher. More

FTX will seek U.S. bankruptcy court approval for the sale at a May 4 hearing. “We are pleased to reach this agreement with MIH, which is an example of our continuing efforts to monetize assets to deliver recoveries to stakeholders,” FTX CEO John Ray said in a statement. Since filing for bankruptcy in November, FTX has recovered over $7.3 billion in cash and liquid crypto assets, the company reported earlier this month. It continues to sell assets as part of that effort, recently agreeing to sell its stake in Web3 startup Mysten Labs for $95 million.The buyer, Miami International Holdings, owns the Bermuda Stock Exchange and several U.S.-registered securities exchanges, including the Miami International Securities Exchange. MIH confirmed the sale agreement but declined to comment further. FTX filed for bankruptcy protection in the United States on Nov. 11 in the biggest crypto firm failure, after traders pulled billions from the platform in three days and rival exchange Binance abandoned a rescue deal.LedgerX, which is regulated by the U.S. Commodity Futures Trading Commission, was omitted from FTX’s bankruptcy proceedings. FTX US acquired it last year to expand into crypto futures and options trading.FTX said earlier this month that it is working on a bankruptcy plan that would lay out how it intends to repay its creditors and customers. FTX may consider restarting or selling its crypto exchange as part of that process.FTX founder Sam Bankman-Fried and several company insiders have been indicted on fraud charges for their role in the company’s collapse. In contrast to Bankman-Fried’s plea of not guilty, the former members of his inner circle have pleaded guilty and agreed to cooperate with prosecutors. More

(Reuters) -The Federal Reserve will publish its internal review of its supervision of Silicon Valley Bank on Friday, April 28 at 11 a.m. ET (1500 GMT), the central bank said Tuesday.The review, which is being led by Fed Vice Chairman for Supervision Michael Barr, follows the regional bank’s abrupt failure last month. It will include policy recommendations and confidential supervisory information that the Fed typically does not disclose to the public, Barr has said. Depositors tried to pull more than $42 billion in a single day at SVB in early March, surprising regulators and kicking off deposit flight across other regional banks. The failures of SVB, and days later, Signature Bank (OTC:SBNY), set off a broader loss of investor confidence in the banking sector that pummeled stocks and stoked fears of a full-blown financial crisis.Barr has criticized SVB for going months without a chief risk officer and for how it modeled interest rate risk, but some lawmakers have questioned whether the Fed was aggressive enough in its supervision of the bank. The Federal Deposit Insurance Corp is also slated to publish a report detailing its supervision of Signature Bank as well as an overview of the deposit insurance system by May 1. More