Aurelia Butler

ZURICH/FRANKFURT (Reuters) -Switzerland’s central bank pledged on Wednesday to fund Credit Suisse with liquidity “if necessary,” a first for a global bank since the financial crisis more than a decade ago.In a joint statement with supervisor FINMA, they announced the radical step, but insisted that Credit Suisse was sound and “meets the capital and liquidity requirements imposed on systemically important banks”.The move to support the bank, with the pledge of central bank money, is designed to stem a crisis of confidence in Switzerland’s second-biggest lender. It puts the central bank on the hook, however, should confidence in the bank continue to tumble.The bank’s stock had plunged more than 30% on Wednesday, following months of turmoil. Governments and at least one bank put pressure on Switzerland to act, according to people familiar with the matter.The SNB and FINMA sought to underpin confidence in the bank, saying that “there are no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the U.S. banking market.””We welcome the statement of support,” Credit Suisse said.The Swiss lender would be the first globally systemically important bank to receive a bespoke lifeline, compared with liquidity offered by central banks to the financial sector generally in times of extreme market stress, such as when economies went into lockdown to combat COVID-19.Shares in Credit Suisse, which is battling to recover from a string of scandals, have taken a hammering over the last 12 months. The stock was worth around 80 Swiss francs in 2008, but had dwindled to 1.55 Swiss francs on Wednesday.The latest fall was triggered when its largest shareholder, Saudi National Bank, said it could not provide further financial help for the embattled lender. Wealthy clients had already pulled billions from the bank.Credit Suisse is in the midst of a major overhaul, cutting costs and jobs and creating a separate business for its investment bank.CEO Ulrich Koerner had earlier sought to calm nerves, saying the bank’s liquidity was strong. On Tuesday it suffered a fresh setback when it published its annual report for 2022, identifying “material weaknesses” in controls over financial reporting.The report had been delayed last week following a last-minute call from the U.S. Securities and Exchange Commission (SEC), which raised questions with the bank. More

WELLINGTON (Reuters) -New Zealand’s economy missed forecasts for growth in the fourth quarter and instead shrank 0.6%, official data showed on Thursday, raising the chances of a recession and making further interest rate hikes less likely.Gross domestic product (GDP) failed to meet analysts’ expectations of a 0.2% contraction in the December quarter and was well below the Reserve Bank of New Zealand’s (RBNZ) forecast of 0.7% growth. It was a reversal from revised growth of 1.7% seen in the third quarter.The weakness in the economy is broad-based and conditions are already recessionary for manufacturing, retail, trade and accommodation, according to the Statistics New Zealand data. The central bank and treasury had both forecast the country would enter a shallow recession in the second quarter of 2023.Economists said the weak data released on Thursday meant it was possible the country was already in recession, particularly given the impact that severe weather in January and February was likely to have on the economy.”The outlook for Q1 remains gloomy,” Capital Economics said in a note. New Zealand spent two quarters in recession in 2020 because of tight restrictions when the COVID-19 pandemic hit, but prior to that the economy had not contracted since late 2010. Regardless of whether the country is entering a recession, the economy is much less overheated than the Reserve Bank of New Zealand (RBNZ) had expected. The central bank has undertaken its most aggressive policy tightening since 1999, when the official cash rate was introduced, lifting it by 450 basis points since October 2021 to 4.75%. The market is betting the RBNZ’s plan to hike the official cash rate (OCR) by a further 75 basis points this year to 5.5% by the third quarter will be pared back.”We see no need for the RBNZ to go to 5.50%, which would risk causing unnecessary losses in activity and employment,” Citi analysts said in a note, predicting GDP contractions in the first and second quarter.NZ bank bill futures have surged as the market priced in a lower peak for RBNZ rates. The market is now 50-50 on whether the RBNZ hikes 25 basis points (bps) in April, while the terminal rate is seen at 5.11% rather than the bank’s projection of 5.5%.The New Zealand dollar was down before the data but extended the fall to be off 0.6% at $0.6145. Two-year swaps are near a two-month low of 4.925% having fallen sharply overnight as bank sector concerns drove down bond yields globally. ASB Bank said in a note that the data weakness and increased financial market jitters overseas suggested less urgency for RBNZ rate hikes.”Uncertainty is elevated, but we have shaded down our 50 basis point April OCR call to a 25 basis point hike,” the note said. More

Figures from the Australian Bureau of Statistics showed net employment rose 64,600 in February from January, when they fell a revised 10,900. Market forecasts had been for a rebound of 48,500.The jobless rate dropped to 3.5%, from 3.7%, when analysts had looked for a dip to 3.6%. Hours worked jumped by 3.9% in another signal of resilient activity. More

Japan’s Nikkei fell 2% in early trade. Australian shares slumped 2% as well, led by losses for banking stocks, while miners dropped heavily too as the spectre of worldwide banking stress has traders getting out of all kinds of growth-sensitive assets.Hang Seng futures were down 2%. Oil has slumped to 15-month lows. Gold touched a six-week high overnight. [O/R][GOL/]In New York the S&P 500 fell 0.7% but the focus was on banks and in Europe where Credit Suisse shares crashed 30% to a record low after its biggest shareholder, Saudi National Bank, said it could not provide further financial help.Switzerland’s central bank pledged to fund Credit Suisse “if necessary,” which lifted Wall Street indexes from lows in afternoon trade, but the intervention isn’t exactly soothing market fears. The Swiss franc fell 2% in its steepest drop for seven years. In a joint statement, the Swiss financial regulator and the nation’s central bank said Credit Suisse “meets the capital and liquidity requirements imposed on systemically important banks.”They said the bank could access liquidity from the central bank if needed. The moves follow the collapse of U.S. lenders Silicon Valley Bank and Signature Bank (NASDAQ:SBNY) in recent days which have sent financial markets on a roller-coaster ride. The Bank of England was holding emergency talks with international counterparts the Telegraph newspaper reported on Wednesday. The Bank of England declined to comment.Expectations for a 50 basis rate hike in Europe have evaporated as markets radically rethink the global interest rate outlook in light of the banking jitters.Money market pricing implies a less than a 20% chance of a 50 bp hike from the ECB, down from 90% a day earlier. Shares in big U.S. banks including JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Bank of America (NYSE:BAC) fell overnight, pushing the S&P 500 banking index down 3.62%.Bonds rallied hard, driving two-year U.S. Treasury yields to their lowest since September at 3.72% at one point overnight. Benchmark 10-year yields fell 14 bps to 3.494%. [US/]The euro also dropped heavily overnight as the U.S. dollar surged, falling 1.4% to $1.0578. The flight to safety lent support to the yen and it rose 0.6% to 132.59 per dollar in Asia trade on Thursday. More

(Reuters) -Boeing Co predicted a surge in worldwide aircraft financing towards pre-pandemic levels this year, highlighting a rebound in demand for air travel just as aviation was swept up in a stock market rout over banking sector woes on Wednesday.The availability of finance for the 1,000 or more new jetliners rolling off production lines each year is a key barometer for the $100-billion-plus a year jet industry, dominated by Boeing (NYSE:BA) and its European rival Airbus.But publication of Boeing’s widely watched annual forecasts coincided with the loss of billions of dollars of value in planemakers, airlines and travel firms as concerns over Credit Suisse washed through global markets. Any new financial crisis could affect business and consumer confidence and cut demand for premium travel as bankers and other high-value customers rein in spending, putting pressure on airline profitability and jet demand, executives said.Aviation is also widely seen as vulnerable to any downturn in an economy already scarred by inflation, with United Airlines shares falling this week after it signaled demand during off-peak months was waning.Still, Boeing forecasts drawn up before this week’s chill in the banking sector, and published on Wednesday, suggest airlines will absorb $94 billion in delivery funding this year, close to $98 billion seen in 2019 and well above $69 billion last year.Boeing said it was seeing increased interest from financiers and investors to aid commercial airplane deliveries. Cash continues to be a significant source of funding as airlines improve their operations and lighten balance sheets stretched by the pandemic. But Boeing said capital markets, bank debt and government export credits would all expand this year.”This positive trend reaffirms that our industry’s fundamentals are strong and aircraft financiers and investors are well positioned as travel continues to recover,” said Rich Hammond, vice president of Customer Finance at Boeing.Boeing closed down 4.4% after falling as much as 7% as a slump in Credit Suisse sent shares lower everywhere.For now, airline executives said, the Credit Suisse upset is viewed as a relatively isolated issue rather than a repeat of the liquidity crisis which rocked aviation and other sectors in 2008-2009.Boeing’s forecast was the first since the planemaker folded decades-old standalone financing arm Boeing Capital into its airplanes unit as part of a corporate streamlining.Anchored mainly in Dublin, the fast-growing aircraft financing sector has benefited from investors chasing relatively high dollar-denominated returns during the decade of central bank stimulus that followed the global financial crisis.Financiers at the industry’s annual summit in January said ample funds remained for aviation but at tighter conditions, given rising interest rates and a sharper focus on quality.Leasing firms may face more competition from other sources of finance this year, Boeing predicted in Wednesday’s report. More

Yellen: US Treasury secretary Janet Yellen will appear before the Senate finance committee to testify on President Joe Biden’s fiscal year 2024 budget. She will probably be asked about the response from Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation, which implemented measures to calm panic among deposit holders and prevent contagion after the failures of Silicon Valley Bank and Signature Bank.Earnings: Parcel group FedEx, often an economic bellwether, will report earnings after the market closes. Analysts anticipate the company to have earned $2.70 a share on revenue of $22.7bn, in the quarter to February, compared with $4.20 a share on revenue of $23.6bn during the prior-year period.Discount retailer Dollar General reports earnings before the opening bell. Analysts predict the chain will have earned $3 a share on revenue of $10.2bn in the three months to January, up from $2.57 a share on revenue of $8.65bn a year before.Economic data: Economists expect 205,000 claims for state unemployment aid to have been made during the week ending March 11, according to Refinitiv. Such a figure would keep US jobless claims, which are a proxy for lay-offs, above 200,000 for the second week in a row. Separately, economists expect new housing starts in February to have held steady at 1.3mn from January. More