Regional Banks Receive Another Warning Amidst US Job Data Slides
The US labor market data released last week showed signs of a slowdown, with job openings falling to the lowest level since September 2021 and new data showing a substantial decrease in job growth. The headline unemployment rate also rose to 3.8%, its highest in 38 months. This decline in the labor market has been faster and more severe than economists expected, and consumers are increasingly relying on savings and credit to sustain their spending. Despite the negative economic data, stocks are rising as investors anticipate more relaxed monetary policy from the Federal Reserve to support asset prices.
Meanwhile, regional banks are facing challenges, with many resorting to selling consumer loans to mitigate losses instead of relying on emergency loans from the Fed. Banks are packaging loans into asset-backed securities (ABS) and selling them, with ABS yields reaching their highest level since 2008. This trend highlights the underlying problems in the banking sector, and the Fed’s reliance on emergency loans is seen as a temporary solution.
In addition, the sudden retirement of San Francisco Fed Bank-Supervision Chief Azher Abbasi raises concerns about the risks facing regional banks. Abbasi oversaw the supervision of banks, including SVB and First Republic Bank, both of which experienced significant failures in 2023. The Fed’s increased oversight of small US banks, with warnings for banks to strengthen their capital and liquidity planning, further indicates the challenges the regional banking sector is facing.
Switching gears to the cryptocurrency front, Grayscale won its lawsuit against the SEC’s rejection of its application to convert GBTC into a spot bitcoin ETF. This news led to a rally in GBTC, though it has since given up some of those gains. In other news, tensions have risen in the Binance and Tether ecosystem as CZ, the CEO of Binance, called Tether a “black box.” Bitfinex responded by launching perpetual BNB futures with a 20x leverage limit. The increased margin pressure on BNB could have implications for Bitcoin if Binance needs to shore up liquidity to meet margin calls.
Overall, the US labor market is showing signs of a slowdown, with negative economic data and a rising unemployment rate. Regional banks are facing challenges, and the Fed’s reliance on emergency loans is seen as a temporary solution. In the cryptocurrency space, Grayscale’s victory in its lawsuit and tensions between Binance and Tether are noteworthy developments..
#Job #Data #Slides #Regional #Banks #Warned #Danger
The US labor market data released last week showed signs of a slowdown, with job openings falling to the lowest level since September 2021 and new data showing a substantial decrease in job growth. The headline unemployment rate also rose to 3.8%, its highest in 38 months. This decline in the labor market has been faster and more severe than economists expected, and consumers are increasingly relying on savings and credit to sustain their spending. Despite the negative economic data, stocks are rising as investors anticipate more relaxed monetary policy from the Federal Reserve to support asset prices.
Meanwhile, regional banks are facing challenges, with many resorting to selling consumer loans to mitigate losses instead of relying on emergency loans from the Fed. Banks are packaging loans into asset-backed securities (ABS) and selling them, with ABS yields reaching their highest level since 2008. This trend highlights the underlying problems in the banking sector, and the Fed’s reliance on emergency loans is seen as a temporary solution.
In addition, the sudden retirement of San Francisco Fed Bank-Supervision Chief Azher Abbasi raises concerns about the risks facing regional banks. Abbasi oversaw the supervision of banks, including SVB and First Republic Bank, both of which experienced significant failures in 2023. The Fed’s increased oversight of small US banks, with warnings for banks to strengthen their capital and liquidity planning, further indicates the challenges the regional banking sector is facing.
Switching gears to the cryptocurrency front, Grayscale won its lawsuit against the SEC’s rejection of its application to convert GBTC into a spot bitcoin ETF. This news led to a rally in GBTC, though it has since given up some of those gains. In other news, tensions have risen in the Binance and Tether ecosystem as CZ, the CEO of Binance, called Tether a “black box.” Bitfinex responded by launching perpetual BNB futures with a 20x leverage limit. The increased margin pressure on BNB could have implications for Bitcoin if Binance needs to shore up liquidity to meet margin calls.
Overall, the US labor market is showing signs of a slowdown, with negative economic data and a rising unemployment rate. Regional banks are facing challenges, and the Fed’s reliance on emergency loans is seen as a temporary solution. In the cryptocurrency space, Grayscale’s victory in its lawsuit and tensions between Binance and Tether are noteworthy developments..
#Job #Data #Slides #Regional #Banks #Warned #Danger
