US consumer confidence ticks up despite banking sector turmoil

US consumer confidence (as measured by the Conference Board) rose slightly in March despite the turmoil in the banking sector during the survey period, which ran through to 20 March. The overall index rose to 104.2 from an upwardly revised 103.4 in February. The present situation component declined slightly while the expectations component improved. Consumer optimism was underpinned by the strong labour market conditions, but respondents did indicate they would spend less on highly discretionary items like entertainment and dining out.  

Fed officials announced a regulatory overhaul for banks which will involve enhanced stress tests as well as options for adjustments to deposit insurance, according to Bloomberg. A review of SVB supervision was also announced.

Saudi Arabia’s net foreign assets (NFAs) at the central bank declined by -USD 4.6bn in February to USD 433bn, the lowest level in a year. NFAs have declined almost USD 20bn over the last three months, with the largest drawdown in December 2020.  Private sector credit growth slowed to a still elevated 11.0% y/y, while money supply growth slowed to 7.4% y/y.

Today’s Economic Data and Events

• 18:00 US pending home sales (Feb) forecast -3.0% m/m

Fixed Income

• US bond yields rose further on Tuesday as banking sector contagion fears ebbed and markets re-evaluated the prospects for a further FED rate hike in May. The US 2yr yield rose by 8bps to 4.078%, while the 10yr yield rose by 4bps to 3.57%.
• Yields also rose across several other markets. The UK 10yr gilt yield rose 9bps to reach 3.45%, while the 10yr bund yield rose to 2.281% from 2.22%.  

FX

• The dollar index closed down 0.4% yesterday on its second daily drop in a row to 102.430. This was its lowest close in eight weeks.
• Commodity currencies were boosted by higher metals and oil prices – both the NZD and the AUD gained 0.9% against the greenback, to 0.6253 and 0.0058 respectively.
• The only one of its peers that the dollar strengthened against was the CHF which dropped 0.5% as the haven play diminished. The euro rose 0.4% and cable 0.5%.

Equities

• There were moderate losses on US equities yesterday with all three major benchmark indices closing lower. The Dow Jones, the S&P 500, and the NASDAQ dropped 0.1%, 0.2%, and 0.5% respectively.
• There were some modest gains in Europe earlier in the day where the CAC and the DAX both added 0.1% while the FTSE 100 closed 0.2% higher. The composite STOXX 600 also added 0.1%.
• Locally, the DFM added 1.7% while the ADX gained 0.4%. The Tadawul closed flat.

Commodities

• Oil prices rose slightly further on Tuesday, extending the gains made on Monday. Brent futures rose 0.68% to USD 78.65/b while WTI rose 0.54% to USD 73.2/b. A report from the American Petroleum Institute suggested that crude inventories had last week seen their most significant drop thus far this year, falling by 6.1m bbl.