PacWest statement, MSFT & GOOG results soothe worries, as US debt ceiling debate heats up | MarketTalk: What’s up today?

Show notes

The selloff in First Republic Bank wreaked havoc in the US session on Tuesday.
The First Republic Bank (FRC) closed the session down by almost 50%. The FRC drama revived the bank stress. Invesco’s European banks ETF slid by 3.40%. The S&P500 lost almost 1.58% and Nasdaq slid nearly 1.90% - even though the US yields fell across the board. The US 2-year yield fell to 3.90% as the worries about the FRC weighed on the Fed rate hike expectations and pulled the expectation of a 25bp hike at the next week’s FOMC to around 77%. This probability was near 90% before the FRC announced results.
Happily, though, PacWest – another regional bank that got hammered by the SVB collapse last month, said, after the bell, that its deposits stabilized in March.
Plus, Microsoft and Google announced better-than-expected results, after the bell, as well.
As a result, the US futures are in the positive at the time of writing, but that doesn’t mean that the stress over banks will suddenly go away. Gains could quickly evaporate if the worries continue.
Elsewhere, another big headache for investors is the US debt ceiling – which was reached earlier this year, and which forced the US government to use ‘extraordinary measures’ and to use up its cash reserves to stay afloat.
The problem is the tax receipts came in lower than anticipated in April, leading to rapidly shrinking finances for the government – which is now expected to run out of money as early as early-June if the debt ceiling isn’t lifted.
And a critical vote is set for this Wednesday!
Listen to find out more!