Treasuries and U.S. equities are little changed following a relatively quiet overnight session. Eurozone aggregate PMI data from S&P came in higher than expected in April (54.4 vs. 53.7). led by increased activity in the services sector (56.6 vs. 54.5 expected). According to the Wall Street Journal, the Fed is considering forcing banks with $100 billion to $700 billion of assets to include unrealized losses in available for sale (AFS) portfolios in regulatory capital measures going forward. Currently, only banks above that asset threshold are required to do so. This is unlikely to be the only regulatory changes in the wake of the March bank failures. On a related note, the Fed’s updated H.4.1 report indicated that bank borrowing activity at the central bank increased $4.4 billion for the week ended April 19, split nearly evenly between the discount window and the new Bank Term Funding Program. Borrowing activity from those two facilities is down nearly $21 billion from the peak on March 15 ($165 billion) but remains well above levels prior to the SVB/SBNY failures ($15 billion). In other words, things have calmed in recent weeks, but we certainly wouldn’t say we’re out of the woods yet as it relates to bank funding/liquidity concerns.
Jason Haley
Chief Investment Officer
To view ALM First’s full daily market commentary, please click here.