It was a very quiet overnight session with Chinese and European markets closed for May Day. Treasury yields are 5-9 basis points higher to start the morning as the market digests news of JPMorgan Chase’s acquisition of First Republic Bank from the FDIC, the second largest bank failure in U.S. history behind Washington Mutual in 2008. The deal includes $173 billion of First Republic loans, $30 billion of securities, and $92 billion of deposits. The FDIC agreed to share a portion of loan losses and recoveries, as well as provide $50 billion of financing.
Market attention now shifts to Wednesday’s FOMC decision, which is broadly expected to include a 25 basis point rate hike. Market participants will be more focused on any changes to the forward guidance in the official statement and Jay Powell’s press conference. The March JOLTS report will be released tomorrow and the April jobs report on Friday. The latter is expected to show 180,000 new jobs added and a slight uptick in the unemployment rate to 3.6%.
Jason Haley
Chief Investment Officer
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