Last Friday we saw the first major bank failure since 2008 when the Silicon Valley Bank was closed by Regulators- the long and short of the issues with the bank was overexposure to the tech sector and big investments in 10-year treasuries which have been hindered by an aggressive rate hike cycle from the Fed. Right now it is unclear whether there will be contagion from this bank’s failing or if there will be bailouts- the current rhetoric from the Fed makes me believe they will backstop all deposits but either way I suspect this will be big news throughout the week.

We also had a better-than-expected NFP release from the U,S which was softened by softer wage numbers and a slightly higher unemployment number- right now it looks like the Fed still want rates higher, but maybe the SVB issues will give them cause to breathe for a moment before they are aggressive again with rate hikes.

Looking at economic data for this week- Monday will be a quiet day, and on Tuesday we have UK employment in the morning with U.S inflation in the afternoon- both very important data releases that have the potential to dictate what the BoE and Fed do next. We are expecting unemployment to rise in the UK and inflation to come down slightly in the U.S.

Thursday is the key day as the ECB is expected to raise interest rates again from 3% to 3.5%- as this is already priced in the main market movement (If any) will be from President Lagarde’s speech half an hour after the rate decision- any forward guidance will give us an idea of where rates are expected to go next- with the UK at 4% and the U.S at 4.5%- the ECB may wish to continue down the hawkish path for now until they are closer to the BoE and the Fed.