Markets remained calm, following the weekend news, that the First Republic Bank had been consumed by the monster bank that is JP Morgan Chase. Authorities have awarded the First Republic Bank to JP Morgan and also added credit lines and taken some of the securitiy losses through the FDIC. This follows the failure of SVB and has been a long time coming, following the collapse in deposit holders. The trend of Banking consolidation is well underway in Europe and the USA, following this and the UBS/Credit Suiss takeover. This is a very complex process and the consolidation will mean less banks and more centralisation. ISM Manufacturing PMI numbers improved slightly but remained in negative territory, while S&P Manufacturing PMI inched back onto positive ground above 50. The EUR drifted back to 1.0950, while the GBP slipped back below 1.2500.
Australian markets will keenly await the RBA’s latest monetary policy decision, which is expected to continue the ‘pause’, instituted at their last meeting. Huge pressure is building on the RBA to keep rates stet, but inflation remains stubbornly high. It would not be a huge surprise if the RBA raised rates, or at least became more hawkish, with the narrative. Australian Manufacturing PMI data remained weak and Job ads contracted 0.3%, which would also lend to the argument in favour of low interest rates. The AUD is trading just above 0.6600, ahead of the RBA rate decision, while the NZD trades around 0.6150.