|
Yellen also reaffirmed the strength and soundness of the
country's banking system at the meeting with bank CEOs on
Thursday in the aftermath of the collapse of Silicon Valley
Bank, Signature Bank, and First Republic Bank.
The KBW Regional Banking Index fell 2.2%, with shares of PacWest
Bancorp and Western Alliance among the biggest losers as they
shed 1.9% and 2.4, respectively. Comerica Inc declined 1.2%,
Zions Bancorp. fell nearly 1.7%, and Valley National Bancorp
dropped 5.5%.
The regional bank crisis has been partly blamed by some on
aggressive interest rates by the U.S. Federal Reserve, which
forced some lenders to seek new capital to make up for a fall in
the value of assets linked to interest rates.
Fed Chairman Jerome Powell said on Friday the after-effect of
recent banking sector troubles is expected to take some pressure
off the U.S. central bank's interest rake hiking cycle.
Tighter credit conditions meant that "our policy rate may not
need to rise as much as it would have otherwise to achieve our
goals," Powell told a central bank conference in Washington.
But Tom Plumb, portfolio manager at Plumb Balanced Fund, said he
doesn't expect the Fed to start lowering interest rates anytime
soon as the U.S. economy is still showing signs of strength and
inflation is not abating as quickly as expected.
"People thought that inflation was going to come down faster and
that the pressure on these regional banks and those failures
were leading to this narrative that the Fed was going to lower
interest rates by the end of this year. I don't think that's the
case," Plumb said.
An agreement on raising the U.S. debt ceiling is still possible
if both Republicans and Democrats negotiate in good faith and
recognize they won't get everything they want, a White House
official said on Friday shortly after an impasse in talks was
reported.
The debt ceiling dispute has weighed on market sentiment,
including for regional bank stocks.
"Unfortunately, the way our government works they are going to
take you to the brink and they're going to cause a significant
last wave of panic. And then they will come up with some type of
resolution," Plumb added.
(Reporting by Chibuike Oguh in New York; editing by Deepa
Babington)
[© 2023 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
