The well-known quote, “There are decades where nothing happens, and there are weeks where decades happen” springs to mind when thinking about financial news and markets this month. That said, mind-blowing moves in bond markets haven’t really been matched by price action in the FX space. Similarly, stock markets have been relatively unscathed with high-growth tech stocks really enjoying the environment of plunging interest rates. It will be interesting to see whether we see a reversal in that price action as value companies make a comeback amid tighter financial conditions.

“No news is good news” seems to be the current mantra of investors to finish off March. Investors are waiting for the dust to settle and to see if there are any other blow-ups in the banking sector. For now, the coast seems relatively clear even though the side effects of the recent turmoil are likely to impact the wider economy going forward. Economic activity could be depressed by the more difficult regulatory and credit environment, certainly in the US. That means inflation may come down sooner than previously anticipated.

The dollar has struggled as its traditional safe-haven status was dented by the banking woes which kicked off in the US with the collapse of Silicon Valley Bank. Although there has been an unwinding of dovish Fed bets, the greenback could struggle as the Fed’s rate hike cycle draws to a close sooner than other major central banks. Gold has prospered during the month, rising over 7% but the psychological $2,000 barrier has proved a tough level to crack.

Major events of the month, in numbers:

* $1.1 trillion: This astronomical figure is estimated to have exited the most vulnerable US banks over the month. Half of these deposits left during just one week ending March 15 as contagion fears ramped up. SVB was the 16^th biggest bank in the US, a country with over 4,000 banks. It was the second largest bank failure in US history. The authority’s response was stark and swift to halt systemic fears. It is widely hoped that the downfall of Signature Bank too is both isolated and idiosyncratic. Risk management rules were flouted it seems as deposits poured in but rising interest rates hammered the banks’ unhedged portfolios.

* 167 years old: When you think of Switzerland you think of watches, chocolate…and banks? Sadly, the second largest one had to be rescued by its rival, UBS, over the course of a weekend. The central bank and government frantically forced the century old Credit Suisse into a shotgun marriage. Some of the terms of the deal, specifically the wipe-out of AT1 bondholders, could set a dangerous precedent. But at least we learned a new acronym, “G-SIB”, which is a global systemically important bank. That’s one which is essentially “too big to fail”.

*+3.55%: Market watchers all became Treasury yield watchers as the US 2-year Treasury oscillated wildly through the month. After Fed Chair Powell’s hawkish tilt during his testimony in early March, markets moved to price in a peak Fed funds rate above 5.6%. This saw the 2-year yield briefly advance above 5%, its highest since 2007.  The biggest gap (or deepest inversion) between the 2- and 10-year yields since 1981 was also evident. But yields came crashing down in the biggest 5-day move since 1982. The daily March 13 half-percentage point move in the 2-year was the biggest fall in 41 years. Bonds have been sold more recently as Fed rate expectations rebound and 2-year yields bounce from this month’s low of 3.55%.

*+20% Nasdaq 100: The tech-laden US index has entered a technical bull market after climbing 20% from its December lows. It is poised for its best quarterly return since 2020 and is up around 14% so far this year. This contrasts with declines of over 30% last year and is primarily due to the recent slide in Treasury yields as growth companies are usually more interest-rate sensitive. But the narrow breadth of the move on megacap tech names worries some, with Meta +17%, Alphabet +12% and Apple +9% on the month helping to support the broader S&P500.

*$30,000 Bitcoin: After slumping 64% last year, the world’s most popular digital asset has beaten every major asset class amid the banking volatility. The largest digital coin has gained roughly 25% since March 8 bouncing off $20,000. Bulls are hoping to conquer $30,000 soon which would still be more than 50% below its all-time high hit in November 2021. A crisis of confidence in the banking system was arguably the original purpose of these digital currencies. Bitcoin as a store of value and currency has also outperformed Ether, the second largest coin.