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What's driving the markets? Bailouts return, Fed outlook reevaluated, and Pfizer M&A

On Monday, 13th March, the Federal Reserve, Federal Deposit Insurance Corporation, and the Treasury announced that they would bail out depositors in Silicon Valley Bank and Signature Bank, making sure the banks honor all of their deposits, many of which belong to clients such as venture capitalists and crypto platforms.

To prevent contagion to the wider banking sector, a new instrument named the Bank Term Funding Plan (BTFP) was set up, which allows banks to sell Treasury bonds and other high-quality liquid assets to the Fed if they need to raise liquidity. The program is back-stopped by $25 billion of taxpayers’ money. Although this brought relief to tech bros and crypto firms, other banks such as First Republic Bank, PacWest Bancorp, and Western Alliance saw their stocks fall in pre-market, with the market predicting that they might be the next banks to fall. The dollar also plunged as the market bet that the Federal Reserve will be too scared to raise interest rates in March, leading to a fall in bond yields. Meanwhile, crypto and Pfizer soared. The stock market opened mixed, and crude oil prices fell.


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