Tuesday Morning Bounce

In this buzz: (Updates)First Republic (FRC); Futures and J-Yell’s comments;J.P and his FOMC meeting; 25bps hike expected; Sen. Elizabeth Warren and a bit more about the yield curve…

First Republic Bank (FRC)…
… popped 15% in pre-market trading, leading an attempted rebound in regional bank stocks.
✳ Futures rise as equities try to sustain Monday’s rally. The early gains are being attributed to Treasury Secretary J-Yell’s comments that the government could backstop more deposits as necessary. Yellen pointed to step that the government has already taken to guarantee deposits and that “similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.” Yellen’s comments seemed to soothe investors after concerns about the government’s willingness to provide support beyond its aid to SVB and Signature depositors.

In other news,
… J.P and his FOMC kick off their two -day meetings. Despite calls for a pause in hikes due to the collapse of SVB and concerns about contagion (see above), the Fed is expected to hike rates 25 basis points at the conclusion of tomorrow’s meeting because that’s the way Jay Powell rolls.

While critics like Sen. Elizabeth Warren…
… think the Fed should hit pause on its rate hikes; she’s concerned about the two million jobs that are at risk in a slowing economy, it’s unlikely the Fed will throw in the towel in its fight against inflation.

❗It’s certainly going to be interesting to see how stocks and the yield curve react to whatever the Fed does (or doesn’t do) tomorrow.