SVB collapse contained, but we remain cautious risk

We think the collapse of Silicon Valley Bank (SVB) will be contained and is not a sign of systemic risks to the banking sector. However, with the US economy likely heading for recession we reiterate our underweight positions on risk assets.

What you will learn:

• Last week’s liquidation of Silvergate Capital and the collapse of Silicon Valley Bank have raised questions about the risks of financial instability to the US economy, leading to a spike in the financial stress indicator within our Cross Asset Framework.
• However, our macro colleagues believe the events should not have significant broader implications for the economy and are not a sign of systemic risks to the banking sector.