The bank crisis has raised the odds of a recession in the next year to 35%, according to Goldman Sachs
Silicon Valley Bank and Signature Bank marked the second and third largest bank failures in history, respectively, behind only Washington Mutual during the 2008 crisis.
The fallout in the banking system has raised the chances of a downturn, in Goldman's view, even as markets price in smaller rate hikes or a pause from the Federal Reserve at the March meeting. CME's FedWatch Tool on Thursday showed traders are giving about a 25% chance to no rate hike next week, and about a 75% chance of a quarter-point hike.
"Until this week, markets had broadly ignored the threats that tightening policy was starting to uncover," Shah wrote in a note Thursday."The latest turmoil, however, has quickly reminded investors that risk assets simply cannot escape the wrath of monetary tightening.
France Dernières Nouvelles, France Actualités
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