The SVB crisis reaches mortgages: the Euribor falls back under pressure on the ECB not to raise rates

• Banking Why are Spanish banks the hardest hit on the stock market after the collapse of SVB?

Despite not being a systemic crisis, the collapse of Silicon Valley Bank (SVB) could end up reaching the hundreds of thousands of citizens who have a variable mortgage referenced to

.

The 12-month index registered yesterday the third consecutive fall in its daily rate, 0.34 basis points, a decrease that had not been registered before and that left the monthly average for March at 3.84%.

The setback has become the most direct reflection of the expectations that the markets have about the road map of the European Central Bank (ECB) in its fight against inflation.

The financial uncertainty unleashed by the SVB crisis has been a

for the strategy that the central banks had been deploying in the last year to contain the escalation of prices.

If before

of the interest rate rise was questioned, especially in Europe, now those doubts have increased because its collateral effects are beginning to become evident.

The increase in rates reduces the valuation of the bond portfolios in the hands of the entities and this, as has been seen in the case of the SVB, can generate a liquidity crisis that ends up taking the bank itself.

The specters of a global contagion have spread through stock markets around the world and the focus has now shifted to supranational banking regulators.

The question is whether they should continue with the expected rises or if, as more and more experts point out, they should

"The fallout from the Silicon Valley Bank failure has led to a drastic downward revision of US interest rate expectations, and some of this has spilled over to ECB prices as well," said Paul Diggle, chief

. of

.

The first acid test for the Eurobank will take place tomorrow, Thursday, when the entity holds a new meeting in Frankfurt with another review of the price of money on the table.

It would be the sixth in a row.

It is expected that the entity will meet the forecasts and announce another increase of half a point, but what is really important will be in the message that its president,

, can later launch to the markets.

"The ECB may try to deal with uncertainties without offering clear guidance on future decisions. Instead, they will emphasize data reliance, and will be given the option to pause before too long if the situation will get worse," adds Diggle.

It is also expected to be a tense meeting with more dissenting voices within the Council.

In the dilemma between inflation and recession, the ECB long ago chose the former at the expense of the latter, the problem is that headline and core inflation show no sign of abating and the risk for businesses and households has increased in parallel with The types.

How long can you keep tightening the European economy to control prices?

That is the point and some like Bank of America were already warning of "excessive tightening" even before the SVB episode.

"

[...] The economy has been and remains weak, some looming inflationary pressures are in the right direction, and fiscal policy is unlikely to provide additional inflationary impetus (in In any case, it could soon take a turn for the worse)," said a recent comment from the team led by

Bank of America's chief economist for Europe.

Federal Reserve

The easing of rate hikes could ease the pressure on families, but it would also weigh down the expectations of margins and profits of regional banks after years of rates at record lows.

Somehow, this worsening on the horizon has caused investors to flee from the stock market in recent days and, in the long run, could also translate into a tightening

Expectations of rate hikes have also been lowered in the case of the US Federal Reserve.

, portfolio manager at AXA IM, considers the

at its meeting next week as the economic slowdown it is pursuing to bring down inflation could accelerate after recent financial events, without of raising money so abruptly.

"Inflation expectations have suffered the biggest drop since Covid following a series of bank failures. Investors seem to think that fears of financial instability may make consumers and businesses more cautious. And, in theory, a An air of caution could do the Fed's job for them," said

, US analyst at

.

Her opinion, however, is that Powell won't change his mind about the guys that easily.

By contrast,

's team estimates that the Fed's hike next week will stay at 25 basis points, instead of the 50 they were contemplating before the SVB collapse.

"A tightening of financial conditions through bank loans could lead the economy into a recession from the second half of 2023. However, with the collapse of SVB the process could be accelerating, potentially anticipating a recession," they point out. .

According to the criteria of The Trust Project

Know more