US Banking System Outlook Downgraded to ‘Negative’… Fallout from U.S. Bank Failures Spreads Around the World

Moody’s cuts outlook on U.S. banking system to negative, citing ‘rapidly deteriorating operating environment’

In a harsh blow to an already-reeling sector, Moody’s Investors Service cut its view on the entire banking system to negative from stable.

The firm, part of the big three rating services, said Monday it was making the move in light of key bank failures that prompted regulators to step in Sunday with a dramatic rescue plan for depositors and other institutions impacted by the crisis.

‘Bank Fears Go Global’: Stock Market Dips as Fallout from U.S. Bank Failures Spreads Around the World

The worst may not be over. The Silicon Valley Bank and Signature Bank failures continue to roil stock markets and have cued further shock to the global banking system.

There was an uptick in the stock market on Tuesday, which followed in the wake of assurances from the Biden administration that business depositers in the failed banks would have their assets restored.

“The S&P 500 rose 1.5 percent in morning trading, recouping some of its losses from the rapid collapse of Silicon Valley Bank and Signature Bank, and pointing to a semblance of stability returning to financial markets,” the Times reported. “Investors appeared to take to heart assurances that depositors will be protected by federal authorities, helping to calm nerves in the banking sector.”

“First Republic Bank, one of the banks most in the crosshairs of investors in recent days, was up nearly 50 percent, having fallen by a similar amount on Monday,” the Times added. “Western Alliance Bancorp rose roughly 40 percent, following a fall of nearly 50 percent. The KBW Bank index, which tracks the performance of 24 banks, rose over 4 percent, its best day in roughly four months.”

Bond volatility just surged to the highest level since the global financial crisis. pic.twitter.com/1ZzaShgyPa

— Otavio (Tavi) Costa (@TaviCosta) March 15, 2023