Impact of the banking turmoil
Following a Bloomberg article that revealed that PacWest, another US regional bank, was considering a sale, the S&P Regional Bank Index lost another 9% last week, with PacWest down by 31%.
Is this the continuation of a series of falling dominos? What will be the effects on macro and markets?
Looking at the hard data, there is a limited impact so far on aggregated weekly lending growth (see below). Manufacturing and services surveys also indicate that the US economy is holding up vs other countries, especially in the manufacturing sector.
Looking at market indicators, we see contained stress so far outside banking stocks, which is surprising given the other negative newsflow...