• Home
  • Pro
  • Partners
  • Help and support
  • English
  • Italiano
  • Español
  • Français
Pepperstone logo
Pepperstone logo
  • Ways to trade
    • Trading accounts

      Choose from two account types depending on your strategy

    • 24-hour trading

      Trade CFDs on key US shares 24/5.

    • Pricing

      Discover our tight spreads, plus all other possble fees

    • Trading hours
    • Maintenance schedule
    • Risk management
    • Funding and withdrawals
  • Markets
    • Forex

      Get great rates on majors like EUR/USD, plus minors and exotics

    • Commodities

      Trade on metals, energies & softs, with oil spreads from 2 cents

    • Cryptocurrencies

      Speculate on Bitcoin, Ether and more, with a trusted broker

    • Shares
    • ETF
    • Indices
    • Currency indices
    • Dividends for index CFDs
    • Dividends for share CFDs
    • CFD forwards
  • Trading platforms
    • TradingView

      Trade through supercharts with tight spreads

    • MetaTrader 5

      Explore the apex in trading automation with our execution tech

    • The Pepperstone platform
    • MetaTrader 4
    • cTrader
    • Trading tools
  • Market analysis
    • Navigating markets

      Latest news and analysis from our experts

    • The Daily Fix

      Your regular round-up of key events

    • Meet the analysts

      Our global team giving your trading the edge

  • About us
    • Who we are

      Pepperstone was born from the dream of making trading better

    • Company news
    • Company awards
    • Protecting clients online
    • Trading accounts

      Choose from two account types depending on your strategy

    • 24-hour trading

      Trade CFDs on key US shares 24/5.

    • Pricing

      Discover our tight spreads, plus all other possble fees

    • Trading hours
    • Maintenance schedule
    • Risk management
    • Funding and withdrawals
    • Forex

      Get great rates on majors like EUR/USD, plus minors and exotics

    • Commodities

      Trade on metals, energies & softs, with oil spreads from 2 cents

    • Cryptocurrencies

      Speculate on Bitcoin, Ether and more, with a trusted broker

    • Shares
    • ETF
    • Indices
    • Currency indices
    • Dividends for index CFDs
    • Dividends for share CFDs
    • CFD forwards
    • TradingView

      Trade through supercharts with tight spreads

    • MetaTrader 5

      Explore the apex in trading automation with our execution tech

    • The Pepperstone platform
    • MetaTrader 4
    • cTrader
    • Trading tools
    • Navigating markets

      Latest news and analysis from our experts

    • The Daily Fix

      Your regular round-up of key events

    • Meet the analysts

      Our global team giving your trading the edge

    • Who we are

      Pepperstone was born from the dream of making trading better

    • Company news
    • Company awards
    • Protecting clients online
Volatility
Trading

A traders' week ahead playbook - the Fed bring out the big guns

Mar 13, 2023
Share
We start the week on a positive note but with such event risk in front of us volatility remains something that traders need to adjust too and respect.

After spending most of the weekend debating who was to blame for SVB Financials demise and who was next in the firing line, we’ve seen the Fed uniting with the US Treasury and the FDIC to bring out the big guns - all strategically timed for the futures open – we’ve seen that Signature Bank has also failed, but in both cases depositors are fully covered and will have access to all deposited capital – this removes a major source of contagion risk and depositors across regional and smaller banks know categorically that the Fed won’t make you wear a haircut and have your back.

We’ve seen a suite of other facilities announced aimed at addressing liquidity and funding concerns – notably, banks can access term funding using collateral valued at par – this is a big deal for banks and a clear positive given collateral used for funding was valued at a discount in the current rate cycle – so funding assets, especially for the more destressed financial institutions is now cheaper.

The Fed are not only addressing concerns over the bank’s asset side of the balance sheet but on the liability side, where they are essentially stepping in front of a larger bank run, which as we’ve seen once again can be devastatingly swift to bring down any institution. The Treasury has been keen to highlight that SVB Financial, which primarily failed to hedge its interest rate exposure, is not being bailed out and it’s the depositors that are their sole focus - the Fed are essentially the lender of last resort.

Still, there's likely going to be further migrations to the stronger banks and those with a large asset base and low equity will continue to see depositors divest capital.

The reaction in markets has so far been positive with the USD following a further rally in the US 2yr Treasury, with yields -11bp on the day. The market now prices ‘just’ 27bp at the 22 March FOMC meeting – we see 61bp of hikes now priced through mid-2023, down from over 100bp last week. Certainly, the data over the past five days is a tailwind to lower interest rate expectations. Clearly, the deterioration in the asset quality held on bank’s balance sheet - much of which is not marked-to-market to show the impact of unrealised losses - is a major consideration.

USD index – daily chart

Preview

The USD is lower vs all major currencies, notably vs the MXN and AUD, where the additional headwind of US equity futures gaining 1.3% is weighing as relief comes into the market. We should see low volatility priced in the VIX index.

One questions how long this goodwill lasts and while the troika of US institutions provides a backstop, it's still concerning that we’re in this position - what other black swans could come as a result of the rapid shift in interest rates?

The price action in the KRE ETF (S&P Regional Bank ETF) could offer broader market direction, while we watch the extent of relief seen in single stock names such as First Republic and Charles Schwab (Pepperstone clients can trade these on MT5) – but also in USD funding and other risk metrics, such as the difference between secured and non-secured funding.

Looking ahead and sentiment in markets and the subsequent price action will most likely be affected by the US CPI print. This is key now and the marquee known event risk that could really move markets around. Naturally given the recent repricing lower in rates expectations it suggests a core CPI print below 0.3% MoM could get the risk party really started.

Conversely, above 0.5% MoM could see the market really open the door to a 50bp hike again – the higher the outcome obviously the bigger the rally in the USD and drawdown in equity markets. The market is seeing a higher probability of an above consensus CPI print, but I think we get a more pronounced move in markets on a lower print than the move we could see on a higher outcome – especially if core services ex-housing was to come in weaker. I guess we’ll never know though.

We will also see US retail sales and PPI, and both could impact given the hotter prints we saw last month. Aussie and UK jobs and the ECB meeting will also get close attention from traders.

It's another huge week in the markets – we could be staring at a big rally in risky assets if inflation comes in soft and we see a sustained rally in financials – where the markets increase conviction that the Fed are close to a pause. Conversely, one can make a compelling counterargument to that, based on an alternate set of outcomes. The fact remains traders need to consider their leverage, and position size and be agile to change – we react, we cut losers without emotion and move on, and we respect but harness the volatility.

The week ahead calendar

Preview

Related articles

Trader thoughts - a classic risk aversion day

Trading

The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients. Pepperstone doesn’t represent that the material provided here is accurate, current or complete, and therefore shouldn’t be relied upon as such. The information, whether from a third party or not, isn’t to be considered as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product or instrument; or to participate in any particular trading strategy. It does not take into account readers’ financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of Pepperstone, reproduction or redistribution of this information isn’t permitted.

Other Sites

  • The Trade Off
  • Partners
  • Group
  • Careers

Ways to Trade

  • Pricing
  • Trading Accounts
  • Pro
  • Active trader Program
  • Trading Hours

Platforms

  • Trading Platforms
  • Trading tools

Markets and Symbols

  • Forex
  • Shares
  • ETFs
  • Indicies
  • Commodities
  • Currency indicies
  • Cryptocurrencies
  • CFD Forwards

Analysis

  • Navigating Markets
  • The Daily Fix
  • Meet the Analysts

Learn to Trade

  • Trading Guides
  • Videos
  • Webinars
Pepperstone logo
support@pepperstone.com
0035725030573
195, Makarios III Avenue, Neocleous House,
3030, Limassol Cyprus
  • Legal documents
  • Privacy policy
  • Website terms and conditions
  • Cookie policy
  • Sitemap

© 2025 Pepperstone EU Limited
Company Number ΗΕ 398429 | Cyprus Securities and Exchange Commission Licence Number 388/20

Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.1% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Trading derivatives is risky. It isn't suitable for everyone and, in the case of Professional clients, you could lose substantially more than your initial investment. You don't own or have rights in the underlying assets. Past performance is no indication of future performance and tax laws are subject to change. The information on this website is general in nature and doesn't take into account your or your client's personal objectives, financial circumstances, or needs. Please read our legal documents and ensure you fully understand the risks before you make any trading decisions. We encourage you to seek independent advice.

Pepperstone EU Limited is a limited company registered in Cyprus under Company Number ΗΕ 398429 and is authorised and regulated by the Cyprus Securities and Exchange Commission (Licence Number 388/20). Registered office: 195, Makarios III Avenue, Neocleous House, 3030, Limassol Cyprus.

The information on this site is not intended for residents of Belgium, Spain or the United States, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.