With the United States banking crisis reaching the old continent Europe, via a G-SIB – a global systemically important bank, namely Credit Suisse (CS), global market players fear the return of the 2008 financial crisis and rushed for the risk safety. The risk-aversion drowned the US Treasury bond yields but propelled the Gold price, as well as the US Dollar Index (DXY).
The Saudi National Bank’s rejection of infusing more funds into the Credit Suisse propelled the key European bank’s Credit Default Swaps (CDS) and triggered the crisis for the financial markets on Wednesday. On the same line were the news that the European Central Bank (ECB) officials contacted banks to ask about exposures to Credit Suisse, which in turn fanned the risk-off mood.
That said, the US 10-year Treasury bond yields dropped the most in four months before bouncing off four-month low to 3.46% at the latest. On the same line, the US two-year bond coupons refreshed six-month low before ending the volatile Wednesday near 3.89%.
Elsewhere, the US Dollar Index (DXY) bounced off the 50-DMA to portray the biggest daily gains in a week before ending the day around 104.75.
It should be noted that the the European stock market closed in the red but Wall Street closed mixed as the Swiss National Bank (SNB) stepped forward to help CS.
As a result, the Gold price rallied to refresh the multi-day high earlier on Wednesday before the SNB news allowed XAU/USD bulls to take a breather.
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