The rapid collapse of SVB, a popular bank among startups, has rattled investors and startups alike. Will the Federal Reserve bail them out? Looks likely. Will it still raise interest rates to lower inflation? Will Congress raise the debt ceiling? We explore these questions and more on Twitter and right here in our new weekly blog post, Monday Market Report.

As of yesterday, the Federal Reserve, Treasury and FDIC issued a joint statement announcing that all SVB depositors will have access to their full funds by Monday (today). No losses will be borne by taxpayers. The Fed also moves to backstop uninsured deposits beyond $250k.

The SVB bailout is significant, given its repercussions to startups and preventing panic in the markets. SVB had $175B in deposits in 2022, of which 89% were uninsured.

The Fed is also making additional funding available to banks to safeguard deposits through an emergency lending facility. Financing will be available through the creation of a new Bank Term Funding Program (BTFP) that offers loans for a period of one year. Up to $25B from the Exchange Stabilization Fund will be used as a backstop. The Fed also indicated that it will be willing to address liquidity concerns that may arise.

Bloomberg said that the FDIC has encouraged buyers for SVB with an auction that started late Saturday and final bids duoe on Sunday afternoon. Among the last ditch white knights are HSBC and suitors JP Morgan and PNC.

On the international front, China’s tech startups and VC industry are rocked by the collapse of SVB, according to the South China Morning Post. China also sets a 5% growth target, which its leadership says is “no easy task” while also promising to build up its miltiary to a “great wall of steel,” according to the Financial Times.

On the employment front, the US added 311,000 jobs, defying expectations and growing slightly  in the labor force participation rate to 62.5% — the highest it's been since April 2020.

In domestic markets, the S&P 500 wiped out gained for 2023 as the KBW Bank Index extended its two-day drop to 10%. Investors brace for volatility and look for parallels in today’s market with the failure of the Continental Illinoise bank in 1984 and a tightening of the Fed. Retail investors crowded the bond market so much that the Treasury website went down. With savings rates reaching 5% on some savings accounts now, money has been flowing there backed up by FDIC insurance.

The big report coming out this week is CPI that reports on many aspects of consumer psending from gas to food, rent and car purchases. The upcoming FOMC meeting this Friday has investors closing pay attention to any interest rate hikes, with markets expecting that the interest rates will not go up given the volatility and the SVB bailout. Both Bank of America and Goldman Sachs analysts no longer see a hike in March.

Have a great week ahead!

Data for this report has been compiled from Yahoo! Finance, WSJ, FactSet, Bloomberg, Financial Times and the South China Morning Post (SCMP).