Global equities had a strong start to the year, rising by more than 8% in euro terms in the first six weeks. A rapid China reopening, no energy crisis in Europe, falling inflation in the US and expectations of a slowdown / end to the Federal Reserve’s hiking cycle meant recession fears (which had been very much to the fore in Q4 22) gave way to “soft landing” hopes. Strong data in January however saw these hopes fade, to be replaced with more overheating worries, a single month’s data becoming a focus for Fed officials not helped by huge revisions to previously released data. Central Banks however are clearly latching on to anything they can to enable a hawkish steer, buoyed by the continued strong activity data which showed that nothing had broken yet from their actions, and rate expectations spiked dramatically during February. There are consequences though from such an aggressive monetary policy campaign, and eventually a tipping point was reached, the drain of deposits from the US banking system leading to the collapse of Silicon Valley Bank, the second biggest ever bank failure in the US, quickly followed by Signature Bank in New York. This placed severe pressure on other regional banks, raising the threat of a major liquidity crisis, forcing the Federal Reserve to come up with yet another type of emergency lending program. The fallout forced Credit Suisse into the arms of UBS, with large guarantees for UBS from the Swiss state.