Asia markets set to rise over Wall Street banks' move to shore up banking system

Treasurys yields moved higher, and the futures market priced an 86% chance of a rate hike from the Federal Reserve next week, as more details emerged on a possible First Republic Bank rescue.

Yields, which move opposite price, were rising Thursday morning after the European Central Bank raised rates by a half percentage point. They pushed even higher following a late morning report that a group of major banks are discussing a rescue of First Republic.

CNBC’s David Faber then reported that a group of financial institutions, including JPMorgan and Goldman Sachs, are in talks to deposit roughly $20 billion into First Republic. Yields moved even further after his report.

“Short-term yields have gone up a lot,” said Michael Schumacher of Wells Fargo. “U.S. 2-year Treasury yields started going up during the ECB discussion, but blasted off on the news of First Republic.” The yield was at 4.20% in afternoon trading, up sharply from the 3.90% it was at around 10:45 a.m. ET, he noted.

Bleakley Financial’s Peter Boockvar said the futures market moved to price in even higher odds of a Fed rate hike. On Wednesday, odds were about 50% for a quarter point rate hike, but in Thursday afternoon trading the odds jumped up to 86%.

“Rate hike expectations have been rising all morning. Now people can take a deep breath,” Boockvar said.

— Patti Domm

The potential deposit at First Republic being discussed by major U.S. banks has grown to $30 billion, CNBC’s David Faber reports.

The biggest contributions would come from Bank of America, Wells Fargo, Citigroup and JPMorgan Chase at about $5 billion apiece. Morgan Stanley and Goldman Sachs will deposit around $2.5 billion each, the sources said. Truist, PNC, U.S. Bancorp, State Street and Bank of New York will deposit about $1 billion each.

— Jesse Pound

Big Tech shares climbed higher Thursday, shrugging off fears of the spreading banking crisis. Amazon shares rallied 3.3%, while Google parent Alphabet jumped 3%. Apple, Meta and Netflix also traded higher.

The strength in technology heavyweights pushed the major stock averages in the green in morning trading. Investors could be flocking to Big Tech to embrace their megacap safety, while betting that the current turmoil will keep the Fed from raising rates, benefitting growth names.

— Yun Li

Banking industry tumult is placing the U.S. economy in greater danger of a recession, according to Goldman Sachs.

The Wall Street firm upped its probability of a contraction in the 12 months ahead to 35%, a 10 percentage point increase, “reflecting increased near-term uncertainty around the economic effects of small bank stress,” Goldman economist Manuel Abecasis said in a client note Wednesday evening.

Regional bank stocks were taking a beating against Thursday. The SPDR S&P Regional Banking ETF slumped 3.7% in early trading.

—Jeff Cox

Sources told CNBC’s David Faber that a group of financial institutions — including Goldman Sachs, Citigroup and JPMorgan Chase — is in talks to deposit about $20 billion in First Republic.

The news comes after First Republic‘s stock has been pummeled in recent days, sparked by the collapse of Silicon Valley Bank last Friday and Signature Bank over the weekend. 

Shares of First Republic were down more than 30% earlier in the day. In early afternoon trading, however, the stock was only down 3.3% before being halted for volatility.

— Jesse Pound, Fred Imbert