China's C.bank Warns SVB Failure Shows Impact of Rapid Global Rate Hikes

A security guard stands outside of the entrance of the Silicon Valley Bank headquarters in Santa Clara, California, US, March 13, 2023. REUTERS/Brittany Hosea-Small/File Photo
A security guard stands outside of the entrance of the Silicon Valley Bank headquarters in Santa Clara, California, US, March 13, 2023. REUTERS/Brittany Hosea-Small/File Photo
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China's C.bank Warns SVB Failure Shows Impact of Rapid Global Rate Hikes

A security guard stands outside of the entrance of the Silicon Valley Bank headquarters in Santa Clara, California, US, March 13, 2023. REUTERS/Brittany Hosea-Small/File Photo
A security guard stands outside of the entrance of the Silicon Valley Bank headquarters in Santa Clara, California, US, March 13, 2023. REUTERS/Brittany Hosea-Small/File Photo

A senior official at the People's Bank of China said on Saturday the collapse of Silicon Valley Bank (SVB) showed how rapid monetary policy shifts were having spillover effects, state-owned newspaper Shanghai Securities News reported.

Xuan Changneng, a deputy governor at the People's Bank of China told the Global Asset Management Forum in Beijing that some financial institutions had grown accustomed to running their balance sheets in an environment of low interest rate volatility and as such lacked sensitivity to short-term and large fluctuations in rates.

Silicon Valley Bank's balance sheet characteristics made it more sensitive to interest rates changes and ultimately led to risk, the newspaper cited him as saying.

"Based on the current situation, there is still uncertainty about whether inflation in the major developed economies will fall significantly in the short term, and continuing to maintain relatively high interest rates may also have an adverse impact on the steady operations of the banking and financial system," he said.

SVB Financial Group on Friday sought protection under Chapter 11 of the US bankruptcy code, days after its former unit Silicon Valley Bank was taken over by US regulators.



Oil Edges Down amid Bearish Trump Tariff Outlook

A view shows disused oil pump jacks at the Airankol oil field operated by Caspiy Neft in the Atyrau Region, Kazakhstan April 2, 2025. REUTERS/Pavel Mikheyev/File Photo
A view shows disused oil pump jacks at the Airankol oil field operated by Caspiy Neft in the Atyrau Region, Kazakhstan April 2, 2025. REUTERS/Pavel Mikheyev/File Photo
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Oil Edges Down amid Bearish Trump Tariff Outlook

A view shows disused oil pump jacks at the Airankol oil field operated by Caspiy Neft in the Atyrau Region, Kazakhstan April 2, 2025. REUTERS/Pavel Mikheyev/File Photo
A view shows disused oil pump jacks at the Airankol oil field operated by Caspiy Neft in the Atyrau Region, Kazakhstan April 2, 2025. REUTERS/Pavel Mikheyev/File Photo

Oil prices declined moderately on Thursday as investors weighed the potential impact of US President Donald Trump's tariffs on global economic growth.

Brent crude futures were down 23 cents, or 0.3%, at $69.96 a barrel by 0904 GMT. US West Texas Intermediate crude fell 32 cents, or 0.5%, to $68.06 a barrel.

On Wednesday, Trump threatened Brazil, Latin America's largest economy, with a punitive 50% tariff on exports to the US, after a public spat with his Brazilian counterpart Luiz Inacio Lula da Silva.

He has also announced plans for tariffs on copper, semiconductors and pharmaceuticals and his administration sent tariff letters to the Philippines, Iraq and others, adding to over a dozen letters issued earlier in the week including for powerhouse US suppliers South Korea and Japan.

Trump's history of backpedaling on tariffs has caused the market to become less reactive to such announcements, said Harry Tchilinguirian, group head of research at Onyx Capital Group.

"People are largely in wait and see mode, given the erratic nature of policy making and the flexibility the administration is showing around tariffs," Tchilinguirian said.

Policymakers remain worried about the inflationary pressures from Trump's tariffs, with only "a couple" of officials at the Federal Reserve's June 17-18 meeting saying they felt interest rates could be reduced as soon as this month, minutes of the meeting released on Wednesday showed.

Higher interest rates make borrowing more expensive and reduce demand for oil, Reuters said.

Supporting oil prices however was a weaker US dollar in Thursday's Asia trading session, said OANDA senior analyst Kelvin Wong. A weaker dollar lifts oil prices by making it cheaper for holders of other currencies.

US crude stocks rose while gasoline and distillate inventories fell last week, the Energy Information Administration said on Wednesday. Gasoline demand rose 6% to 9.2 million barrels per day last week, the EIA said.

Global daily flights were averaging 107,600 in the first eight days of July, an all-time high, with flights in China reaching a five-month peak and port and freight activities indicating "sustained expansion" in trade activities from last year, JP Morgan said in a client note.

"Year to date, global oil demand growth is averaging 0.97 million barrels per day, in line with our forecast of 1 million barrels per day," the note said.

Additionally, there is doubt the recent increase in production quotas announced by OPEC+ will result in an actual increase in production, as some members are already exceeding their quotas, said Tony Sycamore, an analyst at IG.

"And others, like Russia, are unable to meet their targets due to damaged oil infrastructure," he said.

OPEC+ oil producers are set to approve another big output boost for September, as they complete both the unwinding of voluntary production cuts by eight members, and the United Arab Emirates' move to a larger quota.