"us futures taken sudden dip"
I wonder if the sudden drop has anything to do with the BTFP coming to an end and Fed Chair Jerome Powell saying:
"I am sure there will be bank failures." Last time, (when SVB, First Republic and Washington Mutual imploded) the only thing that prevented fear and massive bank runs on deposits was Yellen saying she will guarantee the "whole" of deposits and beef up the FDIC’s Deposit Insurance Fund to cover it.
(See here.)The "takeover" of these banks by bigger banks (eg JP Morgan) was not a real takeover, it was an auction of the assets (loans) and a willingness to take the deposits (liabilities) after the FDIC’s Deposit Insurance Fund agreed to pay billions into the deal to cover the difference between assets and liabilities with the risk of loan defaults factored in.
This is no longer possible because of the debt ceiling deal done on 3 June 2023. Under that deal Biden can only spend what he earns plus any rescinded amounts from the pandemic.
(See here.) So, Yellen hasn't got the money to beef up the FDIC’s Deposit Insurance Fund to cover a guarantee on "whole" deposits or to do "sweetener" deals to get the big banks to take on all the deposits.
So, when the regional banks begin to fail and larger depositors find out most of their money is at risk and not covered by the Deposit Insurance Fund, there will be widespread panic and bank runs on ALL regional banks. This will cause them to clam up and fall like dominos with billions being wiped off peoples' savings.
Also, what get's bid for these failed banks by the bigger banks will be much less because they all know what's coming (recession & GFC) and many of the loans may not be repaid.
But, this is just the US, the bad loans are worse in overseas banks and when the dominos begin to fall it can go on for a long time.
(20min delay)