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Credit Suisse rebounds after a lifeline from the central bank, First Republic explores a sale and the fallout from bank stress continues ahe [View in browser]( [Bloomberg]( Credit Suisse rebounds after a lifeline from the central bank, First Republic explores a sale and the fallout from bank stress continues ahead of today’s European Central Bank meeting. — [Heather Burke]( To catch up on the trading day in the UK and Europe, check out [Markets Today.]( Credit Suisse rebound Credit Suisse surged the [most on record]( after the lender tapped the Swiss National Bank for as much as 50 billion francs ($54 billion) and offered to repurchase debt. The announcement followed a frantic trading session in which worries about Credit Suisse’s financial health [roiled]( global markets, alarmed regulators across Europe and the US and prompted some firms to reassess their exposure to the bank. Credit Suisse CEO Ulrich Koerner told his staff to [focus on facts]( as he pledged to rapidly move ahead with a plan to streamline operations. Meanwhile, Credit Suisse’s[biggest shareholder]( said “everything is fine” and the bank isn’t likely to seek more capital, the day after his comments helped spark the biggest-ever slump in the stock. First Republic sale First Republic Bank, the San Francisco-based lender that was cut to junk by S&P Global Ratings and Fitch Ratings on Wednesday, is exploring [strategic options](including a sale, according to people with knowledge of the matter. The bank, which is also weighing ways to shore up liquidity, is expected to draw interest from larger rivals, said some of the people, all of whom requested anonymity discussing confidential information. No decision has been reached and the bank could still choose to remain independent, they said. A spokesperson for First Republic Bank declined to comment. Bank fallout Goldman Sachs boosted its estimate of the odds of a [US recession]( to 35% over the next 12 months in response to increased uncertainty over the economic impact of bank stress. The new estimate is still below the 60% median of economists surveyed by Bloomberg. The Federal Reserve’s emergency loan program may inject as much as [$2 trillion of funds]( into the US banking system and ease the liquidity crunch, according to JPMorgan. Stocks fade European stocks [pared]( an early rally on Thursday and bonds fell as traders braced for a European Central Bank rate decision amid concerns about the outlook for economic growth, even as bank shares rebounded after Credit Suisse’s lifeline. S&P 500 futures pared an early gain to fall 0.1% as of 6:08 a.m. New York time. Nasdaq 100 contracts advanced after the benchmark posted its third day of gains on Wednesday. The euro recovered from a two-month low while an index of the dollar fell. Coming up… The [ECB’s]( plan to raise interest rates by another half-point on Thursday has been thrown into question by banking turmoil. With the Fed’s next rate meeting still a week away, the ECB today will give the first indication of what the banking blowup means for monetary policy. Over in the US, 8:30 a.m. data include initial jobless claims, import price index, housing starts and Philadelphia Fed business outlook. Dollar General reports earnings. How much more do you think the Fed is going to tighten, if at all? Would you say that the Fed has lost its credibility? Is the US jobs market slowing or gaining speed again? Share your views in our latest MLIV Pulse [survey]([.]( What we’ve been reading Here’s what caught our eye over the past 24 hours: - Crisis narrative dominates [bank-obsessed]( markets - JPMorgan joins those saying [cash in bond gains](. - Citigroup trims exec’s pay after $200 million [WhatsApp penalties]( - [Populist fury]( grips Congress in echo of 2008 - A [$100,000]( New York City salary feels like $36,000 - [Gen Z couples](shacking up at record rates - Why top [Washington officials]( agreed to a bank rescue And finally, here’s what Joe’s interested in this morning The events of the last week have put central banks into a quandary. Inflation is high, and they've been indicating plans to continue to with sustained rate hikes. But now financial stability is under threat in the US and Europe. So obviously the Fed (which has a decision next week) and the ECB (which has a decision later this morning) have to figure out which path is riskier. Pause, and risk inflation gathering further steam? Or continue to hike, and risk a widening meltdown? [On today's episode of the podcast]( we speak with Columbia Law professor [Lev Menand]( about the regulatory failures that gave us the SVB fiasco. And this tension came up. To him it's not about monetary policy vs. financial stability risk, but rather that the entire banking system *is* monetary policy. And the fact that there seems to be this tension between the desire of the central bank to hike rates vs. the safety of the banking system is indicative of a flawed regulatory approach. All that being said, the events of the past week have simultaneously caused traders to reduce rate hike bets, while also tightening financial conditions. Here is a chart of 2-year yields (white line) vs. the Bloomberg US Financial Conditions Index (yellow line). While it's true that short-term rates have come down big time (indicating imminent rate cuts) it's also true that financial conditions have tightened dramatically (lower is tighter). In addition to stock market pain, we've also seen a surge in high-yield spreads and other stress measures in the wake of the bank collapse.  It stands to reason generally that the collapse of a major bank will constrain both credit and general confidence, and have a cooling effect on activity, at least as long uncertainty about the fallout remains. So while the market has priced in a lower path for policy rates in the months ahead, the net effect of everything indicates a significant tightening. Follow Bloomberg's Joe Weisenthal on Twitter [@TheStalwart](. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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