The abrupt demise of Silicon Valley Bank (SVB) and Signature Bank, and UBS' hasty takeover of Credit Suisse (CS) are reminders of banks' sensitivity to confidence and liquidity. Emergency liquidity measures by central banks and the expedited takeover have likely lowered the odds of broader banking system contagion, although the decision to write-off CS' AT1 bonds may contribute to a higher cost of capital for banks. Broader credit risks remain elevated. U.S. bank failures are the latest episode of financial volatility partly brought about by rising interest rates. We think it unlikely that this episode will prevent policymakers from sticking to the task of taming inflation and expect rates to remain higher for longer. We think it's likely financing conditions will continue to tighten and bring further episodes of credit market turbulence.