I have been getting a lot of questions around the dollar in recent weeks. De-dollarization seems to be a thing, as do central bank digital currencies, along with the latest round of worries about what the government is going to do to our savings. There is much to talk about, but the root of most of these questions is this: the notion that sometime soon the value of the dollar will collapse, making our savings valueless.

There is a lot riding on the monthly jobs report, which comes out tomorrow. For the economy, more jobs are good: more workers, more wage income, more spending ability, and so forth. There’s no real downside. For financial markets, however, a strong report would be problematic. Those workers—earning and spending their wages—add to demand, which adds to inflation. So, a strong report would be bad news for the Fed, for interest rates, and for markets. This is the problem we face tomorrow.

After a weak February, markets rallied in March. U.S. markets were up by low single digits, while bond markets were in the same range. International markets also showed modest gains, with developed markets about the same as the U.S. and emerging markets doing slightly better. For the quarter as a whole, the Nasdaq did best and moved into a bull market by some measures, followed by developed international markets and the S&P 500. This was a stronger start to 2023 than most had expected, and it may signal how the rest of the year will play out.

It has been an eventful first quarter of the year. When we started 2023, expectations were for a recession in fairly short order, for markets to continue to tank, and for the news to remain bad. Instead, we end the quarter in a much better place than we started. Economic growth is significantly positive. Markets are up, with the Nasdaq now in a new bull market. And while there have been significant negative events—the banking crisis comes to mind—the actual effects we are seeing from those events simply are not that bad.

There has been surprisingly little worry reported by advisors and readers in the past couple of weeks. With the headlines in play—bank failures, a recession coming, commercial real estate starting to crash, and so forth—I would have expected more concerns. But it seems that people are realizing that, despite all the headlines, things are actually not all that bad.

There were two events that mattered this week. First was the regular Fed meeting on interest rates, where the Fed ended up raising rates by the expected 25 bps. Even as it did, though, Chair Powell led the press conference with unexpectedly dovish commentary. He explicitly said that the Fed was aware of the stress in the financial system, that it would have negative effects on the economy, and that it would affect future Fed decisions. All told, this was about as dovish a rate increase as you can get. On the whole, that seemed to leave markets feeling if not good, then at least not bad.

Yesterday, the Fed completed its regular meeting and announced that it would increase interest rates by 25 bps, or a quarter percentage point. This move was in line with expectations, and markets shrugged. Even at the press conference, when some awkward questions were asked (which Chair Powell ducked), markets bounced around but remained calm. But then something else happened. After Powell had gone to some trouble to assure people that their deposits were safe (without actually committing to anything), Treasury Secretary Janet Yellen was asked whether there were plans to dial up deposit insurance across the board. She said no, and then the market started to sell off.

On one hand, the answer to “what mattered this week?” is an easy one: the banks. On the other hand, the more difficult questions are, why does it matter and what does it all mean? So, let’s take a look at what happened and exactly why it matters.

Starting last Friday and extending over the weekend, we saw two very large bank failures: Silicon Valley Bank (SVB) and Signature Bank. Those followed the collapse last week of Silvergate, the “crypto bank.” These are some of the largest bank failures in U.S. history, and they all happened in the past several days. What is going on here—and could we be headed for the next Great Financial Crisis?

I tried this format a week ago—looking “beyond the numbers” to what the data really means—and the feedback was good. So, here we go again.

Two moments mattered this week—one pretty good, all things considered, and the other bad, potentially very bad. Let’s start with the good one.