Posted on 03/13/2023 7:02:07 AM PDT by Kaiser8408a
The Silicon Valley Bank failure (along with NY’s Signature Bank) are sending shock waves through the global economy. Not because of the incompetence of bank regulators, but because of the reaction function from the FDIC and Fed.
The 10-year Treasury yield is down -26 basis points in the AM. And the Fed Funds Target Rate is expected to drop to 4.7%.
Its not just the US Treasury yield that declined -26 basis points. European sovereign yields are down too (Germany 10-year is down -32.9 basis points).
On a sad note, Resident Biden is calling for stricter regulations for the banking industry, already one of the most regulated sectors of the economy. How about less politics and just make them do their ^*T^R jobs!
(Excerpt) Read more at confoundedinterest.net ...
Someone please explain what the drop in basis points is exactly.
SVB bought T Bonds, as all banks do. Their bonds were purchased when interest rates were near zero. When interest rates spiked this year the PRESENT VALUE of those bonds are worth much less. If held to maturity (10 years, 20 years, 30 years) they would pay out 100%, but the bank had to sell some NOW to cover withdrawals. So, they sold at a BIG loss.
Were other banks more cautious and buy enough short term bonds that aren’t as subject to interest rate risk? Perhaps. But all banks have some exposure to long bonds.
Biden/Yellen/Powell are working hard to prevent a panic and a run on the banks, so expect to see all sorts of shenanigans to get that done.
Don’t you know, everything will be better when government takes care of all your needs? If only Biden nationalized banks, then everything will be better again. And those high gas prices, they can be fixed with Biden run oil companies, refineries and your local gas station. After all, Biden has decades of experience. He knows best.
It's a mess created by the government's economic and money policies. Specifically his administration's policies.
He is the one accountable.
I predicted the Fed would pivot by February. Two weeks off isn’t bad. 😏
If there is anything positive to come out of this debacle, I just don’t see how Fed can hike interest rates anytime soon. Caught between a rock and a hard place.
Fortunately for everyone, SVB has retained its perfect ESG ratings. There may not be your money in the bank anymore, but they can be proud of their accomplishments.
A basis point is another measurement of interest rate percentage. Example: 250 basis points equals .25%. Just move the decimal point to the right by three digits. One basis point is 1/100th of a percent.
“...incompetence of bank regulators...”
More proof that AA hires will eventually destroy the American economy and therefore the world’s economy.
Cpi tomorrow. Hot CPU ain’t gonna help the market or rates. Jpowell said no pivot yet
After more than a decade of keeping interest rates artificially low and unlimited government largess, the inflation and destruction are baked into the economic cake.
Too little too late.
War always leads to further inflation.
History repeats.
Weimar Republic and the post war UK.
Very interesting in how similar this is.
Add to that, brics.
Question is..who the hell is gonna bail us out? China? Russia? That’ll work real well since pig face bidet has made enemies with everyone around.
Meanwhile the treasury secretary is in Ukraine and the gov is pushing states to urgently pass an update to the commercial code which establishes the feds digital currency as the only legit one.
These are 2 very dangerous moves…. We are in great peril as a country.
I think this will bring us into the QFS.
#8 Their plan was to raise the rates next week.
I wonder if they will now?
2023 Fed Meetings Calendar
Heading into the next Fed meeting, the market expects Fed Chief Jerome Powell and the rest of the FOMC to raise the benchmark federal funds rate by 25 basis points (opens in new tab), or 0.25%
March 21 to 22
May 2 to 3
June 13 to 14
July 25 to 26
September 19 to 20
October 31 to November 1
December 12 to 13
Banking industry, already one of the most regulated sectors of the economy.
There’s your problem
Biden already made over 500 regulations notice how much better thing have gotten. /s
In my opinion, one of the often-overlooked market drivers is the speed of information. It used to be that an investor would get their information days later and it would take up to a week to react. Now information is available in seconds and investors can react within hours.
This “time to market” for the investors has the net effect of making a regulator action much more impactful.
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