There were a lot of opinions about the situation in the community “Rocketpunch, is korea sns “ about our startup trends, we but it's reliable. I'm checking the basis of the data myself.
*The adage with banks is that they borrow short, and lend long.
That is, they get funded by savers with maturities at the short end of the yield spectrum, and lend to companies and households at the long end.
Well, that’s about the worst trade anyone can be in at the moment, as the inversion between the 2- and 10-year Treasuries this week hit the deepest since 1981.
Investors have noticed: the Invesco KBW Bank ETF, which tracks the biggest banks, has dropped 4% this year; the SPDR S&P Regional Banking ETF has slumped 10%, including an 8% slide on Thursday alone.
Some banks are experiencing more pain than others.
Silvergate Capital this week said it’s going to voluntarily liquidate its banking subsidiary.
Silicon Valley Bank parent SVB Financial on Thursday launched a $1.75 billion share sale to plug a hole caused by the sale of a loss-making portfolio in U.S. Treasury securities.
Granted, Silvergate’s clients were focused on crypto, and SVB’s on venture capital—two of the hardest-hit sectors as short-term rates have risen.
But the entire banking industry has been told by regulators after the 2008-09 financial crisis to bolster their holdings of U.S. government bonds, to provide a cushion against potential losses.
Now that very cushion is proving to be a source of problems.
Another frequently used expression is that the Federal Reserve would hike until things break.
It’s too early to say the banking sector’s broken, but things are beginning to shake.
As investors try to figure out the Fed’s next moves, they should broaden their concerns to the health of the financial sector along with the latest jobs and inflation data.
https://www.barrons.com/articles/bank-term-funding-program-btfp-bedb0367
There were a lot of opinions about the situation in the community “Rocketpunch, is korea sns “ about our startup trends, we but it's reliable. I'm checking the basis of the data myself.
I linked https://www.rocketpunch.com/cards/post/558055
■ Barron's
Title: Fed Hikes Haven’t Broken Much Yet.
But Banks Are Wobbling.
*The adage with banks is that they borrow short, and lend long.
That is, they get funded by savers with maturities at the short end of the yield spectrum, and lend to companies and households at the long end.
Well, that’s about the worst trade anyone can be in at the moment, as the inversion between the 2- and 10-year Treasuries this week hit the deepest since 1981.
Investors have noticed: the Invesco KBW Bank ETF, which tracks the biggest banks, has dropped 4% this year; the SPDR S&P Regional Banking ETF has slumped 10%, including an 8% slide on Thursday alone.
Some banks are experiencing more pain than others.
Silvergate Capital this week said it’s going to voluntarily liquidate its banking subsidiary.
Silicon Valley Bank parent SVB Financial on Thursday launched a $1.75 billion share sale to plug a hole caused by the sale of a loss-making portfolio in U.S. Treasury securities.
Granted, Silvergate’s clients were focused on crypto, and SVB’s on venture capital—two of the hardest-hit sectors as short-term rates have risen.
But the entire banking industry has been told by regulators after the 2008-09 financial crisis to bolster their holdings of U.S. government bonds, to provide a cushion against potential losses.
Now that very cushion is proving to be a source of problems.
Another frequently used expression is that the Federal Reserve would hike until things break.
It’s too early to say the banking sector’s broken, but things are beginning to shake.
As investors try to figure out the Fed’s next moves, they should broaden their concerns to the health of the financial sector along with the latest jobs and inflation data.
—Steve Goldstein