Silver Bank Financial launched a $1.75 billion share sale on Wednesday to shore up its balance sheet, claiming it needed the proceeds to plug a $1.8 billion hole caused by the sale of a $21 billion loss-making bond portfolio consisting mostly of U.S. Treasuries.
The shock threw a spotlight on possible hits other banks may suffer from the renewed rout in bond prices as the U.S. Federal Reserve signals another severe tightening of credit - and the possible contagion within the banking system from balance sheet uncertainty.
While investors holding bonds to maturity can absorb bond price hits, as 'safe' bonds like Treasuries will pay back at par eventually, banks and leveraged investors required to mark holdings to current market prices may have to register the hit - with unnerving consequences.
The reverberations around world markets more generally saw a retreat from risk and dash for safety - not least on a critical day for assessing Fed rate risk given the release of the February employment report later.
Ironically, the dash for safety prompted a rally in bonds - in part because some think signs of financial stress may force the Fed to think again about speeding up rate hikes later this month.
Ten-year Treasury yields have recoiled almost 20 basis points from yesterday's highs to just above 3.8% on Friday and futures pricing for peak and yearend Fed policy rates dialled back.
Misschien kunnen jullie ook Reuters even uitleggen dat ze er helemaal naast zitten en jullie gelijk hebben haha
https://www.reuters.com/m...kets-view-usa-2023-03-10/
The shock threw a spotlight on possible hits other banks may suffer from the renewed rout in bond prices as the U.S. Federal Reserve signals another severe tightening of credit - and the possible contagion within the banking system from balance sheet uncertainty.
While investors holding bonds to maturity can absorb bond price hits, as 'safe' bonds like Treasuries will pay back at par eventually, banks and leveraged investors required to mark holdings to current market prices may have to register the hit - with unnerving consequences.
The reverberations around world markets more generally saw a retreat from risk and dash for safety - not least on a critical day for assessing Fed rate risk given the release of the February employment report later.
Ironically, the dash for safety prompted a rally in bonds - in part because some think signs of financial stress may force the Fed to think again about speeding up rate hikes later this month.
Ten-year Treasury yields have recoiled almost 20 basis points from yesterday's highs to just above 3.8% on Friday and futures pricing for peak and yearend Fed policy rates dialled back.
Misschien kunnen jullie ook Reuters even uitleggen dat ze er helemaal naast zitten en jullie gelijk hebben haha
https://www.reuters.com/m...kets-view-usa-2023-03-10/
[Voor 19% gewijzigd door DutchManticore op 13-03-2023 13:00]
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