Junk bond yields rising to highest levels since November pic.twitter.com/mvjjX7Fi6R
— Gunjan Banerji (@GunjanJS) March 20, 2023
This month, four banks failed:
– Silvergate, $SI
– Silicon Valley Bank, $SIVB
– Signature Bank, $SBNY
– Credit Suisse, $CSWill there be more?
— unusual_whales (@unusual_whales) March 20, 2023
-Bank failures in the U.S.
-Credit Suisse has a shotgun marriage with UBS (#BearStearns moment)
– Fed reopens #dollar #swap lines to provide liquidity
As we have repeatedly stated, it was only a function of time until the #Fed broke something. pic.twitter.com/w8eduabVKt— Lance Roberts (@LanceRoberts) March 20, 2023
#1 Dead
#2 Deutsche Bank
#3 UBSThe Weakest European Banks
Ht @crofin67 pic.twitter.com/lubwRghrCB
— Willem Middelkoop (@wmiddelkoop) March 20, 2023
The question for the Fed this morning isn't whether to hike 25bp or 50bp this week. It's when do they start cutting rates, at least according to fed funds futures, which have priced out rate cuts and priced in rate cuts as soon as June. pic.twitter.com/ROHatlStkx
— Lisa Abramowicz (@lisaabramowicz1) March 20, 2023
Opinion: The end of the ‘everything bubble’ has finally hit the banking system. Credit Suisse and SVB might be just the first of many shocks.
Major financial market regime changes typically take place in stages. The crypto meltdown in 2022, for example, incurred about $2 trillion of losses. The technology meltdown followed, with losses of about $5 trillion, the U.K. government bond (gilt) crisis ($500 billion in losses), plus an ongoing emerging market debt crisis.
These problems have now reached the world’s financial system, with U.S., European and Japanese banks losing around $460 billion in market value so far in March alone.
The immediate cause is the rapid increase in official interest rates in the U.S. and other major global economies. The true cause is the unwinding of an economic and financial structure built upon an artificially low cost of money, which gave rise to the “everything bubble” and its leveraged speculation.
Higher rates and losses on securities have significantly weakened the global banking system.