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An inverted yield curve makes life harder for all banks


How much broader could this problem be?

Not to raise the fed funds rate next week, with median inflation above 7%, would be a sign of panic, as Jonathan Levin points out. 


That doesn’t mean that it won’t happen. 

But if the Fed leaves rates on hold, it will be because the problems of the banking sector have forced it to do so. 

Which brings us back to the story of Silicon Valley Bank. 

Banks with substantial unrealized securities losses and with non-retail and uninsured US depositors may still be more sensitive to depositor competition or ultimate flight, with adverse effects on funding, liquidity, earnings and capital.

Moody’s placed six US lenders on review for downgrade

 “It was not the largest institutions failing that caused the Global Financial Crisis, but Lehman and Bear Stearns, which were seen as being small enough to be allowed to fail. In retrospect, they were not.”

John Authers Bloomberg 15 mars 2023


US banks sitting on unrealized losses of $620 billion

CNN 12 March 2023


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