This basic principle — known as “duration risk” — seems to have been lost on many bankers, fixed-income investors, and bank regulators

‘Most U.S. banks are technically near insolvency, and hundreds are already fully insolvent,’ Roubini says

Bank-sector stress makes a stagflationary debt crisis more likely and potentially more severe

If depositors flee, the deposit franchise evaporates, and the unrealized losses on securities become realized.

Regulators did not even subject banks to stress tests to see how they would fare in a scenario of sharply rising interest rates.

Nouriel Roubini 31 March 2023

Duration Risk

Bond Rally at Risk as Bank Stress Diminishes

Turmoil for banks sent yields tumbling, but some traders expect a quick reversal

 Matt Grossman WSJ 31 March 2023


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