A year ago, the U.S. faced a frightening reality when there was a run on banks. Fearing collapse, depositors raced to pull their money out, resulting in the shut down of Silicon Valley Bank. Going forward, this can be prevented if the weaknesses are addressed in the system, including more regulatory…
The following article was posted on Bloomberg Opinion on January 4, 2024. It points out the massive gaps in regulations and lack of transparency with banks’ supervisory issues, among other industry failings, that led to the SVB failure and will continue to plague the banking industry without regulatory action. This…
Following the Fed meeting last week, markets staged a major rally when the Fed gave its clearest signal yet that its tightening campaign is over, projecting more interest rate cuts in 2024. The message sent stocks soaring and pushed the 10-year yield below 4%, and reinforced the Fed’s plan to…
Real GDP growth plus inflation forecasts the 10-year T-Note yield. Core PCE is at 3.46% currently with the expectation of 2.3% to 2.5% in 2024. Combined with a 2% real GDP growth forecast, the 10-year T-Note yield is set to decline to 4.11% in December 2023. Table IChart ITable IIWelcome news…
Predictably, in times of higher interest rates, unrealized losses occur. As yields rose in 2023Q3, the market prices of the bonds fell, and unrealized losses accumulated. According to the FDIC’s quarterly bank data release from last week, those losses jumped by $126 billion (22%) from the previous quarter to $684…
