The public focuses on the stock market but this bond market is much more important to the economy. There are major consequences for all the banks who hold Treasury Bonds. The level of unrealized losses has probably gone through the roof and possibly hundreds of banks are technically insolvent if they had to mark their bond holdings to market prices, especially in light of new higher reserve requirements. We are on the cusp of a Big time Banking Crisis.
Banks' unrealized bond losses estimated to hit a new record $700 billion in Q3 due to this massive yield spike.t.co/ZylfGgqjUH
Bank stocks are now trading inversely to bond yields, something that's never happened before.
The blood is in the water. pic.twitter.com/8OABR0BLBO
— Mac10 (@SuburbanDrone) October 5, 2023
— Akshay A (@WagholikrAkshay) October 5, 2023
via businessinsider:
- Since March 2020, Treasury bonds with maturities of 10 years or more have plummeted 46%, Bloomberg says.
- That’s just under losses seen in the stock market when the dot-com bubble burst.
- The bond rout is worse than the one seen in 1981 when the 10-year yield neared 16%.
The bond-market sell-off that’s sending yields soaring is starting to eclipse some of the most extreme market meltdowns of past eras.
Bloomberg reported losses on Treasury bond with maturities of 10 years or more had notched 46% since March 2020, while the 30-year bond had plunged 53%.
Those losses are nearly in line with stock-market losses seen during the worst crashes of recent history — when equities slumped 49% after the dot-com bubble burst and 57% in the aftermath of 2008.
Compared with previous bond-market meltdowns, long-term Treasurys are seeing one of the most extreme undoings in history. The losses are over twice as big as those seen in 1981 when 10-year yields neared 16%.