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[Video] What the FICC?: US Banks Take a Beating

March 11, 2023

It's the weekly bond edition of What the FICC?

The Silicon Valley Bank $SIVB collapse dominates the week's headlines.

While risks appear isolated for now, unlike in 2008, the next chart reveals a storm brewing beneath the surface...

Banks do not fare well when the shorter end of the curve outpaces the longer end.

They make money by lending at the long end while paying deposits based on the short end. As long as the curve remains inverted, banks likely remain under pressure.

More importantly, they’re sitting on significant unrealized losses.

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