Bond yields up, stocks down
2-year and 10-year bond yields are flying.
If a bond is giving more returns than equities, investors may flock towards it as it is generally less riskier than stocks, thus making it more attractive,
Therefore, when yields go up, equities usually go down.
$SPDR S&P 500 ETF(SPY.US$ $S&P 500 Index(.SPX.US$ $Tesla(TSLA.US$ $Apple(AAPL.US$ $Alphabet-A(GOOGL.US$ $Netflix(NFLX.US$ $Amazon(AMZN.US$ $NVIDIA(NVDA.US$ $Salesforce(CRM.US$ $Snowflake(SNOW.US$ $iShares 20+ Year Treasury Bond ETF(TLT.US$ $U.S. 30-Year Treasury Bonds Yield(US30Y.BD$ $Treasury Bond ETF(BK2733.US$ $iShares Core S&P 500 ETF(IVV.US$ $iShares U.S. Treasury Bond ETF(GOVT.US$ $Workday(WDAY.US$ $ProShares Ultra VIX Short-Term Futures ETF(UVXY.US$ $U.S. 10-Year Treasury Notes Yield(US10Y.BD$ $Direxion Daily S&P 500 Bull 3X Shares ETF(SPXL.US$ $HP Inc(HPQ.US$ $Advanced Micro Devices(AMD.US$ $Alibaba(BABA.US$ $Credit Suisse(CS.US$ $Enphase Energy(ENPH.US$ $Financial Select Sector SPDR Fund(XLF.US$ $Digital World Acquisition Corp(DWAC.US$ $Peloton Interactive(PTON.US$
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Gilley : nope markets about to go back to highs on a onslaught of bad news and inflation rising again its almost criminal to see gains like this cause one corrupt fed opened his mouth talking out his ass
72734102 : Bond rates can’t compete with doubling your investment such as Tesla stock! That could go to $800 in one or two years. Thanks! But no thanks
toomanyscammers : sorry, could you kindly explain if bond yields are doing well, why did the treasuries drop causing svb to lose its capital?
Cow Moo-neyOP toomanyscammers: SVB collapse is because their customer base are those tech start ups. It all started from Fed raising the interest rates, making tech start up business cost to go up. As a result, they need to withdraw money from SVB. And SVB had to look for money to meet these withdrawals as they don’t have enough cash on hand.
So what they did was to sell their treasury bonds on hand at a loss. Why loss? Because their portfolio of yield is only 1%+, but the current yield is like close to 4%. As a result, they have to realise a loss. Bu then, even by selling these bonds, they stil don’t have enough cash. So what they did next is to announce that they need to start selling their stocks to fund the withdrawals. This news then spook investors and firms who had money with SVB.
So everyone either start selling stocks or start withdrawing their money from the bank. The former caused the stock to crash, while the latter caused a bank run
toomanyscammers : is it cos they bought those bonds before the yields got up and so locked in yields at a lower rate but when they sold it ,their prices already dropped since price and yield move inversely?
Cow Moo-neyOP toomanyscammers: Yup!
toomanyscammers Cow Moo-neyOP: but if like this, can't they buy new bonds with the better rates then. with any new funds they have....
Cow Moo-neyOP toomanyscammers: SVB was running out of cash and have liquidity issue. They didn’t even have money to pay out to their depositors, let alone buying new bonds
toomanyscammers Cow Moo-neyOP: I see. but so banks who have, this would be one of their possible strategies?
Cow Moo-neyOP toomanyscammers: Yup!