SVB Failure & Market Stability With Bond Spreads & Treasury Volatility
The uncertain outlook for inflation and Fed policy has caused Treasury yields to fluctuate significantly in 2023. The Fed’s tightening has exposed weaknesses in the banking sector, as evidenced by the failure of Silicon Valley Bank (SVB), which has resulted in a surge in 10-year Treasury volatility to levels last seen in 2020 and 2008. While rising rates alone may not necessarily harm market health, the increased uncertainty surrounding the path of interest rates can have significant consequences for all market participants. Banks may struggle to accurately price lending products. Business cas...