20/03/2023, 14:06 U.S.

Treasury yields investors weigh bank stock tumble, interest rate outlook

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BOND S

Treasury yields fall as investors flock to bonds with bank

stocks once again under pressure
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U.S. Treasury yields fell Wednesday as a downturn in Credit Suisse once again pressured bank
shares, prompting a flight to traditionally safer bonds.

The yield on the 10-year Treasury was down by nearly 16 basis points to 3.477%. The
2-year Treasury yield was trading at 3.919% after falling by just over 30 basis points. It had
posted its largest three-day decline since the October 1987 stock market crash following the
Silicon Valley Bank’s failure last week.

TREASURYS
TICKER  COMPANY  YIELD  CHANGE  %CHANGE 

US1M U.S. 1 Month Treasury 4.233 0.005 0

US3M U.S. 3 Month Treasury 4.786 0.096 0

US6M U.S. 6 Month Treasury 4.873 0.119 0

US1Y U.S. 1 Year Treasury 4.469 0.144 0

US2Y U.S. 2 Year Treasury 3.955 0.178 0

US10Y U.S. 10 Year Treasury 3.496 0.118 0

US30Y U.S. 30 Year Treasury 3.735 0.091 0

The yield declines came as investors as a tumble in Credit Suisse’s U.S.-listed shares once
again put pressure on bank stocks. The Swiss national bank said Wednesday afternoon it
could provide liquidity to the bank if needed. The flight to safety pushed up prices, which in
lowered yields.
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20/03/2023, 14:06 U.S. Treasury yields investors weigh bank stock tumble, interest rate outlook

“Credit Suisse has been

Stocks a slowing
making movingmoves
the biggest car crash for years Pinterest,
premarket: it seems but now
First today’s Caterpi
Citizens, news of
course is happening in the vortex of SVB,” wrote Peter Boockvar, chief investment officer at
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Bleakley Financial.

“I think the problem European banks face, all of which have had to manage [negative interest
rate policy] and massive QE for almost 10 yrs and managed to survive, is similar to many US
banks in that they own too much duration with I’m sure plenty of negative yielding bonds on
their balance sheets which are guaranteed to lose them money if held to maturity,” he added.

This all comes a week ahead of a highly anticipated Federal Reserve policy decision.

Many investors had been expecting the Fed to announce a 50 basis point rate hike at the
conclusion of its meeting, after Fed Chairman Jerome Powell said that rates would likely go
higher than expected. But the aftermath of Silicon Valley Bank’s collapse, which saw the
banking sector struggle and led investors to focus on safer assets like government bonds,
caused uncertainty about the Fed’s policy path.

The producer price index fell 0.1% in February from the prior month despite economists
polled by Dow Jones expecting a month-over-month gain of 0.3%. The index increased 4.6%
on an annualized basis, showing downward movement from the revised 5.7% level seen
when comparing January to the same month a year ago.

Economists and investors considered that the Fed may now prioritize financial stability, with
some going as far as suggesting the central bank would pause rate hikes. However, according
to an estimate by the CME Group, a 25 basis point rate hike is now widely expected as the Fed
continues to work to cool the economy and ease inflation.

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