SVB collapse: Bank failures raise odds of 2008-style recession

The collapse You can also visit our website.f Silicon Valley Bank The result has been a significant increase in signs A recession is a bad thing It is possible.

Investors seem to be betting on SVB’s Friday implosion and Signature Bank’s Sunday federal takeover by credit lender Signature Bank. recession Is in stock.

SVB COLLAPSE – SIGNS of CONTAGION REGIONAL BRANKS IN DISTRESS

Prior to the negative news about the banking industry, more economists suggested that the Federal Reserve might be capable of bringing down inflation without sending the economy into recession. However, economic indicators make this less likely.

Markets

The fallout from Silicon Valley Bank has triggered market reactions. The Dow Jones Industrial Average, Nasdaq and S&P 500 were all closed Monday morning but have since reopened.

However, the plummeting stocks of some regional banks is raising concerns that there might be more bank failures as skittish investors consider the possibility of a recession.

San Francisco-based shares First Republic Bank Although the company plunged to more than 73% within a few months of opening, they have managed to reduce those losses somewhat. Western Alliance Bancorp lost 65% and PacWest Bancorp 36% at the same time.

Even more alarming is the situation in bond markets.

On Monday, the yields on U.S. Treasurys fell further following the continuing declines of late last week. At one point, the yield of the 10-year Treasury fell 0.2% to 3.498%. The two-year Treasury yield was down a full percentage point since Wednesday — the worst three-day plunge since 1987 after the infamous crash known as “Black Monday.”

Both of these yields are inverted. This means that the shorter-term yields have a higher average than the longer-term. Inversions of the yield curve are a sign that investors expect to see a drop in growth in the coming weeks.

For the first time since 2007, when the yield curve predicted the recession that started in December 2007 as the financial crisis took root, the yield curve is now inverted deeply.

Hypothecaries

These are the mortgage rates as measured by Mortgage News DailyThe, which tracks rates daily, dropped to 6.57% Monday, down nearly 0.2% in just one day. It is almost a 0.5 percentage-point plunge in the last week.

The rate at which mortgage rates rise is somewhat related to interest rates. This sign indicates that the market is betting that rates will slow down. Many economists believe that the housing market is already in a recession and will soon be able to recover.