U.S. banks sitting on $325 billion in unrealized losses right now.
Most of this is tied up in long-dated bonds and securities they bought when rates were near zero. Now those same assets are worth less as rates climbed.
The losses are "unrealized" because banks can hold these to maturity and avoid booking the hit—unless they need liquidity fast or face deposit flight.
This is why regional bank stress isn't fully behind us. If economic conditions shift or depositors get nervous again, some institutions could be forced to crystallize those paper losses.
Keep an eye on bank balance sheets, especially smaller regionals with heavy exposure to commercial real estate and fixed-income portfolios.
Most of this is tied up in long-dated bonds and securities they bought when rates were near zero. Now those same assets are worth less as rates climbed.
The losses are "unrealized" because banks can hold these to maturity and avoid booking the hit—unless they need liquidity fast or face deposit flight.
This is why regional bank stress isn't fully behind us. If economic conditions shift or depositors get nervous again, some institutions could be forced to crystallize those paper losses.
Keep an eye on bank balance sheets, especially smaller regionals with heavy exposure to commercial real estate and fixed-income portfolios.