First, you need to understand bond yields:

- Bond yield = Interest / Bond price

For example: Mr. A spent 100 million to buy a 5-year bond, profit 10 million/year. So Bond yield = 10 million/ 100 million = 10% This 10% number does not change over the time the bond you buy, like 5 years or 10 year. Now Mr. A is stuck with money, selling 100 million bonds for 80 million, the buyer still receives 10 million/year each year.

So: Bond yield = 10 million / 80 million = 12.5% ​​(no longer 10%)

»» Inferred, if the bond yield increases, the value of that bond will decrease and vice versa if the bond increases from 100 million to 130 million, you will still receive 10 million each year, but the yield is only = 10 million/130 million = 7.6 % If the general bank interest rate is higher than the bond yield, then the cash flow will attract to the bank, so the government will lower the bond price, to have a better yield, to attract money to itself.

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The story of the 2008 collapse was due to the Bank system arbitrarily lending, despite not being qualified. But 2023 is different, this is the story where people deposit money in the Bank, they buy too many bonds by 59%. Therefore, once the Fed continuously increases interest rates and the dollar has value, the bond price increases, meaning the yield % of previous purchases will decrease. The bank faces a loss over the years, not to mention people now want to withdraw money, while the bank buys 5-10 year terms.

- Banks have to withdraw money from their pocket in mandatory reserves and reserve payments, but they only reserve 7%, while investing 59% in bonds - Bank calls on the government to save, the government says it's up to the Bank to save , or wait for big guys like Warren to buy the Bank and save it, but I'm sucking in the money

- Bank faces Bank Run, simultaneously withdrawing money from people, in the past people still lined up to withdraw money, now in the 4.0 era, it transfers money simultaneously via phone with 2 notes, Bank Run is no longer supported - In America, banks Small banks give better interest rates, because they don't cost as much to operate as big banks, so people's money goes back to small banks. But the bad thing is, small banks also invest, knowing that big banks need money, so they lend money to big banks at high rates. That's why there's a story about a series of small banks saving a big bank. Isn't that interesting...

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As for Credit Suisse, the Swiss bank, why is it so important to countries around the world?

- In 1815 Switzerland declared itself a neutral country, and all Swiss banks followed Geneva law to ensure absolute confidentiality of customer information.

- In 1934, Switzerland introduced the "Banks and Provident Funds" Act, which prohibits all banks from disclosing customer data to third parties, whether tax authorities or foreign governments, even governments. Switzerland also doesn't know. It is because of this special privilege that many corrupt people in countries send money through it, it is a paradise to launder and keep money safe. So if this banking system has problems, many people sitting on the throne have their hearts broken and have to use their power to save their assets. To name another typical example, is the Greek banking system, a small country in Europe. For decades, experts wanted Europe to ignore this system and not save it, but under Germany's leadership in Europe, they were determined to save it, because this system is interconnected. Intertwined throughout European banking systems.

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Now back to the FED raising interest rates on March 23

- If the FED continues to increase by 0.5, the $ will increase again, bond prices will increase and yields will decrease. A series of investments, from people to small banks, then small banks to big banks, are all affected, and it is inevitable that many banks will go bankrupt, people will lose money, and assets will take over cheap banks, not to mention banks. There is insurance, the insurance company is also holding bonds and is losing money.

- Therefore, the extremely high possibility will be the 0.25 level and more importantly, the market will fly strongly again, you guys can take advantage of Margin trimming.

Source: Rich Kid Trading