🚨Global banking sector is in trouble.
Bank stocks are crashing in the US, Europe and Asia all together as bond yields hit multi decade highs.
In the US, the KBW bank index, which tracks the biggest US banks, is down 12% in the last 2 months.
Goldman Sachs is down -22%
Bank of America -17%
Wells Fargo -9%
JPMorgan -9%
Citigroup -10%
In Europe, the Euro Stoxx Banks index is down 6% in the last month
On Oct 7 alone, the STOXX Europe Banks index fell 3.5%, with Deutsche Bank, UniCredit and Société Générale each down more than 4%
In Asia:
DBS, OCBC and UOB fell up to 9% this week.
Banks hold huge amounts of government bonds, and when yields rise the value of those bonds falls.
US banks held $326.7B in unrealized bond losses at the end of Q2, per FDIC
The 10 year yield has since risen above 5%, and is now above 5.2%, so those losses are likely even bigger now.
Investors fear a repeat of Silicon Valley Bank in 2023, when it was forced to sell bonds at a loss as depositors pulled their money out.
Bank stocks are crashing in the US, Europe and Asia all together as bond yields hit multi decade highs.
In the US, the KBW bank index, which tracks the biggest US banks, is down 12% in the last 2 months.
Goldman Sachs is down -22%
Bank of America -17%
Wells Fargo -9%
JPMorgan -9%
Citigroup -10%
In Europe, the Euro Stoxx Banks index is down 6% in the last month
On Oct 7 alone, the STOXX Europe Banks index fell 3.5%, with Deutsche Bank, UniCredit and Société Générale each down more than 4%
In Asia:
DBS, OCBC and UOB fell up to 9% this week.
Banks hold huge amounts of government bonds, and when yields rise the value of those bonds falls.
US banks held $326.7B in unrealized bond losses at the end of Q2, per FDIC
The 10 year yield has since risen above 5%, and is now above 5.2%, so those losses are likely even bigger now.
Investors fear a repeat of Silicon Valley Bank in 2023, when it was forced to sell bonds at a loss as depositors pulled their money out.