/biz/ - Business & Finance

>>56212882
Think about bonds as being a cash equivalent, one that will give you a return on that cash after an allotted amount of time. from 1month to 30years they all have different return amounts or "yields". Now what is currently happening is that because of inflation and jerome's crusade to get it back to 2% they in effect raising these bond yields through with the tool of rate hikes aka monetary tightening. Now why this is a problem or can be is because most cash you store at a bank they take and buy bonds with it. Before the rate hikes all of these yields were low and they were getting an okay return on that cash. When tightening started the yields rose to the point where the bonds banks held were devalued. If they had a 10 year bond at 2% and the yield was now 4% and they started to have a lot of withdrawals they would have to offload these bonds at a net loss of 2%. This is exactly what happened in march when 5 regional banks failed because of deposit flight and shitty bonds. In my photo the bracketed section is march that yield level was enough to collapse those banks. Look at where we are now. Nothing has broken again yet...
>btfp also but you can look that up yourself