Macquarie links fast bond-yield swings to financial failures
Macquarie cites past financial failures after sharp yield moves, while a Fundstrat strategist says valuations compress above 5.5%.
Key takeaways
- Macquarie says nearly all high-profile financial blowouts in 50 years followed rapid bond-yield moves.
- Hardika Singh said valuations start compressing after the 10-year yield rises above 5.5%.
Macquarie strategists say nearly all high-profile financial blowouts over the past 50 years followed rapid moves in bond yields. They point to sharp increases and decreases in long-term yields as a recurring risk for financial companies and heavy borrowers.
Their examples include Franklin National Bank’s collapse in 1974, Orange County’s bankruptcy in 1994 and Silicon Valley Bank’s failure in 2023. The 10-year Treasury yield recently reached its highest level since 2002, while benchmark yields in five other countries have risen at least 100 basis points since the start of the year, according to Yardeni Research data.
Fundstrat strategist Hardika Singh said valuations start compressing after the 10-year yield passes 5.5%, a level that would require investors, companies and consumers to reassess their investments.
This article was produced with the help of AI technology. Source: Yahoo Finance
