Macquarie Says 50 Years of Rapid Yield Swings Preceded Nearly All Major Financial Blowups
Updated
Updated · Yahoo Finance · Oct 8
Macquarie Says 50 Years of Rapid Yield Swings Preceded Nearly All Major Financial Blowups
2 articles · Updated · Yahoo Finance · Oct 8
Summary
Macquarie strategists said sharp moves in long-term bond yields have preceded almost every high-profile financial blowup of the past 50 years, warning that speed—not just higher borrowing costs—creates the biggest risk.
Their research links those swings to balance-sheet stress that can quickly spiral into mini-crises, citing failures from Franklin National Bank in 1974 to Silicon Valley Bank in 2023.
SVB’s roughly $200 billion collapse in less than 48 hours became the latest example after Fed rate hikes slashed the value of its long-dated bond holdings.
The warning comes as the 10-year Treasury reaches its highest level since 2002 and benchmark yields in France, Italy, Indonesia, Japan and South Korea have each risen at least 100 basis points this year.
Macquarie also tied France’s bond-market stress to unrest over budget cuts, while Fundstrat said equity valuations historically start compressing once the 10-year yield climbs above 5.5%.