Bloomberg Surveillance
Surveillance: Rate Impact with Berro
Oct 5, 2023
Guests Kelsey Berro, Sarah Hunt, Peter Tchir, and Kevin Tynan discuss the impact of rising interest rates on bond prices, concerns about the trajectory of treasuries, options for the future of automakers, the current state of the Republican Party, and obstacles and bipartisanship in policy making.
37:23
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Quick takeaways
- The recent stress in the banks due to losses in the bond market has been eased by the bank term funding program (BTFP) implemented by the Fed, providing stabilization and caution is advised when investing in financials.
- The tightening financial conditions engineered by the Federal Reserve can curtail banks' ability to finance the economy, leading to increased pressure on corporate earnings and balance sheets.
Deep dives
Banks and Bond Market Stress Amidst Federal Reserve Interventions
The recent stress in the banks due to losses in the bond market has been eased by the bank term funding program (BTFP), implemented by the Fed. The BTFP allows banks to pledge treasury securities at par, providing a stabilization factor that was absent during the March crisis. However, there is still stress in the market, and caution is advised when investing in financials, as interest margins are under pressure, and there may be future pressure on bank margins.
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