No crisis. CRE loans are carried on an accrual basis with loss reserves whereas CDO are marked to market which is why the CDO crisis whacked the entire system--they went from 100 cents to zero in one day. The real crisis is t-bonds which are marked to market and have cratered in price. This will show in the 3Q23 numbers.
With yields rising in most major bond markets it is highly probable that similar scenarios will play out globally.
Europe has had negative rates for a very long time. The US has had near zero interest rates since 2020, and low rates before that.
There is no escaping the math that the cost of capital has conservatively doubled pretty much everywhere in the past 18 months. It is not possible for this to have zero consequences.
No crisis. CRE loans are carried on an accrual basis with loss reserves whereas CDO are marked to market which is why the CDO crisis whacked the entire system--they went from 100 cents to zero in one day. The real crisis is t-bonds which are marked to market and have cratered in price. This will show in the 3Q23 numbers.
Yep, and the trickle on effect is likely to be felt globally.🤦♀️🤦♀️🤦♀️
With yields rising in most major bond markets it is highly probable that similar scenarios will play out globally.
Europe has had negative rates for a very long time. The US has had near zero interest rates since 2020, and low rates before that.
There is no escaping the math that the cost of capital has conservatively doubled pretty much everywhere in the past 18 months. It is not possible for this to have zero consequences.