10-year Treasury yield Major Concern for Regional Banks

Analysts are forecasting some concern not just about the stock market, but for average American consumers who have been able to borrow with relative ease.

Many parts of the American economy have reason for concern, and regional banks are no exception. Banks hold bonds that have been falling in value which was a major cause for the collapse of Silicon Valley Bank earlier this year. Rates are even higher than they were at the end of first quarter when several regional banks had major difficulties.

Both the bond market and stock market have had major downturns over the past few weeks that have raised concerns about the major health of the housing market as well. Rising borrowing costs influence one of the banking industry’s major source of profit as investors are growing pessimistic about rate cuts coming anytime soon.

Major banks such as JP Morgan are signaling that increase cost of borrowing will be part of the forecast for the foreseeable future due to the Fed’s continued concern with inflation.

The ten-year treasury has concerned analysts with regards to corporate, home, and auto loans. Stocks have also sold off since interest rates started to rise again in July.

Perhaps the most disturbing thing about the indicator is that consumers have yet to feel the pain of higher interest rates, but it appears that retail bank customers will likely feel it soon.