The Impact of Rising Interest Rates on Bond Yields

S.V.B. went from net inflows, meaning they were getting more deposits than they were lending out, to net outflows at the end of 2022. Rising interest rate has an impact on the value of those bonds. The only way that Silicon Valley bank can sell their bonds that are worth 1% to 2% is by discounting them.

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Episode notes

Both SVB (Silicon Valley Bank) and Signature Bank have crashed and burned dramatically over the past week. What once was a few large customers making withdrawals quickly turned into a bank run of epic proportions. Within just a few days, SVB went from one of the largest banks in the United States to one of the biggest bank failures in the nation’s history. But what led to such a fast-paced collapse, and are more banks on the chopping block?

You don’t need to be an expert economist to understand what happened at SVB and Signature Bank this week. But you will want to hear Dave Meyer’s take on what could come next. With bailouts back on the table, many Americans fear we’re on the edge of a total financial collapse, mirroring what unfolded in 2008. With more and more Americans going on cash grabs, trying to keep their wealth safe from the “domino effect” of bank failures, what should everyday investors prepare for?

More specifically, for our beloved real estate investors, how could SVB’s failure affect the housing market? Will the Federal Reserve finally be forced to end its aggressive rate hikes? Could money flood into real estate as hard assets become more attractive? Stick around as Dave explains this week’s wild events and what it could mean for the future of the US economy.

In This Episode We Cover

SVB’s (Silicon Valley Bank) collapse explained and why it failed so fast

The bank run “domino effect” that could put other intuitions at risk

Why a “bailout” happened so quickly, and whether customer funds were secured

Bond yields and why making long-term investments was a risky bet for SVB

The future of mortgage rates and how SVB’s failure could lead to fewer rate hikes

The psychology behind a bank failure and how it affects the entire economy

And So Much More!

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