Interest rates pause?

[Pandubabu]

14 hours ago, Killer66 said:

Inflation target 4% chestharu topic is over Repu clarity vastundi short term where economy is heading …

Market asale good news kosam waiting,  ala gani chesthe DOW 1200 points 

[*Prince Charming]

Pause aite cheyaru anipistondi, maybe plan chesinantha aggressive hikes undavemo....they will have to find a balance. 

[Sqaud]

16 hours ago, hyperbole said:

I went through BofA 10k this weekend and financials. 110B in unrealized losses on their long term holdings
 

if BoA is in such situation imagine 7000 other small banks in US, if they let another fail there will be a bank run and huge chaos on the streets, no big or small bank will be able to survive a bank run.

any bank has 20-30 operating cash and rest are parked in bonds and loans, and breaking bonds will cost them money as they will have to realize losses, small banks are more susceptible because there user-base is limited and not as diverse as big banks

the situation will be go in a cycle, people lose jobs and there will be more fore closures and that too after inflated loans that banks offered in the last 3 years

 what are those unrealized losses? manam thelusukolemaa? thelsukunna peekedhe yemundhi antaavaa?

[Manishican]

1 hour ago, Sqaud said:

 what are those unrealized losses? manam thelusukolemaa? thelsukunna peekedhe yemundhi antaavaa?

Mostly bonds. Banks bought bonds when interest rates were low. Now with interest rates up, bonds value has fallen on paper. If banks wait until bonds maturity, the bond is not a loss.

[hyperbole]

16 minutes ago, Manishican said:

Mostly bonds. Banks bought bonds when interest rates were low. Now with interest rates up, bonds value has fallen on paper. If banks wait until bonds maturity, the bond is not a loss.

 banks can wait till eternity but depositors are withdrawing money as government is paying 5% short term (9 month) bonds, say a company like Apple has $100 billion cash in various banks, government is paying them 5% on short term bonds, companies like apple and high worth individuals would happily buy short term bonds and make easy money. Generally long term mortgage bonds are deemed safe since government through fannie and freddie guarantees the underlying assets and when short term money markets pay more than long term bonds it is called inverted curve and it means looming recession. 

now the predicament, this money has to come from bond sales, just imagine a bank like Bank of America is $110 billion under water and if enough customers withdraw money to invest some where else then the bank is doomed as they have to sell the long term bonds they are holding for a loss

second reason is companies need money and are breaking deposits for their survival 

[Manishican]

1 minute ago, hyperbole said:

 banks can wait till eternity but depositors have withdrawing money as government is paying 5% short term (9 month) bonds, say a company like Apple has $100 billion cash in various banks, now imagine when government is paying them 5% on short term bonds companies and high worth individuals would happily buy short bonds and still make.

now the predicament, this money has to come from bond sales, just imagine a bank like Bank of America is $110 billion under water and if enough customers withdraw money to invest some where else then the bank is doomed.

second reason is companies need money and are breaking deposits for their survival 

SVB bank ki idhe ayyindhi

[Manishican]

2 minutes ago, hyperbole said:

 banks can wait till eternity but depositors have withdrawing money as government is paying 5% short term (9 month) bonds, say a company like Apple has $100 billion cash in various banks, now imagine when government is paying them 5% on short term bonds companies and high worth individuals would happily buy short bonds and still make.

now the predicament, this money has to come from bond sales, just imagine a bank like Bank of America is $110 billion under water and if enough customers withdraw money to invest some where else then the bank is doomed.

second reason is companies need money and are breaking deposits for their survival 

If this start spreading to other banks Fed might even cut interest rates 

[hyperbole]

29 minutes ago, Manishican said:

If this start spreading to other banks Fed might even cut interest rates 

See the chart, BAC sitting on $110 billion paper loss

[Manishican]

Fed opened a new unlimited scheme now where you can take cash by giving a bond

[Paamu]

1 hour ago, hyperbole said:

See the chart, BAC sitting on $110 billion paper loss

Ippudu BOFA lo ekkuva money unchodu antunnavaa, 250k kanna low unte safe enaa bro ?

[hyperbole]

47 minutes ago, Paamu said:

Ippudu BOFA lo ekkuva money unchodu antunnavaa, 250k kanna low unte safe enaa bro ?

Bank ki em kadu but if fed keeps raising the rates at this rate(they raised rates rapidly in the last 8 months) it might come to a situation where companies of size of BAC might fall and take many big ones along with them and that will wipe out everything 

 

[Manishican]

Fed new unlimited scheme for exchanging bonds for cash will help. now banks have to pay higher interest in deposits else people will withdraw 

[Netflixmovieguz]

31 minutes ago, hyperbole said:

Bank ki em kadu but if fed keeps raising the rates at this rate(they raised rates rapidly in the last 8 months) it might come to a situation where companies of size of BAC might fall and take many big ones along with them and that will wipe out everything 

 

No one questioned the fed reducing the rates. Why bother now when the common man is frocking. Historical avg rates are above 2.5%. Preaching as if the rates are high as paul vocker. 
 

boA pays pennies on deposits. Why can’t they pay high to attract deposits?. Let that fall

[Manishican]

I think we should all remove deposits from banks which pay low interest and move to high interest paying accounts 

[Netflixmovieguz]

2 minutes ago, Manishican said:

I think we should all remove deposits from banks which pay low interest and move to high interest paying accounts 

Buy treasury bills. Let banks frock themselves. I moved my boa deposits to treasury.