Cracks are appearing in the global financial system as the decade-long era of cheap money ends, with some investors worrying the shock collapse of Silicon Valley Bank signals world markets may be on the cusp of a reckoning.
, nearly erasing its gains for the year, while the Cboe Volatility Index, known as Wall Street’s fear gauge, surged to its highest level in 3 months. Yields on two-year Treasuries saw their biggest plunge since the 2008 financial crisis. That suggests a flight to safety among investors as well as bets that economic distress may force the Fed to ease up or reverse its aggressive tightening.The U.S.
Similar to the UK pension fund crisis in September, the firm appeared to be on the wrong side of the surge in yields, leaving it exposed to interest rate risk and unable to meet its liabilities. "Contagion risk stemming from the collapse of SVB Financial triggered a sell now, ask questions later, backdrop for stocks," said Adam Turnquist, chief technical strategist for LPL Financial. He noted that less than half of the companies in the Standard & Poor's 500 were trading above their 200-day moving average, down sharply from 79% in February.
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