2023-5-5 15:23 |
Coinspeaker
US Treasury Yield Spikes as Investors Fear Recurring Banking Crisis
United States Treasury yields spiked earlier today after fluctuations experienced on Thursday. The yield on the 10-year Treasury went up by almost 5 basis points or 3.407% while that of the 2-year Treasury jumped by 9 basis points or 3.823%. The percentage surge covered up some of the losses encountered in the previous trading day.
The Treasury yield dip that happened earlier left investors with jitters about a recurring banking crisis after the collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank. Most investors took extra caution and went in search of traditional safer alternatives like government bonds.
PacWest Bancorp (NASDAQ: PACW), a bank holding company that recently suffered huge losses announced its plans to consider strategic options.
One of such options is that the regional bank is currently considering selling off all its assets outright. This sale will include the community lender Pacific Western Bank and a long list of commercial and consumer lending ventures. Therefore, selling its entire assets may prove difficult as sources have it that only a few potential buyers would be interested in acquiring the entire Los Angeles-based financial institution.
PacWest Bancorp views the potential sale as a strategy to maximize its shareholder value amid declining stock. At present, the bank holding company’s shares have dipped by more than 50%. On Thursday, PacWest shares closed at $3.17, down 50.62% from its opening price on the same day.
“In light of the recent events, management took immediate steps to maximize liquidity, including the exploration of strategic asset sales, which has led to the transfer of our $2.7 billion Lender Finance loan portfolio to held for sale,” said Paul Taylor, PacWest President and Chief Executive Officer (CEO).
Federal Reserve Increases Interest Rate despite Banking CrisisAmid the broader banking crisis, investors are still concerned about the next move of the government in terms of Federal Reserve policy. After several hikes in interest rates including the 25 basis point increase introduced over the past few months amid the banking crisis, investors are no longer sure of what to expect.
Following the recent increment earlier this week, the central bank hinted that the rate increase may be suspended soon.
In the meantime, investors are still bothered that the central bank may eventually cut rates towards the end of the year, especially with a looming recession. Fed Chairman Jerome Powell once suggested that it was too early to do so. However, he also mentioned that whatever changes and policy decisions that would be implemented in the future would be data-dependent.
These data are likely to include April’s nonfarm payroll, unemployment and wage growth figures. In turn, these parameters would help to determine if there has been less stress in the labor market. The report is expected to indicate that about 180,000 jobs have been added, according to economists surveyed by business and financial information outlet Dow Jones.
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