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Does Credit Suisse Qualify as a “Big Bank” Now? The company could be argued to be rolling down the drain for several months, but it still has hundreds of billions in assets. If it fails, it will be a big deal and financial markets asked this question in very serious tones today.
All other things being equal, when financial markets worry about a global systemic banking crisis, it puts downward pressure on stock prices and bond yields. Bond yield is another term for interest rates.
The bonds that underpin the mortgage market don’t react as quickly to this type of episode as US Treasuries, but the response was huge nonetheless. The average lender went back to the levels seen on Monday. At the time, they were the lowest rates in more than a month.
Whether rates remain in this zone (or lower) depends on inflation and the path of the economy as additional banking drama emerges. The only safe bet in the short term is for volatility to elevate, for better or for worse.
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