This Bond Market Signal Warns Trouble Is Brewing in the Banking System

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A bond-market indicator shows there's trouble brewing in the banking system, warns a top market researcher — and investors are underestimating the risk posed to the economy

As deposits continue to leak out of banks, Bianco said, banks will be more reluctant to lend out money as they look to keep liquidity levels sufficient. This could in turn lead to a so-called credit crunch, where businesses and individuals no longer have access to money they thought they would, he said."Banks are going to find that their deposit bases, they don't understand them...

While bonds yields are falling to account for a potential Fed pivot in the case of a recession, stocks aren't yet pricing in that outcome, Bianco said. That means the S&P 500 likely has further downside from current levels around 4,040. Bianco said the S&P 500 could fall to roughly its October 2022 lows around the 3,500 level, representing 13% downside from current levels.

 

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Just let them all fail. We can bail them out. Nbd. White collar crime is what makes America so great. It’s capitalism! Yay 😀

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