Investors rush into bonds, gold flees to safety after SVB rescue
A trader works on the floor during morning trading at the New York Stock Exchange (NYSE) on March 1[ads1]0, 2023 in New York City.
Spencer Platt | Getty Images
Investors flocked to safe-haven assets such as Treasurys and gold on Monday, amid an extraordinary plan to stop the banking system and limit the fallout from the collapse of Silicon Valley Bank.
The benchmark 10-year Treasury yield fell nearly 20 basis points to 3.50%, hitting its lowest level since February 3. The 10-year yield last traded around 3.54%. The yield on the 2-year Treasury fell more than 40 basis points to 4.16%, also the lowest in more than five weeks. Interest rates move inversely to prices and one basis point corresponds to 0.01%. The iShares 20+ Treasury Bond ETF jumped 1.6%.
Treasurys
| TICKER | COMPANY | DIVIDEND | CHANGE | %CHANGE |
|---|---|---|---|---|
| US1M | US 1 month Treasury | 4.463% | -0.261 | 0.00% |
| US3M | US three-month Treasury | 4.664% | -0.291 | 0.00% |
| US6M | US 6-Month Treasury | 4.681% | -0.448 | 0.00% |
| US1Y | US 1 Year Treasury | 4.351% | -0.525 | 0.00% |
| US2Y | US 2-year Treasury | 4.155% | -0.433 | 0.00% |
| US10Y | US 10-year Treasury | 3.464% | -0.231 | 0.00% |
| US30Y | US 30 year treasury | 3.563% | -0.137 | 0.00% |
Meanwhile, gold prices hit their highest since early February at $1,893.96. U.S. gold futures rose 1.2% to $1,889.40, while the SPDR Gold Trust rose 1.5% in premarket trading. Investors tend to rotate into the metal during economic shocks. In addition, lower interest rates reduce the opportunity cost of holding zero-yielding gold.
Investors sought reassurance as banking regulators rushed to stop depositors with money at Silicon Valley Bank and now crushed Signature Bank, easing fears of systemic contagion. Depositors at both failed institutions will have full access to their deposits as part of several moves officials approved over the weekend.
“Anxiety over what could be ‘the next shoe to drop’ spread through the markets like wildfire,” said John Stoltzfus, investment strategist at Oppenheimer Asset Management. “We continue to believe that while we’re not out of the woods yet.” “
Stock futures initially opened higher on Sunday night on the government’s plans, but have since rolled over.
Concerns about the health of smaller, regional banks deepened after regulators closed another institution on Sunday. First Republic Bank led a decline in bank stocks on Monday after it said on Sunday it had received additional liquidity from the Federal Reserve and JPMorgan Chase.
San Francisco’s First Republic shares lost 70% in premarket trading Monday after falling 33% last week. PacWest Bancorp fell 37%, and Western Alliance Bancorp lost 29% in the premarket. Zions Bancorporation fell 11%, while KeyCorp fell 10%.
SVB’s collapse marked the largest US bank failure since the 2008 financial crisis – and the second largest ever. HSBC on Monday announced a deal to buy the UK subsidiary of the failed US start-up lender after an all-nighter.
