Silicon Valley Bank’s Contagion Risk Is Overblown: Macro View

The problems faced by Silicon Valley Bank, which at first glance may be considered potentially systemic, actually appear to be reasonably idiosyncratic. Any bank run is damaging, but SVB was unusually vulnerable to the change in macro regime post-pandemic, rather than a canary in the banking coal-mine.

• The rise in yields over the past year has generated large unrealized losses in banks’ holdings of Treasuries and MBS, which are now set to become a focus for analysts, prompting further declines in the KBW Bank Index
• Negative sentiment may linger and some other small banks may suffer. However, it’s reasonable ...