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If SVB hedged its interest rate risks, it would be a going concern today.
by jgalt212 4y ago
If SVB hedged its interest rate risks, it would be a going concern today.
- ozi 4y agoYou can't hedge something that is likely to happen in a cost efficient way. Yield curves are predictable.
- oarabbus_ 4y agoHuh? A bond portfolio always includes a significant amount of short-dated maturities to provide liquidity. SVBs decided to take on much more risk and forego short-maturations for extra yield. Yield chasing blows up overleveraged entity, nothing new here really, except usually people rightfully criticize the yield chasers/overleveragers for being greedy; this time people are acting like SVB was a victim of the Fed instead of their own extreme incompetence.