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Except you don’t have to take a loss if you don’t have to sell. If you can hold it to maturity, you get all your money back. It’s only really an issue if you’r
by eloff 4y ago
Except you don’t have to take a loss if you don’t have to sell. If you can hold it to maturity, you get all your money back.
It’s only really an issue if you’re forced to liquidate early, and the fed is allowing you to loan the assets out at par value - which will help a lot on that front.
On the other hand some banks have asserts that don’t count under that program - they could be in trouble if there’s enough pressure on them.
Effective interest rates dropped like a rock today, the most since 1983 on the two year treasury. And the fed is likely to be a lot more dovish next week. That will help.
I don’t have a crystal ball, but I think the worst of the danger has passed. I loaded up on regional banks today.
- gruez 4y ago> Except you don’t have to take a loss if you don’t have to sell. If you can hold it to maturity, you get all your money back. Sure, you get your principal back as well as the promised interest, but you lost out on the opportunity cost of being able to do something else with the money (ie. investing in current bonds that pay 2x-3x more). It's a loss by another name.