Quarterly Investment Letter

The failure of Silicon Valley Bank (SVB) and Signature Bank in the US, shortly followed by solvency concerns and the rapid UBS takeover of Credit Suisse, serve as stark reminders of the shifting macro dynamics at play. Only 18 months ago a quarter of all outstanding government debt was yielding less than zero. The cost of capital has been increased by an unprecedented magnitude in a very short space of time (chart 11 ), and as Niall Ferguson states, such a shift in market conditions exposes fragilities. This piece provides an initial assessment on financial sector stresses and implications for...