Lessons learned from SVB collapse

Bond markets endured significant volatility in 2023 amid great uncertainty about the path of interest rates, which had already risen to their highest levels since the Global Financial Crisis of 2007-2008. In March 2023, a sharp rise in bond yields – a fall in their market price – was swiftly followed by a crisis at several large banks, led by SVB, which together fuelled the nervous state of bond markets. Withdrawals by its start-up clients, who were facing their own financing difficulties, forced the bank to sell long-term bonds. SVB and other investors with high duration risk were placed...