SVB's collapse is what happens when an 'everything bubble' finally bursts
"What do you get when you see one of the biggest hiking cycles on record, alongside one of the most inverted yield curves in history, at the same time as seeing one of the biggest tech bubbles bursting in history, coupled with runaway growth in private markets," Deutsche Bank analysts wrote Friday.
SVB's steep losses on its bond portfolio — the announcement of which kicked off its decline in the middle of last week — were a direct result of theover the last year, as its holdings of longer-term Treasuries and mortgage securities cratered in value with rising interest rates. SVB is merely the latest casualty of that era coming to an abrupt end, and it illustrates the problems for investors and firms that saw huge success in an unprecedented period of loose financial conditions. As rates rise, and less risky investments start offering attractive yields, more and more money is going to be pulled from things like high-growth tech stocks, crypto, and privately held start-ups.
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