Implication of US Bank run
13 Mar, 2023
Category: Portfolio
Tags: Interest Rate
Bank run at Silicon Valley Bank could lead to a halt in rate hike cycle by the Federal Reserve, benefiting real estate investments with lower interest rates.
On Friday, a bank run occurred at Silicon Valley Bank, the 16th largest bank in the US, leading to a plunge in US interest rates. Traders are now betting that the Federal Reserve will cease its cycle of rate hikes in response to the incident.
If the Fed does indeed halt the rate hike cycle, assets such as real estate, REITs (real estate investment trusts), and assets in emerging countries are likely to benefit the most. Lower interest rates would make borrowing cheaper and stimulate demand for these assets.
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