Swedbank Strategist Says US Banking Crisis Is Spreading — Warns of More Banks Failing in ‘Vicious Spiral’

A strategist astatine Swedbank, a Swedish bank, has warned that the determination banking situation successful the U.S. is spreading. After respective slope failures, helium stressed that Pacwest Bank, Western Alliance Bank, and First Horizon Bank person each been “subject to fiscal meltdowns.”

Swedbank connected U.S. Banking Crisis Spreading

Pär Magnusson, a fixed income strategist astatine Swedbank, a Swedish slope based successful Stockholm, has warned astir the spreading of the U.S. banking crisis. He reportedly said:

After Silicon Valley Bank, Signature Bank, First Republic Bank and present perchance Pacwest Bank, Western Alliance Bank, and First Horizon Bank each having been taxable to fiscal meltdowns, the proverbial feline volition beryllium precise hard to enactment backmost into the bag.

First Republic Bank was seized by regulators past week and astir of its assets were sold to JPMorgan Chase. It was the biggest U.S. slope nonaccomplishment since 2008. Silicon Valley Bank and Signature Bank collapsed successful March. Following the seizure of First Republic Bank, shares of respective banks, including Pacwest and Western Alliance Bank, plummeted.

“It is hard not to spot the irony of determination U.S. banks having successfully lobbied for little regulations during the Trump medication lone to find that little regulations present is making them susceptible to slope runs,” Magnusson opined.

The Swedbank strategist further cautioned:

The U.S. determination slope situation is spreading. With each slope that succumbs to shrinking deposits and/or marketplace distrust, the probability of much banks falling unfortunate to akin fates grows. A vicious spiral whitethorn beryllium astir to instrumentality hold.

“A wide risk-off absorption is becoming progressively likely, and you should presumption for this risk,” the strategist concluded.

Despite aggregate slope failures, Federal Reserve Chairman Jerome Powell stated that the U.S. banking strategy is “sound and resilient” arsenic Fed officials raised involvement rates by 25 ground points this week. The Federal Reserve precocious revealed that 722 banks reported unrealized losses exceeding 50% of capital successful the 3rd 4th of 2022.

Do you hold with the Swedbank strategist that the U.S. banking situation is spreading? Let america cognize successful the comments conception below.

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