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Financial stocks decline by 1.3%! Strict capital requirements trigger market concerns😧
Within the S&P 500, interest rate sensitive sectors such as real estate were the main laggards, as stocks reacted negatively to the bear steepening of the yield curve and and associated increase in financing costs. Financials also underperformed with a -1.3% drop on the session as US regulators finally unveiled their plans to impose even tighter capital rules on big banks, while the eight mega banks will face a 19% increase. As we mentioned before, the SVB 'bailout' is an entirely different beast than the rescue packages seen during the Lehman days, where the rescue loans were given at the expense of total shareholder wipeouts, along with the long-running tail of regulatory costs being ratcheted up.
