Weekly Report – August 9th, 2023

Graph 2023.08.09

Highlight of the Week

Moody’s Downgrades Banks

  • On Monday evening, Moody’s lowered the credit ratings of 10 banks and put others under review or negative outlook, sparking a modest selloff in bank shares with the KBW Regional Banking Index closing Tuesday down ~1.4% from the prior day.
  • Moody’s cited compressed interest income, tight capital levels, and risk in commercial real estate as three key drivers of the downgrades.
  • As the WSJ notes, spreads on bank debt have remained elevated from pre-March levels, so these credit actions appear more as an alignment to the bond market.
  • These actions, along with Fitch’s downgrade of the U.S. government’s credit rating, continue to show the challenges in navigating a higher-for-longer interest rate environment.

Rate Curves

Graph 2023.08.09
Category: Market Updates
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Weekly Report – August 2nd, 2023
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