Good morning contrarians! Stock futures are pointing to renewed selling as bonds see bids. Credit Suisse ($CS) drops to a new all-time low…

It would be nice to believe the bank issues that emerged last week have gone away and we can live happily ever after. Unfortunately, the underlying issue of hold-to-maturity securities remains. Banks still hold large amounts of US Treasuries and other government bonds that don’t need to be marked-to-market if they are (you guessed it) held to maturity, or HTM. The problem is if these assets need to be sold, in which case they do need to be marked-to-market, leaving banks with a huge hole in their balance sheets from the ensuing write down. See Silicon Valley Bank, which tried to plug their hole with a capital raise. Didn’t work.

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