Wharton Professor Jeremy Siegel says the SVB collapse could be a good thing - if it 'knocks some reality' into the Fed to pause rate hikes
has been a consequence of that policy move, Siegel said. The tech-focused bank has roiled markets in the past week since reporting a $1.2 billion loss on its bond portfolio, thanks to aggressive rate hikes that have raised bond yields while pushing down prices.
The implosion also highlighted how rate hikes have raised odds of recession, Siegel said, pointing to the inverted Treasury yield curve, which occurs when short-term interest rates surpass longer-term rates. The surge in short-term rates is partly behind SVB's crash, he said, and the"There's a reason every recession in the last fifty years has followed an inversion. Something blows up, something goes wrong," he added.
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