Are Treasuries Safe After the SVB Collapse?

The transcript discusses the influence of Federal Reserve messaging on fixed income markets, highlighting the challenges of interpreting various data points. It questions the safety of treasuries as a safe haven asset, especially in light of SVB's duration risk issues. Paul McCauley provides insights on the stability of asset prices, emphasizing that while treasuries are credit risk-free, their price stability is not guaranteed. The only truly secure asset is an FDIC-insured deposit, with market outcomes depending on inflation and Fed actions.

What are market participants closely monitoring in relation to the Federal Reserve's actions?

• Only the weekly Fed reports

• The Fed's messaging and various data points

• Just the banking flow data

• Only the PC data

What is the main concern regarding treasuries in the context of the SVB's situation?

• Their duration risk

• Their yield

• Their credit quality

• Their liquidity

How has the bond market paradigm shifted according to the discussion?

• Duration rates are now a concern

• The bond bull market continues

• Rates have remained low

• Treasuries are no longer considered safe

According to Paul McCauley, what is the only 100% safe financial asset?

• Corporate bonds

• 10-year treasuries

• Federally FDIC insured deposits

• Agency mortgage-backed securities

What does Paul McCauley emphasize about treasuries?

• They are neither risk-free from credit nor asset price stability

• They are risk-free from credit but not asset price stability

• They are not risk-free from credit but have asset price stability

• They are risk-free from credit and asset price stability