Yield Surge Will Send Banks' Unrealized Losses $140 Billion Higher To A Record $700 Billion

Despite today's modest pullback in rates which took place after the 30Y briefly rose above 5% for the first time since 2007, and was catalyzed by the worst (and most realistic) ADP report since 2021, the reality is that rates have seen unprecedented moves in recent months, including a +73.5bps rise in 10yr US yields during Q3, while 30yr yields soared +83.9bps, the largest move since Q1 2009.

It is therefore not a surprise that there has been a frenzy of inquiries into whether the spike in yields will lead to another round of "accidents" something which both Goldman and JPMorgan warned is increasingly likely... and in the case of the latter even welcome, since any regional bank failure would mean that JPM would just become even bigger as it assumes (and with some luck, is paid by the FDIC to do so) the deposits of yet another failed bank(s) - just see what happened in March when every regional bank failure meant JPM would just soak up its good assets while leaving the toxic stuff to US taxpayers.

*CORRECT: DIMON: WHEN ASKED IF RATES CAN GO TO 7%, ANSWER IS YES

Translation: JPM urgently needs another $100 billion in fresh deposits courtesy of a regional bank sacrifice

— zerohedge (@zerohedge) October 2, 2023