Macquarie Warns of Rising Long-Term Interest Rates and Financial Risks

As government bond yields in major countries, including the United States, surge, concerns about instability in the financial markets have been raised. Global investment bank Macquarie analyzed that many cases of bankruptcies of major financial institutions and large-scale financial accidents have occurred shortly after sharp fluctuations in long-term bond yields over the past 50 years. It is projected that if the yield on the U.S. 10-year Treasury bond exceeds 5.5%, valuation pressures may emerge in the stock market. The rise in bond yields is heightening concerns about the financial health of financial institutions and highly indebted companies. Macquarie explained that fluctuations in interest rates could shock the financial status of institutions, potentially leading to small-scale financial crises. Notable examples mentioned include the collapse of Franklin National Bank in 1974, the bankruptcy of Orange County in 1994, and the failure of Silicon Valley Bank (SVB) in 2023. SVB faced a liquidity crisis and went bankrupt within 48 hours as the value of its portfolio declined due to rising interest rates. Recently, the rise in bond yields is not limited to the United States but is also observed in countries such as France, Italy, Japan, and South Korea. Wall Street is paying close attention to the 5.5% yield on the 10-year Treasury bond as a key threshold, analyzing that reaching this level could lead to a reassessment of plans by investors and companies.

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