For more than a decade, only we here at LoS, it has seemed, correctly characterized the seemingly endless “low interest rate environment correctly. See here. And here. And here. And here.

And since most of my readers (all three of them!) are too lazy to click the links, let me just quote from the earliest of those posts:

It’s a fundamental truth that drives the bond market:  a rising interest rate environment is terrible for bonds; a declining interest rate environment is great for bonds.  Because, as the quote above rightly points out, the face value of the bond rises or falls accordingly.  If I have a $100K bond paying 2% interest and market interest rates are 8%, who’s going to pay $100K for my bond?  If I want to sell it, I have to “discount” the price, you know, a lot.  Maybe my $100K bond would only sell for $25K.  But if the situation is the reverse, and I have a $100K bond paying 8% and market interest rates are 2%, well then so many people want my $100K bond that I can prally sell it for $150K, because where else are they going to get an 8% yield?

This is not rocket science, as they say.

So the Fed has been holding off on raising rates precisely so as to avoid the SVB collapse. Now, apparently, the SVB collapse is acceptable. What has changed?

Who knows?