How rates affect bond prices:

Let's say you have a bond and it's yielding 1%.

Let's say they raise rates and the new bonds being auctioned are yielding 3%.

Now nobody is going to want your 1% yielding bond for the price you paid for it. They'll be willing to pay less for it, because when it matures it will be paid back by the government at face value, so the price difference in effect becomes extra yield, making this boobs yield as much as the new ones in the long run.

Three years ago rates were rock bottom and banks were flush with cash and using it to scoop up bonds. Rates are now over 5% and all of those bonds purchased in 2020 have gone -40% in price.

This isn't one or two banks. This is all the banks. There is a collective unrealized loss in the banking system of over $1 trillion right now.

Let's see what happens next 🎲