Sales positions in local banks in the USA

Reflecting expectations of losses in U.S. local bank stocks, positions rose above the peak of concerns about a global banking crisis in March. The ratio of short positions to outstanding shares in the SPDR S&P Regional Banking ETF rose to 37%, above levels seen after the collapse of Silicon Valley Bank in March, according to IHS Markit Ltd. The speculative pileup in short positions comes after a sell-off in bonds amid growing expectations that the Fed will keep interest rates high for some time. That threatens to inflict deeper losses on banks with loans and fixed-income securities when interest rates are at their lowest, just as it did after the central bank began tightening monetary policy aggressively in 2022. “It’s tough to be a bank, especially a regional bank, when Treasury yields are going parabolic,” said Art Hogan, chief market strategist at B. Riley Wealth. “And with that comes things; "Mortgage rates are heading toward 8 percent, commercial real estate continues to lose value. In other words, everything that worked against regional banks in March has gotten worse instead of better," he said.