US banks shares fall after regional banks downgrade

US banks shares fall after regional banks downgrade

Moody’s Investors Service downgraded 10 regional banks and said it could review its ratings on many other banks as well.

Shares in the banking sector have gone down after the announcement meaning that the health of the financial institutions is not that good.

The ultra-high interest rate, set by the Federal Reserve to fight inflation, is one of the main reasons why the US banks are suffering.

We all remember the failure of Silicon Valley Bank and the other two banks earlier this year due to the undervalued bonds, deposit withdrawals and higher costs.

Higher rates, in fact, are continuing to negatively impact the value of bonds owned by small banks, leaving them with significant unrealized losses and if scared customers want to withdraw their money triggering a bank run, we will see other collapses.  

Bigger banks, however, seem more healthy. They have reported huge profits in the second quarter because of their higher fees on loans and new clients that have switched from a small to a bigger bank to deposit their savings.

The banking sector, regardless of bank size, will not be immune if the Federal Reserve continue to hike interest rates which could lead to the inability to pay back the loans that people and institutions have previously taken.

Portfolio update

I am rebalancing my portfolio gradually.

I recently took a profit on some long positions on stocks.

I am adding new positions and will close some in the upcoming months.

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Let me know if you have any questions.


Federica Montella

eToro Popular Investor


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Author: Federica Montella
eToro Popular Investor, food lover and blogger. Stock trader and Popular Investor at eToro. I am on a mission to find the best restaurants and food to eat.