[dragontamer]

> Banks bought up a bunch of US treasuries at close to nothing interest rates during the last two years. This is where a bank typically parks their cash reserves because the audit requirements require them to hold a certain amount of cash and cash basically == treasuries.

You're ignoring Fed Repos. Aka: overnight deposits at the Federal Reserve. Which counts as cash and today is returning 5% APY.

Today, a bank will very strongly consider Fed Repos, because 5% is a much better rate than the rates from 2 years ago (aka: 0% to 0.25%)

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This also means that a 10Y bond you bought at like 2% or whatever is making less than Fed Repo overnight deposits today. So banks who are on 5Y, 10Y, or 30Y treasuries are in practice feeling like they've lost a lot of money. (And in SIVB or FRC's case, collapsed in part because of this mismatch, combined with depositor flight).