An unsettling trend has emerged from the heavy selling that sent global markets tumbling this year: Investors are getting nervous about the world’s biggest banks. The concerns about the banks are clearly reflected in the stock markets, where shares in banking giants are plunging. But there are also ominous signs in markets that investors use to bet on the perceived creditworthiness of large financial firms.
A crucial benchmark for the banking sector, the KBW Nasdaq Bank Index, was down more than 3 percent on Monday and had lost nearly 20 percent of its value this year. There were other signs of nervousness.
Investors are again rushing into benchmark government bonds. The yield on the 10-year Treasury note, which falls as its price rises, declined to 1.75 percent on Monday; it yielded 2.27 percent at the end of last year. The price of gold is rising. The Vix, which measures investors’ expectations of volatility and is known as Wall Street’s fear gauge, rose over 10 percent. FULL REPORT