There is apparently a Bloomberg article that highlights the fact that the stress tests are not taking into account debt held in banks “held to maturity” portfolios, just bonds held in trading books. That of course, is nuts, but that’s the way the test was designed.
Anyone who’s worked in a bank for more than 20 minutes knows that bond purchases gone bad get stuffed into the bank’s portfolio while profitable trades get flipped in the market…
Not sure why it took the market so long to take not, but supposedly that’s why we sold off to 1.2794.
