As I understand it, here's a very simplistic explanation of what happened with Silicon Valley Bank.

[A HERETIC I AM]

56. You've said this a few times now and it's not quite accurate;

"they need to be able to find a buyer for the bonds."

1st, the market for US Treasuries is wide, extremely deep, VERY liquid and worldwide. We are talking literally TRILLIONS of dollars worth. The idea that this bank has to "find a buyer" is somewhat misleading, as one single pass across a bond desk at any brokerage in the world would find a willing buyer for virtually any amount of any series in a matter of seconds.

2nd, you have insinuated a few times that these bonds are somewhat less than completely liquid, and that is simply not the case, for the reason I stated above. US Treasuries settle Same Day, as opposed to the traditional "Trade Plus 3" settlement of most other securities. If you put up the $200 million figure (a drop in the bucket compared to the overall size of the market) you have used numerous times for sale in the morning, by the middle of the afternoon your account would be credited with the cash. It isn't as if you would have to wait days and days or even a full 24 hour period. A number of the articles that have been linked on this subject indicate the bank sold some $21Bn of their bond portfolio, a large sum to be sure, but again, not much compared to the overall market for this paper.

Your assertion that they have sold these bonds at a loss is correct, but since these bonds are sold "Over The Counter" and on a Bid/Ask basis, that market takes into account the time to maturity, coupon, current yield trends on similar bonds sold and the direction the bond market is heading (a rally or a selloff), so a bond with a 2% coupon as an example selling into a 2.5% market would absolutely sell at a discount to par.

It is also important to keep in mind that the Yield is typically only realized if the bond is held to maturity and then redeemed by the Treasury (there are various yield calculations, of course; Running Yield, Nominal Yield, Yield to Maturity (YTM), Tax-Equivalent Yield (TEY), Yield to Call (YTC), Yield to Worst (YTW) etc.) . If you buy a 2% coupon at a discount on Jan 1, hold it until you receive one of the bi-annual interest payments and then sell, the yield quoted on the day of purchase will not necessarily be what you actually realize on the day you sell.