Will A Bond Selloff Raise Startup Financing Costs?

Bloomberg reported a deepening bond selloff as traders increased bets on additional Federal Reserve tightening. Rising U.S. Treasury yields lifted discount rates and pressured valuation-sensitive equities in the S&P 500 and Nasdaq Composite. Borrowing costs for small businesses climbed as lines of credit and SBA 7(a) loans tied to SOFR and Prime reset higher at banks such as JPMorgan Chase, Bank of America, and Wells Fargo. Venture debt from lenders including Hercules Capital, TriplePoint Capital, and First Citizens Bank’s SVB unit repriced to higher all-in coupons with tighter terms. A stronger dollar against the euro and yen added currency risk for importers and exporters. Operators responded by laddering short-term Treasuries, using money market funds from Vanguard and Fidelity, and updating budgets to reflect higher interest expense.

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