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The trading in the rates markets has been more piquant than equities lately, with some milestone Treasury moves.

The 10-year Treasury (US10Y) (NYSEARCA:TBT) (NASDAQ:TLT) topped 4%, while the 2-year yield (US2Y) (NASDAQ:SHY) rose above 5%.

The 10-year is now at 3.95%, while the 2-year had pulled back to 4.83%.

"Last week was a fascinating one as US 10yr yields closed the week above pre-SVB levels for the first time since that major accident and 2yr yields traded briefly above for the first time too, albeit retracing in the latter half of the week," Deutsche Bank's Jim Reid wrote.

"It does make you wonder where we would be if SVB (OTCPK:SIVBQ) hadn’t happened," Reid said. "Our view before SVB was that we were waiting for the lag of monetary policy to bite and that something would happen to trigger a US recession by the end of the year."

"However, as a thought experiment it's possible that SVB and the other regional bank problems have actually helped delay further pain and the recession as it caused a major rally in rates and rate expectations whilst simultaneously seeing the Fed add various liquidity schemes to help prevent a wider problem," he added.

Since the March 10 SVB collapse, the 10-year yield is up around 30 basis points and the 2-year is up about 25 bps (although closer to 40 last week).

In equities, the S&P 500 (SP500) (SPY) (IVV) (VOO) is up about 14%, with the Dow (DJI) (DIA) up 6% and the Nasdaq 100 (NDX) (QQQ) jumping 27%.

During the regional banking crisis "a -130bps rally in 2yr yields to the lows after SVB, a -65bps rally in 10yr and a stunning -185bps rally in the Dec 2023 Fed Funds contract, the fear trade quickly moved onto to a 'Fed will soon cut aggressively' trade and with it the soft-landing narrative slowly gained more and more traction," Reid said.

"However, as we stand here today, we’re pretty much back to where we were pre-SVB in rates (plus or minus) and with equities notably higher. I still think we’re at the earlier end of the full impact period from the lag of what has been fairly aggressive monetary tightening over the last 12-15 months. Remember that a year ago the ECB rate was still negative with QE only having just ended."

More on recession prospects