With the 10-year Treasury yield climbing, the financial sector should be well supported going forward.
The 10 years treasury has started to rise again in August and financial stocks like JPM and BAC has started to climb as well.
I believe the banking sector is still in the early stage. Since the beginning of 2021, the yield has outperformed the Banks’ share prices. Historically, the banks’ share prices are positive correlated to the 10 year treasury yield as shown below.
With US Government latest fiscal plan in place, we may see another pop in yield due to inflation expectations. In the last one month, financial stocks have in fact outperformed the market as major US banks started to release their huge reserve as credit risks diminishes on the back of a recovering economy.
Banks that i have positioned personally include BAC and JPM. Other financial stocks that i am holding which are set to benefit from a rising yield are SYF, PRU, FHN and KEY.
Wishing all readers a great weekend ahead and profitable investing!