Black Friday Sale! Save huge on InvestingProGet up to 60% off

Banks Could Tank if Rates Break Out

Published 11/07/2023, 05:41 pm
US2YT=X
-
BKX
-

It’s always nice to see bank stocks leading the market higher… but it doesn’t always work out that way.

This is why we always let the price action (and patterns) dictate our investment choices.

Bank Index Chart

For most of my career, though, bank stocks have liked rising interest rates.

But for the past 2 years, interest rates have risen nearly 5 percent, and the all-important KBW Bank Index (for bank stocks) has declined nearly 50%.

I have not seen this in my 43-year career.

You can see this in today’s chart, where we compare the Bank Index to the 2-Year Treasury Bond Yield.

As you can see, the 2-year yield is testing its 2007 highs.

As this occurs, a couple of questions come to mind… what if interest rates peak here, what will banks do? What if rates break out, what will banks do???

This dynamic is definitely worth watching. Add it to your trading radar… and stay tuned!

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.