Banking Stocks Soar as 10-Year Treasury Yield Climbs Signaling Interest Rate Hike

UTC by Benjamin Godfrey · 3 min read
Banking Stocks Soar as 10-Year Treasury Yield Climbs Signaling Interest Rate Hike
Photo: Unsplash

There are other industries billed to benefit from macroeconomic events slated to be introduced this year beyond just the banking stocks as highlighted.

Banking stocks in the United States soared in Tuesday’s trading session on the ground that the 10-year Treasury yield has continued on its upward growth tracks. The overall growth in the bond market has been steady for the first two trading days of the year, with the benchmark 10-year Treasury yield soaring as high as 1.71% on Tuesday.

Financial institutions have a lot to gain from the increasing Treasury yields as a growing yield rate influences lending rates for mortgages and many other business and consumer loans. Banks stocks are already reflecting these potentials as shares of Bank of America Corp (NYSE: BAC) climbed 3.92% to $47.99 JPMorgan Chase & Co (NYSE: JPM) rose 3.79% to $167.83, Morgan Stanley (NYSE: MS) ended Tuesday’s session up 4.06% to $104.26, Goldman Sachs Group Inc (NYSE: GS) also joined the top earners with 3.07% surge to $407.48, while Citigroup Inc (NYSE: C) added 0.78% to $63.59.

The Wells Fargo Equity Research unit named its top financial stocks for the year, and besides the Bank of America, American Express Company (NYSE: AXP), and Signature Bank (NASDAQ: SBNY) were also flagged as promising stocks to watch for the year. Both stocks shot up by 3.21% and 2.36% respectively.

There have been additional indications that the 10-year yield will rise as high as 2% this year, a feat if attained will represent the highest hike for the first time since 2019.

“The year has really started off with a bang here,” said Robert Tipp, head of global bonds and foreign exchange for PGIM Fixed Income. “The market’s been getting kind of bounced back and forth between the downside risks to the economy from Covid …and then ping ponging back to the other side, which is the economy continues to do pretty well. Inflation is high and the Fed is on track to raise rates.”

More Beneficiaries are in the Making Beyond Banking Stocks

There are other industries billed to benefit from macroeconomic events slated to be introduced this year beyond just the banking stocks as highlighted. These industries include energy with a spillover to EV stocks.

Away from the massive 10 million barrel historic slash in crude oil supply, as instituted by OPEC+ as the onset of the coronavirus pandemic, the body has finally decided to increase production by 400,000 barrels per day beginning in February which is a few weeks time. Companies operating in this industry have seen their share prices grow on the back of the news.

Halliburton Company (NYSE: HAL) grew 6% to $25.43 on Tuesday, Occidental Petroleum Corporation (NYSE: OXY) surged 7.47% to $33.38, and Coterra Energy Inc (NYSE: CTRA) recorded a 6.95% growth to $20.93.

Irrespective of the challenges that are yet to be deciphered as might plague the stock market this year, the resilience of banking stocks is billed to be bolstered with the projected interest rate hike by the Federal Reserve.

Business News, Market News, News, Stocks
Benjamin Godfrey

Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.

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