10 & 30 Year Yields Up, Stock Market Up… Banks Down!

Okay, this has got my full attention now.

While long-term interest rates do this…

…and this…

The nominal Bank index is still doing this…

While the S&P 500 and most US and global stock markets are green today. Hence, BKX/SPX is doing this…

So what, I ask you, are the pigs doing under performing for such an extended period while long-term Treasury yields have been rising for about a month now?

Banks supposedly favor rising longer-term yields because that is where their lending profits tend to come from. Could it be that the flattening yield curve is pressuring their margins in the ‘borrow short, lend long’ racket? Could this be why a flattening yield curve is a precursor to financial/economic hardship or even recession (with the acute event being a steepening of the curve)?

A lot of questions about which I think we have some pretty good clues to the answers.

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