Banks Could Tank if Rates Break Out
US2YT=X
-0.56%
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BKX
+0.22%
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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…
This dynamic is definitely worth watching. Add it to your trading radar… and stay tuned!
