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Banks fall behind

The three major equity indices have continued to rise since October, achieving new highs. Within the financial sector, the regional banks index participated on the rallie until the end of the year. Since then, it has given some of the gains, and losses have accelerated over the last few weeks, departing from the rest of the market. Today, the credit rating of New York community Bancorp has been cut to junk by Moody’s. As we get closer to March, the anniversary of the failure of Silicon Valley Bank, and the creation of #btfp to support banks, investors are increasingly anxious about the possibility of that plan not being renewed as the implications for the whole sector, which is key to support the economy through lending. Before the zero interest era, banks were major beneficiaries of rising rates, because that allowed them to expand their financial margin (lending -deposit rates), however, during #zirp they accumulated long duration bonds that are now underwater. This time, they wil probably benefit the most from #ratecuts. And that may not happen til June.

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