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Financials Hit Midday as Yield Curve Inversion Persists

Published 12/04/2018, 11:34 AM
Updated 12/04/2018, 11:56 AM
© Reuters.

Investing.com - Financial stocks took the brunt of the selling midday as a continued inversion on parts of the Treasury yield curve weighed on banks.

The S&P 500 Financials index fell about 2.3% at 11:45 AM ET (16:45 GMT).

State Street (NYSE:STT) fell about 5.3%, while Fifth Third (NASDAQ:FITB) was off about 4.6%.

Bank of America (NYSE:BAC) tumbled about 3.8% and Citigroup (NYSE:C) lost about 3.5%.

A yield curve inversion happens when longer yields fall below those of shorter-dated bonds.

The 3-year and 5-year Treasuries inverted Monday for the first time since 2007 and today the 2-year and 3-year yields were above the 5-year yield.

The 2-Year yield was at about 2.821%, with the 3-Year around 2.827% and the 5-Year below them at 2.809%.

Inversions are troublesome for bank earnings as it could lead to negative net interest margins, where banks loan out at lower longer-term rates while paying higher shorter-term rates borrowing (such as for deposits).

Latest comments

A recession is coming in 2019... We are overdue for this, no doubt about it.
so it begins
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