US Financials Tend To Outperform When Fed Tightens: Source

Sifting through historical evidence, the analysts at Source conclude that U.S. financials tend to outperform when the Fed starts tightening.

Paul Jackson and András Vig at Source state in their November 15, 2015 research note titled: “What’s the price of US banks?” that banks are currently the third cheapest sector in the U.S., and hence they remain Overweight on the sector.

US financials, banks struggle to make a profit over last 7 years

Jackson and Vig point out thanks to the ongoing low rate environment, banks have been struggling to make profits during the last seven years. The analysts reckon a rate rise and higher yields will be good news for banks.

As one looks forward to Fed tightening, the analysts point out...