Have Bank Stocks Bottomed? High-Yield Spreads Say No
Chris Kimble | May 15, 2023 08:10
The stock market is stuck in neutral, with several sectors failing to keep up. Call it a lack of leadership.
One key sector that has been struggling is banking. And let’s say that the economy needs healthy banks and a healthy financial sector.
Today’s chart tells us that we may not be ready to turn around just yet. Below is a KBW Bank chart compared to high yield spreads (lower pane).
As you can see, bank stocks tend to find a quality low when high-yield spreads blow out. Right now, spreads are only at 4.74. The spread is far from prior levels when the bank index formed a quality low.
Could banks turn higher from here? Sure. But something tells me that it’s okay to be cautious on banks right now.
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.