Panic buying on bonds hurts banks – Bank of America Corporation (NYSE: BAC)


Behind the current sharp drop in bond yields, the German PMI plunged to its lowest level since 2012. This pushed the yield of the German Bund to 10 years into negative territory.

At the same time, the 10-year US Treasury yield declined more than nine basis points to 2.44% – its lowest level in more than two years. This is how the US yield curve is flat (the 2 years are at 2.34% and the Fed Funds target is 2.25% to 2.5%). TLT + 1.35%, TBT -2.7%

While the major US averages are down about 1%, the financial sector (XLF -2.3%) is hit much harder. The regional bank SPDR (KRE) -3.4%), The SPDR Bank ETF (KBE) -3.3%).

Individual players: Bank of America (LAC -3.6%), Morgan Stanley (MS -3.3%Wells Fargo (WFC) -2.5%), KeyCorp (key -4.6%), SunTrust (STI -3%), Comerica (CMA -3.6%), BB & T (BBT -2.9%), Fifth third (FITB -2.7%), Financial regions (RF -4.4%), BNY Mellon (BK -2.8%), MetLife (MET -3%), Prudential (PRU -2.9%).


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