As the Fed Looks to Normalise Watch Out for Financials Gaining
The prospect of rising interest rates is usually beneficial for financials. Why? Because higher interest rates means that banks can charge more for their loans. The Bank of America is the second-largest bank in the US, so if the Fed does signal an increase in interest rates then it could be due to gain in share price. Also, note the seasonals are strong as we come into August.
Between August 22 and September 18 the Bank of America share price has gained in value 11 times over the last 15 years. The largest fall was in 2020 with a -2.01% loss. The biggest gain was in 2012 with a 12.29% profit. The average return has been 3.39%.
Key Trade Risks: If there is a return to COVID-19 lockdowns that could mean that the Fed are much slower to normalise their policy.
Giles Coghlan
