The big question hanging over banks as earnings season starts

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Investors have questions about how a new Federal Reserve rate-cutting cycle will affect the biggest US banks, and they will be looking for some answers as...

Investors have questions about how a new Federal Reserve rate-cutting cycle will affect the biggest US banks, and they will be looking for some answers as third-quarter earnings season begins Friday.

How all of this plays out is still a big unknown, and investors will be listening this week and next for any changes to future outlooks based on the Fed’s new rate path. "The expectations are a bit too high," Pinto said, while speaking at a Barclays conference.CEOs from left, Charles Scharf, Wells Fargo, Brian Moynihan, Bank of America, and Jamie Dimon, JPMorgan Chase, in 2023 while testifying in Washington, D.C. Some analysts are adjusting their views on JPMorgan now that rates are moving down.

Another is that because these same giants didn’t have to raise their deposit rates as high as regional banks during the Fed’s tightening cycle, they now stand to benefit less immediately from cheaper funding, according to Moody’s Ratings senior vice president David Fanger. Of the lenders that had priced savings and money market deposit accounts above 4.00%, 50% have also reduced their rates, according to Curinos.The lenders that stand to benefit most as these deposit rates fall back are the smaller regional banks that saw their funding costs jump after the failures of Silicon Valley Bank and several other sizable institutions in 2023.

"We're looking at an interest rate scenario here that is going to be beneficial for banks and beneficial for the market," Argus Research director Stephen Biggar told Yahoo Finance.What time will Hurricane Milton make landfall in Florida?

 

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