Today, the 10-year Treasury yield surged to its highest level since May 2019 as investors weighed Federal Reserve Governor Lael Brainard’s comments on the Fed's need to drive down inflation quickly. The rise in Treasury yields bodes well for the banking sector since banks generate a significant portion of their revenue from net interest income (NII).
In addition, a surge in cash deposits since the onset of the COVID-19 pandemic has also helped the banking sector regain momentum. And rapid digitization by banks to improve their operating efficiency is expected to aid the industry’s long-term growth.
