Source: Bloomberg

US banks have traded as a nearly-perfect proxy for the 10-year Treasury yield during the past year. Higher interest rates give more scope for bank profits at a time when their net interest margin is hovering around its all-time low.

That doesn’t say much for the business model, though.

Commercial and industrial lending is virtually flat year on year, and negative during 2017 to date. There’s no point owning a sector whose profitability depends on an observed, traded market variable. Might as well short the 10-year note.