Posted inAT+

Tech stocks’ bad news = good news for bank stocks

Tech stocks got clobbered in New York on Tuesday after Treasury Secretary Janet Yellen said, “It may be that interest rates will have to rise somewhat to make sure our  economy doesn’t overheat.”

Tech stocks, as everyone knows, have traded in a straight line with interest rates for the past year (that is, with a 95% regression fit to the 5-year inflation-indexed Treasury yield).

Bank stocks, though, trade with the difference between short-term and long-term interest rates. (That’s because banks borrow short and lend long.)

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