The markets closed flat last week amid falling crude oil prices and anxiety over a possible Brexit. Among lenders, Wells Fargo & Company (WFC) lost 1.6%, while its peers Citigroup (C) and Bank of America (BAC) fell 1%–2% each. This week, investors turn their attention to the FOMC (Federal Open Market Committee) meeting on June 14–15 to decide the course of interest rates.
Receive e-mail alerts for new research on AMG:
Interested in AMG?
Don’t miss the next report.
Interest rates (TLT) have been at record lows since the financial crisis hit in 2008. US banks started the year expecting four rounds of rate hikes during the year. Higher interest rates lead to higher net interest income for banks. This results in higher profitability margins. However, the FOMC retreated from its expected interest rate hikes.
The chances of a rate hike in June dropped to 2%, according to the CME Group, after the number of US jobs added to payrolls in May came in well below expectations. The chances of a rate hike in June were higher than 20% at the end of May.
The following are some major events in the financial sector this week:
Investors look forward to events in the US financial sector (XLF) to determine the trajectory of economic growth. Weak oil prices and global volatility hurt trading revenues in the first quarter of 2016. Further, tighter regulations continue to remain a challenge for US banks as they struggle to remain profitable with high legal expenses.
Read on for a recap of how the financial sector performed last week.