Yield Curve Steepens; American Petrol Banks Continue to Surge

With all this talk of Fed rate hikes, the 2-10yr yield curve has widened significantly to 92bps from 72bps. The difference from this goes directly into the coffers of your local banker, which is why banks are doing so well now.

None better than America’s equivalent to petrol-banks — regional players in the southwest, especially Texas. While many of these banks, like CFR, will deny being a petrol bank, their businesses are heavily dependent upon the health of the oil business to stay profitable.

Remember when oil was tanking and everyone was freaking the fuck out over CFR? Well, since then, oil has nearly doubled and CFR has moved higher by 30%.

For the year, southwest regional banks are higher by 21% — absolutely poleaxing the broader averages. It’s a novel way to play the oil sector, without having to actually buy into it.