SPDR S&P Regional Banking ETF (ARCA: KRE)

Dernières nouvelles pour SPDR S&P Regional Banking ETF (ARCA:KRE)

SPDR S&P Regional Banking ETF

Financial Services

In seeking to track the performance of the S&P Regional Banks Select Industry Index (the index), the fund employs a sampling strategy. It generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index. The index represents the regional banks segment of the S&P Total Market Index (S&P TMI).

Columbia Banking System Inc Common Stock

Western Alliance Bancorp

Valley National Bancorp

Synovus Financial Corp

Zions Bancorp Na

East West Bancorp, Inc.

Truist Financial Corp.

Citizens Financial Group Inc.

Webster Financial Corp

Bank Ozk

Huntington Bancshares Inc./Oh

M&t Bank Corp.

Regions Financial Corp.

First Horizon National Corp

State Street Institutional US Government Money Market Fund

New York Community Bancorp, Inc., Series C

KonaRed Corp

KKR Real Estate Finance Trust Inc. Common Stock

KKR Real Estate Finance Trust Inc

KKR Real Estate Finance Trust Inc. 6.50% Series A Cumulative Redeemable Preferred Stock

Keppel REIT

<a href="https://www.youtube.com/watch?v=iQAnZXa1Kpg">https://www.youtube.com/watch?v=iQAnZXa1Kpg</a>
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Macro Economic Events

News

Economics

Federal Reserve

Fed Chair Powell Says Banks Are Free To Provide Banking Services To Crypto Industry, Conduct Activities As Long As Protect Safety And Soundness

As broader U.S. equity funds suffered their largest weekly outflow of $18.43 billion since March this week, according to LSEG Lipper as cited by Reuters, one corner of the market quietly shined: <a href="https://www.benzinga.com/etfs">sector ETFs</a>. Despite the risk-off mood driven by intensifying Israel-Iran tensions and uncertainty around U.S. tariffs, investors poured money into focused plays, signaling a tactical rotation rather than a wholesale retreat.
Also Read: <a href="https://www.benzinga.com/etfs/sector-etfs/25/06/46017365/consumer-spending-slips-but-these-niche-retail-etfs-are-defying-the-downtrend">Consumer Spending Slips, But These Niche Retail ETFs Are Defying The Downtrend</a>
Tech and industrial ETFs were the week's breakout stars, absorbing $1.85 billion and $445 million in inflows, respectively. This marks the fourth straight week of sectoral ETF gains, even as large-cap, mid-cap, and small-cap equity funds all bled red ink.
So, where is the &#8220;smart&#8221; money flowing, and why?
<h2 class="wp-block-heading">Sector ETFs To Watch</h2>
<h3 class="wp-block-heading">Technology ETFs: Betting On Resilience And AI Tailwinds</h3>
Tech continues to draw interest as investors seek exposure to innovation and growth even in uncertain times. The sector&#8217;s relative insulation from geopolitical strife and the ongoing AI boom likely contributed to this surge.
Top Picks:
<ul class="wp-block-list">
<li>Technology Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLK#NYSE">XLK</a>): Blue-chip heavy with Apple (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), Microsoft (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NASDAQ">MSFT</a>), and NVIDIA (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>).</li>
<li>Vanguard Information Technology ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VGT#NYSE">VGT</a>): A broader tech play with strong diversification.</li>
<li>ROBO Global Robotics and Automation Index ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ROBO#NYSE">ROBO</a>): For those leaning into automation and AI trends. Top holdings include Symbotic (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SYM#NASDAQ">SYM</a>), Rockwell Automation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ROK#NYSE">ROK</a>), and Celestica (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CLS#NYSE">CLS</a>).</li>
</ul>
<h3 class="wp-block-heading">Industrial ETFs: Infrastructure And Defense Boost</h3>
Industrials are gaining favor amid expectations of increased infrastructure spending and growing demand for defense and manufacturing equipment, especially in the light of global tensions.
Top Picks:
<ul class="wp-block-list">
<li>Industrial Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLI#NYSE">XLI</a>): A solid all-around industrials fund with exposure to companies like Raytheon (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RTX#NYSE">RTX</a>) and Honeywell (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/HON#NASDAQ">HON</a>).</li>
<li>Invesco Aerospace &amp; Defense ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/PPA#NYSE">PPA</a>): A niche option benefiting from the defense sector rally. Top holdings include General Electric (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GE#NYSE">GE</a>) and General Dynamics (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GD#NYSE">GD</a>).</li>
<li>iShares U.S. Infrastructure ETF (BATS:<a class="ticker" href="https://www.benzinga.com/stock/IFRA#BATS">IFRA</a>): Capitalizing on the ongoing U.S. infrastructure push with holdings in the likes of Sterling Infrastructure (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/STRL#NASDAQ">STRL</a>), Raytheon and Axon Enterprise (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AXON#NASDAQ">AXON</a>).</li>
</ul>
<h3 class="wp-block-heading">Financials Falter, But Don't Count Them Out</h3>
While the tech and industrial boats raced ahead on tailwinds, financial ETFs saw $1.22 billion in outflows, suggesting investor unease about profitability under sticky inflation and a "higher for longer" interest rate regime. One can consider keeping an eye on the Financial Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLF#NYSE">XLF</a>) and the SPDR S&amp;P Regional Banking ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KRE#NYSE">KRE</a>), but only if rate and lending conditions stabilize.
<h2 class="wp-block-heading">The Takeaway</h2>
Investors aren't abandoning the market, they're just getting choosier. With geopolitics and economic uncertainty muddying the waters, sector ETFs are emerging as a tactical safe haven for capital.
Read Next: 
<ul class="wp-block-list">
<li><a href="https://www.benzinga.com/etfs/new-etfs/25/06/46029255/alliancebernsteins-emop-etf-targets-growth-in-emerging-markets">AllianceBernstein&#8217;s EMOP ETF Targets Growth In Emerging Markets</a></li>
</ul>
Photo: Shutterstock

Sector ETFs

ETFs

AAPL

AXON

IFRA

MSFT

NVDA

ROBO

STRL

As US Equity Funds Bleed $18 Billion, Sector ETFs Offer Tactical Opportunities: XLK, XLI, ROBO In Focus

Fannie Mae (Federal National Mortgage Association) (OTCQB:<a class="ticker" href="https://www.benzinga.com/stock/FNMA#OTCQB">FNMA</a>) and Freddie Mac (OTCQB:<a class="ticker" href="https://www.benzinga.com/stock/FMCC#OTCQB">FMCC</a>) might finally be headed for an exit from government conservatorship, almost 17 years after being taken over by the federal government in the <a href="https://www.benzinga.com/markets/25/01/42808169/hedge-fund-star-who-profited-big-in-2008-financial-crisis-is-betting-big-on-current-market-volatility-risk-prices-have-come-down">2008 financial crisis.</a>
The two giant housing finance companies, long lingering in regulatory limbo, are again generating investor enthusiasm as word circulates that President Donald Trump is considering allowing them to return to public markets.
Also Read: <a href="https://www.benzinga.com/etfs/sector-etfs/25/06/46001274/alibabas-high-speed-comeback-the-ai-commerce-cocktail-lifting-etf-hopes?utm_campaign=Watchlist&amp;utm_source=Benzinga&amp;utm_medium=Email">Alibaba&#8217;s High-Speed Comeback: The AI-Commerce Cocktail Lifting ETF Hopes</a>
With the over-the-counter stocks of Fannie and Freddie skyrocketing so far this year, up over 190% and 140%, respectively, investors are racing to figure out how to position themselves. Although there isn&#8217;t an ETF directly tracking these two government-sponsored enterprises (GSEs), multiple ETFs provide indirect exposure to the changing housing finance story.
<h2 class="wp-block-heading">The ETF Play: Indirect Exposure To GSE Reboot</h2>
No ETF actually owns shares of Fannie or Freddie, as they now trade over the counter and are still under federal control. But the following ETFs would potentially be affected by shifts in their status:
iShares MBS ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MBB#NASDAQ">MBB</a>)
Exposure: Agency mortgage-backed securities
Why it&#8217;s relevant: Fannie and Freddie stand behind many MBS in the U.S. Shocks to their structure, credit health, or guarantees may affect valuations of MBS and yield profiles.
SPDR S&amp;P Regional Banking ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KRE#NYSE">KRE</a>)
Exposure: Mid-sized lenders
Why it&#8217;s relevant: The regional banks are significantly dependent on the GSEs to securitize mortgages and cover their lending risk. A change in Fannie and Freddie&#8217;s business model would impact their credit standards and liquidity.
iShares U.S. Financial Services ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IYG#NYSE">IYG</a>)
Exposure: Broad financials, including mortgage lenders and insurers
Why it&#8217;s relevant: Large mortgage lenders and insurance players might feel knock-on consequences in terms of origination volumes, risk-sharing, and costs if Fannie and Freddie reverse their move back to public companies.
<h2 class="wp-block-heading">Why The Comeback Matters</h2>
Fannie and Freddie are instrumental in the U.S. housing market by buying mortgages from banks and aggregating them into securities. Fannie and Freddie mortgage-backed securities (MBS) are widely owned by banks, insurers, and institutional investors. Following the collapse of the housing market in 2008, the Federal Housing Finance Agency (FHFA) put both GSEs into conservatorship, and profits went directly to the U.S. Treasury.
Today, though, with the housing markets strained, discussions on terminating the conservatorship have revived. A restructured, publicly traded Fannie and Freddie could remake mortgage access, investor perceptions, and the fixed income universe.
As the conservatorship conversation heats up, so too will the spotlight on these ETFs. Because when the twin titans of housing finance make a move, even from the shadows, the entire market listens.
Read Next: 
<ul class="wp-block-list">
<li><a href="https://www.benzinga.com/etfs/sector-etfs/25/06/46004883/homebuilder-etfs-climb-thin-foundation-permits-sentiment-slide">Homebuilder ETFs Climb On Thin Foundation As Permits, Sentiment Slide</a></li>
</ul>
Photo: Mehmet0/Shutterstock

FMCC

FNMA

iShares Trust Dow Jones US Financial Services Index Fund

How To Invest In Fannie Mae's Comeback With Housing-Focused ETFs

A quiet M&amp;A desk is a sorry sight for a banker and a lost opportunity for an investor. But that may be about to end. Citigroup has predicted a strong rebound in banking fees this quarter, fueled by increasing equity underwriting and M&amp;A activity, <a href="https://www.reuters.com/business/finance/citi-expects-banking-fees-trading-revenue-climb-despite-us-tariff-anxiety-2025-06-10/">reported</a> Reuters. After a bleak spell of deal famine, the signs are for a fee feast, and <a href="https://www.benzinga.com/etfs">ETF investors</a> might do well to bring a plate.
Citi's forecast suggests mid-single-digit growth in banking fees in the second quarter, alongside a surge in trading revenues. While equities and fixed-income trading are already showing muscle, the advisory and underwriting sides of the business could be gearing up for a comeback.
And when Wall Street feasts, the financial ETFs don't stay hungry for long.
Also Read: <a href="https://www.benzinga.com/etfs/specialty-etfs/25/06/45865293/microsoft-overtakes-nvidia-to-top-3-5-trillion-taking-these-3-etfs-with-it">Microsoft Overtakes Nvidia To Top $3.5 Trillion, Taking These 3 ETFs With It</a>
<h2 class="wp-block-heading">M&amp;A's Are Back On The Menu</h2>
Mergers and IPOs were shelved for most of 2023 and early 2024, courtesy of wild interest rates and recession anxiety. But with inflation cooling and the Fed suggesting a possible rate-cutting cycle, corporate confidence is coming back into play—laying the groundwork for increased deals.
&#8220;Given the amount of capital flowing through M&amp;A—some $3.4 trillion in 2024—and the decades of research showing that programmatic acquirers create more value than peers, investing in M&amp;A capabilities makes sense,&#8221; a February <a href="https://www.mckinsey.com/capabilities/m-and-a/our-insights/top-m-and-a-trends">report </a>by McKinsey &amp; Company said.
&#8220;M&amp;A continues to be super active &#8212; there&#8217;s a lot of dialog, a lot of engagement,&#8221; Citi said in its recent outlook, commenting on improved pipelines in equity capital markets and advisory services. If the momentum continues, fee-based revenue will climb sharply in top banks.
That directly affects ETFs that track financial institutions, especially those more exposed to advisory-heavy banks such as Goldman Sachs (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GS#NYSE">GS</a>), JPMorgan (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JPM#NYSE">JPM</a>), and Morgan Stanley (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MS#NYSE">MS</a>).
ETFs That Could Ride The Deal Wave
SPDR Select Sector Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLF#NYSE">XLF</a>)
Why it&#8217;s important: With heavy weightage to Citi, JPMorgan, Goldman Sachs, and Bank of America, XLF is a front-line winner of increased banking fees. It&#8217;s one of the most liquid sector ETFs, too, ideal for active traders and institutions.
SPDR S&amp;P Bank ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KBE#NYSE">KBE</a>)
Why it matters: Provides equal-weight exposure to large and mid-cap banks. Though more interest-rate spread-sensitive, it would be helped if M&amp;A activity comes to regional players or smaller institutions, which is possible in the current environment.
SPDR S&amp;P Regional Banking ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KRE#NYSE">KRE</a>)
Why it matters: If transactional activity filters down into regional consolidations, most notably in commercial banking, KRE might benefit from acquisition premiums and improved fee margins.
<h2 class="wp-block-heading">Bottom Line</h2>
The fat-fee, fancy-bonus era may not be here yet—but it&#8217;s around the corner. As banks prepare for a wave of deal-making and advisory activity, sector-specific ETFs can potentially provide a low-friction means of accessing the rebound.
And, if Wall Street&#8217;s having a fee feast this quarter, perhaps it&#8217;s time to take a fork and some judiciously selected tickers.
Read Next: 
<ul class="wp-block-list">
<li><a href="https://www.benzinga.com/etfs/specialty-etfs/25/06/45869385/silvers-35-breakout-the-best-etfs-for-the-bullish-ride">Silver&#8217;s $35 Breakout: The Best ETFs For The Bullish Ride</a></li>
</ul>
Photo: Shutterstock

Specialty ETFs

Citi Sees M&A Rebound: Financial ETFs May Finally Catch A Bid

<a href="https://www.dallasfed.org/banking/events/2025/25banking" title="https://www.dallasfed.org/banking/events/2025/25banking">https://www.dallasfed.org/banking/events/2025/25banking</a>

Fed's Logan Says Repeats That All Banks Should Be Set Up To Use Discount Window; Healthy Banks Should Use The Discount Window

The bond market might be whispering, but <a href="https://www.benzinga.com/etfs">ETF investors</a> are already screaming back with a megaphone. 
While Treasury yields rise again in 2025, one theme is becoming impossible to escape: the increasing underperformance of the SPDR S&amp;P Regional Banking ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KRE#NYSE">KRE</a>) against the Financial Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLF#NYSE">XLF</a>). So far into the year, KRE fund has declined more than 3% while XLF is up more than 5%.
The divergence between the two ETFs is getting larger, and it isn&#8217;t a rotational quirk. Rather, it&#8217;s a flashlight signaling the market&#8217;s new fear of regional bank exposure to interest-rate risk and bond portfolio depreciation.
For ETF observers, the XLF-KRE divergence might just be the warning system Wall Street wished it had on hand in early 2023.
Also Read: <a href="https://www.benzinga.com/etfs/sector-etfs/25/05/45632498/nvidias-40-billion-oracle-win-may-trigger-a-chip-etf-rally">Nvidia&#8217;s $40 Billion Oracle Win May Trigger A Chip-ETF Rally</a>
<h3 class="wp-block-heading">2023: ETFs As Bond Mine Canaries</h3>
The 2023 bank crisis provided a textbook example of duration risk failure. Several regional banks, most prominently Silicon Valley Bank, were dealt crippling losses as bond yields soared. With large positions in long-duration bonds and inadequate hedging, those losses quickly went from &#8220;unrealized&#8221; to &#8220;unmanageable.&#8221;
Investors watching KRE got the message fast. The ETF began to dip days before SVB's name started trending on social media. Meanwhile, XLF held its ground, encouraged by the resilience of large, diversified banks like JPMorgan (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JPM#NYSE">JPM</a>) and Bank of America (OTCPK: BACRP).
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="559" src="https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/28085201/image-361-1024x559.png" alt="" class="wp-image-929871" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/28085201/image-361-1024x559.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/28085201/image-361-300x164.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/28085201/image-361-768x419.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/28085201/image-361.png 1052w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="542" src="https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/28090949/image-363-1024x542.png" alt="" class="wp-image-929904" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/28090949/image-363-1024x542.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/28090949/image-363-300x159.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/28090949/image-363-768x407.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/28090949/image-363.png 1039w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Now, in 2025, we're seeing a familiar pattern, and ETF investors are once again voting with their dollars.
The Divergence, Quantified
KRE: Trades at par with pre-SVB levels now, but it took more than a year of the collapse for KRE to regain the pre-SVB level.
XLF: has largely rebounded and even moved higher within months of the collapse, showing confidence in large banks.
This divergence is not merely cosmetic. It&#8217;s exposing a structural disconnect in the banking sector that ETFs are highlighting: confidence in big banks, doubt in small ones.
<h3 class="wp-block-heading">What KRE Is Saying</h3>
Investors in ETFs are evidently preparing for further pain, or at least further volatility, among regional banks. Here&#8217;s why:
Rate Risk Continues to Loom: In spite of regulatory pressure to better manage risk, much of the regional banking sector is still exposed to long-duration securities susceptible to price drops with increasing yields.
CRE Exposure: The underlying holdings of KRE feature institutions that are significantly weighted toward commercial real estate lending.
Liquidity Pressure: Even post-2023&#8217;s flight of deposits, smaller banks have few levers to lure and retain capital relative to their giant-bank counterparts.
In short: KRE is the portion of the financial sector that still feels vulnerable. And investors appear to be treating it thus.
<h3 class="wp-block-heading">Meanwhile, XLF Is Rolling</h3>
On the opposite side of the banking ETF fence, XLF has gained from its makeup. Such stalwarts as JPMorgan, Goldman Sachs (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GS#NYSE">GS</a>), and Wells Fargo (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/WFC#NYSE">WFC</a>) did not just shelter from the worst of the 2023 chaos, they benefited from it. For instance Wells Fargo is up more than 100% from the lowest point hit in March 2023 after the SVB collapse. As deposits exited regional banks, they sought safer haven in these institutions.
XLF is now the &#8220;flight-to-safety&#8221; trade in the financials space, a safer-ish wager on institutions with diversified revenue bases, improved risk management, and better regulatory oversight.
<h3 class="wp-block-heading">The ETF Takeaway</h3>
This isn&#8217;t just sector rotation. The KRE-XLF divergence is a living snapshot of the way ETF investors are factoring in systemic risk. It&#8217;s also a cautionary note: when yields increase rapidly, even solid-looking portfolios can plunge.
For tactical ETF traders, the spread may be a trade opportunity, through long/short or volatility trades. For long-term investors, it&#8217;s a barometer for sector risk.
Read Next:<a href="https://www.benzinga.com/etfs/sector-etfs/25/05/45631164/nvidias-q1-earnings-may-mark-a-turning-point-for-chip-etfs"> </a>
<ul class="wp-block-list">
<li><a href="https://www.benzinga.com/etfs/sector-etfs/25/05/45631164/nvidias-q1-earnings-may-mark-a-turning-point-for-chip-etfs">Nvidia&#8217;s Q1 Earnings May Mark A Turning Point For Chip ETFs</a></li>
</ul>
Image: Shutterstock

BACRP

KRE Falls Behind XLF, Sparks SVB Collapse Flashbacks: Are ETFs Sensing Bank Trouble?

Editor&#8217;s note: This story has been updated to add more context on the move in bond yields.
Long-term U.S. bond yields spiked last week to levels not seen since late 2023, after President Donald Trump's "One Big, Beautiful Tax Bill" was passed in the Republican-controlled House. The yield on 30-year Treasuries <a href="https://www.benzinga.com/markets/25/05/45600354/trumps-big-tax-bill-clears-the-house-30-year-yields-jump-to-5-15-as-bond-market-freaks">broke above the key 5% level</a>, climbing as high as 5.15% on May 22, on investor concerns about ballooning deficits and the long-term risks of the country's mounting indebtedness.
To be sure, yields have retreated somewhat since then thanks to easing trade tensions after the president paused a move to slap 50% tariffs on Europe. A global yield decline in response to Japan's move to cut long-term debt issuance also helped.
Yet, according to&nbsp;Lawrence McDonald, founder of the Bear Traps Report, it's too soon to take comfort.
On Monday, McDonald fired off a blunt warning on X, about the potential catastrophic consequences of an extended surge in bond yields on the financial sector.
<h3 class="wp-block-heading">&#8216;Smoking In The Dynamite Shed&#8217;</h3>
"Washington – They are smoking in the dynamite shed," he wrote, urging investors to prepare for a world with 5% or even 5.5% yields on 10-year Treasuries. Ten-year yields peaked at 4.63% on May 22, and last topped 5% in October 2023.
&#8220;There is a price for higher for longer – it&#8217;s NOT free. Interest rates up, bond prices down,&#8221; McDonald said in an accompanying post on X, pointing to billions of dollars in bond losses faced by Japanese insurance firms.
McDonald also highlighted a policy shift floated by Treasury Secretary Scott Bessent: the possible reduction of the Supplementary Leverage Ratio, a key regulatory capital rule for large banks.
"Bessent&#8217;s move toward lowering the SLR&#8230; reeks of financial repression," McDonald said. Loosening the SLR would allow banks to load up on more Treasuries with less capital, possibly papering over demand issues but at the cost of financial stability.
<h3 class="wp-block-heading">Regional Banks Are More Interest-Rate Sensitive</h3>
The surge in yields has created winners and losers within the banking sector—and the divide is stark. In a follow-up comment, McDonald highlighted a striking divergence between large-cap financials and regional lenders.
"Who is wearing the interest rate risk? Who doesn't have the hedges on? It's pretty clear."
The interest-rate risks are once again squarely on the shoulders of banks—especially smaller ones.
The Financial Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLF#NYSE">XLF</a>)—dominated by financial behemoths like&nbsp;JPMorgan Chase&nbsp;&amp; Co.&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JPM#NYSE">JPM</a>),&nbsp;Goldman Sachs Group Inc.&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GS#NYSE">GS</a>), and&nbsp;Bank of America&nbsp;Corp.&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BAC#NYSE">BAC</a>)—has been up 30% since January 2022.
Meanwhile, the SPDR S&amp;P Regional Banking ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KRE#NYSE">KRE</a>) is down 21%, a gap that McDonald says you'd need to "look far and wide historically to find&#8230; outside some kind of crisis."
McDonald's comments also echo lessons of the March 2023 banking crisis, when Silicon Valley Bank&#8217;s failure exposed the danger of unhedged interest rate exposure. That crisis erupted after SVB sold long-term Treasuries at a loss to raise liquidity, prompting a wave of withdrawals.
The aftermath saw federal regulators step in with extraordinary support measures, including the Bank Term Funding Program. 
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<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Big vs. Small Who is wearing the interest rate risk? Who doesn&#39;t have the hedges on? It&#39;s pretty clear, indeed. &#x2A;Everyone knows the XLF is 42% BRK, JPM, MA, V, BAC. Since January 2022 XLF +30% KRE -21% &#x2A;You have to look far and wide historically to find this kind or… <a href="https://t.co/vQuG3JYwbo">pic.twitter.com/vQuG3JYwbo</a>
&mdash; Lawrence McDonald (@Convertbond) <a href="https://twitter.com/Convertbond/status/1927080575086551527?ref_src=twsrc%5Etfw">May 26, 2025</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></div>
</figure>
<h3 class="wp-block-heading">Steep Yield Curve Lifts Big Banks, Sinks Regionals—Here's Why</h3>
Higher Treasury yields impact banks differently based on their size, funding structures and asset-liability profiles. 
As the yield curve steepens, large banks gain from wider net interest margins, stronger trading revenue and diversified income streams.
Since Trump&#8217;s election victory in November 2024, the 30-year and 2-year Treasury spread has widened from 30 to 100 basis points, helping boost large-cap financials.
The Financial Select Sector SPDR Fund (XLF) has outperformed the SPDR S&amp;P Regional Banking ETF (KRE) by 20% during the same period. 
For regional banks, higher short-term funding costs, long-duration asset losses and weaker hedging strategies are eroding profitability. Many smaller lenders remain exposed to the same vulnerabilities that triggered the 2023 bank failures. 
In this environment, a steeper curve is more of a risk signal than a recovery story for America's regional banking industry.
<h3 class="wp-block-heading">Chart: Big Banks Crushed Regionals As The Treasury Yield Curve Steepened</h3>
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="535" src="https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/27110310/image-342-1024x535.png" alt="" class="wp-image-928599" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/27110310/image-342-1024x535.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/27110310/image-342-300x157.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/27110310/image-342-768x401.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/27110310/image-342-1536x803.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2025/05/27110310/image-342-2048x1070.png 2048w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read now: 
<ul class="wp-block-list">
<li><a href="https://www.benzinga.com/government/regulations/25/05/45569891/big-tax-cuts-big-deficits-wall-street-winners-and-losers-emerge">Big Tax Cuts, Big Deficits: Wall Street Winners And Losers Emerge </a></li>
</ul>
Photo: Shutterstock
<ul class="wp-block-list">
<li></li>
</ul>

Analyst Color

Government

Regulations

Bonds

Treasuries

Econ #s

Analyst Ratings

Trump May Be 'Smoking In The Dynamite Shed' With The Big, Beautiful Bill Pressuring Yields Higher (UPDATED)

After a sharp 23% rebound in the S&amp;P 500 since April, hedge funds are now stacking record levels of bearish bets against stocks as investors question the staying power of <a href="https://www.benzinga.com/topic/tariffs">the tariff-relief rally.</a>
Hedge funds have added $25 billion in short equity futures exposure over the last three Commitments of Traders (COT) reports—marking the largest three-week increase in at least a decade. 
This surge underscores deepening skepticism about the market's resilience following its V-shaped recovery after the tariff selloff.
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"> 
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<blockquote class="twitter-tweet" data-width="500" data-dnt="true">Hedge Funds have added $25 Billion of short equity futures exposure over the last 3 COT reports, the largest increase AT LEAST the last decade &#x1f6a8;&#x1f6a8; <a href="https://t.co/WxiEjHlmDS">pic.twitter.com/WxiEjHlmDS</a>
&mdash; Barchart (@Barchart) <a href="https://twitter.com/Barchart/status/1925047520272502901?ref_src=twsrc%5Etfw">May 21, 2025</a></blockquote>
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</figure>
Gross leverage, which includes both long and short exposures, has climbed to an all-time high, according to Goldman Sachs analyst Ben Snider. 
Although net leverage—longs minus shorts—remains below February levels, the acceleration in short interest has changed the landscape.
&#8220;As growth and inflation begin to reaccelerate, hedge funds and CTAs continue to fight the cycle—doubling down on long bonds and short risk. The macro bears aren't giving up without a fight,&#8221; said Oskar Vårdal, analyst at Steno Research. 
<h3 class="wp-block-heading">Where Are Hedge Funds Targeting Shorts?</h3>
Funds are targeting both exchange-traded funds (ETFs) and single-name stocks. 
According to data from Goldman Sachs, ETF short interest hit $218 billion in the second quarter, while single-stock short interest reached $948 billion. In over a decade, April alone saw the most significant jump in U.S. ETF short selling.
Among U.S.-listed ETFs, SPDR S&amp;P Regional Banking ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KRE#NYSE">KRE</a>) saw its short interest soar by 50 percentage points since mid-February, now totaling 96% of float. SPDR S&amp;P Biotech ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XBI#NYSE">XBI</a>) rose 27 points to 111%, while iShares Russell 2000 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWM#NYSE">IWM</a>) climbed to 33%.
ETFs with the most historically elevated short interest include VanEck Gold Miners ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GDX#NYSE">GDX</a>) at 12% of float (100th percentile vs. history, First Trust NASDAQ-100 Tech ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/qtec#NASDAQ">QTEC</a>) at 4% (98th percentile), and iShares Core S&amp;P Mid-Cap ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IJH#NYSE">IJH</a>) with $1 billion shorted (98th percentile).
<h3 class="wp-block-heading">Defensive Sectors Are Under Pressure</h3>
The rise in short interest has been especially acute in defensive sectors. Short interest in consumer staples, utilities, and healthcare sectors now ranks in the top quintile compared to historical norms. The median S&amp;P 500 stock now has a 2.3% short interest relative to market cap, ranking in the 61st percentile over the last 30 years.
Only the financials and information technology sectors show short interest below their long-term averages.
<h3 class="wp-block-heading">Which Stocks Are Being Targeted By The Heaviest Bearish Bets?</h3>
Large-cap stocks that have seen the biggest spikes in short interest since the February peak include:
<ul class="wp-block-list">
<li>Somnigroup International Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SGI#NYSE">SGI</a>): 13% of float, up 10 percentage points.</li>
<li>Lucid Group Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/LCID#NASDAQ">LCID</a>): 30% of float, up 8pp. </li>
<li>Amer Sports Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/AS#NYSE">AS</a>): 12% of float, up 8pp.</li>
<li>Medpace Holdings Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MEDP#NASDAQ">MEDP</a>): 11% of float, up 6pp. </li>
<li>Moderna Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/MRNA#NASDAQ">MRNA</a>): 18% of float, up 6pp.</li>
<li>First Solar Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/FSLR#NASDAQ">FSLR</a>): 11% of float, up 5pp. </li>
</ul>
Now Read:
<ul class="wp-block-list">
<li><a href="https://www.benzinga.com/analyst-ratings/analyst-color/25/05/45530460/trumps-6-trillion-investment-deals-face-reality-check-only-a-fraction-may-reach-the-real-economy">Trump&#8217;s $6 Trillion Investment Deals Face Reality Check: Only A Fraction May Reach The Real Economy </a></li>
</ul>
Image: Shutterstock

Equities

Large Cap

Broad U.S. Equity ETFs

Hedge Funds

FSLR

Market Vectors ETF Trust Market Vectors Gold Miners

LCID

MEDP

MRNA

First Trust NASDAQ-100 Technology Index Fund

QTEC

Hedge Funds Are Building A Towering Wall Of Bets Against Stocks

WIIM

ALLY

ARES

FITB

HBAN

NTRS

SCHW

SPGI

TROW

Shares of banks and financial services stocks are higher after the US and China agreed to a temporary reduction in most tariffs on each other's goods. A reduction in tariffs could alleviate macro uncertainty in the lending and deal environment.

<a href="https://www.youtube.com/watch?v=V2fIB2wx_i8" title="https://www.youtube.com/watch?v=V2fIB2wx_i8">https://www.youtube.com/watch?v=V2fIB2wx_i8</a>

Treasury's Secretary Scott Bessent Says Many Bank Capital Regulations May Be 'Too Tight'

Politics

General

Live On CNBC, U.S. Treasury's Bessent Discusses Tariffs, Says 100% Expensing For Equipment, Factories, Along With Tax Certainty, Lower Energy Costs Will Accelerate U.S. Economic Growth; There Will Be Stimulus From Permanence Of 2017 Tax Cuts; The Way To Cut Deficit Smartly Is To Bring It Down By 100 Basis Points To GDP Each Year; We Think We Van Get Growth Back To 3% By This Time Next Year; We Are Putting Banking Deregulation Focus On Community Banks And Smaller Regional Banks

<a href="https://www.youtube.com/live/qhAQ_sImdOM">https://www.youtube.com/live/qhAQ_sImdOM</a>
&nbsp;

U.S. Treasury's Bessent Says Growth Of Private Credit Is A Sign That Banks Are Too Tightly Regulated

<a href="https://www.wsj.com/finance/regulation/federal-reserve-bank-ratings-review-1b66135f" title="https://www.wsj.com/finance/regulation/federal-reserve-bank-ratings-review-1b66135f">https://www.wsj.com/finance/regulation/federal-reserve-bank-ratings-review-1b66135f</a>

'Fed Reviewing Its Secret Ratings For The Nation's Biggest Banks; Most Large Banks Have Bad Ratings, Keeping Them From Doing Deals' - WSJ

CACC

DBRG

DGICB

FSEA

ITUB

LMND

LPLA

NAVI

NEWT

NYMT

PBHC

QFIN

SLQD

SOFI

TREE

UPST

WRLD

Shares of financial companies are trading higher amid overall market strength after President Trump said he will not be firing Fed Chair Powell. Additionally, Trump indicated the final tariff rate would be lower than the current one, which may lead to greater business and lending activity for financial institutions.

CNFR

LPRO

SLQT

Shares of financial companies are trading higher amid Treasury Secretary Scott Bessent's remarks about trade de-escalation with China, which may help restore investor confidence towards the sector.

Global

Fed Chair Powell Says U.S. Financial System Is Well Into The Process Of Working Out Its Problems With CRE; Private Credit Market Has Not Been Through A Real Credit Event; Fed Is Keeping A Close Eye On; We Should Proceed To Complete Basel 3 Accord

<a href="https://www.bloomberg.com/news/articles/2025-04-10/jpmorgan-bank-of-america-to-meet-with-canada-officials-after-trump-complaints" title="https://www.bloomberg.com/news/articles/2025-04-10/jpmorgan-bank-of-america-to-meet-with-canada-officials-after-trump-complaints">https://www.bloomberg.com/news/articles/2025-04-10/jpmorgan-bank-of-america-to-meet-with-canada-officials-after-trump-complaints</a>

'Canadian Officials Said To Plan Meeting With US Banks After Trump Complaints' - Bloomberg News

U.S. Bank CEOs Met With Commerce Secretary Howard Lutnick On Thursday To Discuss Trump Tariff Plan; Banking Industry Group Hosted Lutnick As Part Of Quarterly Meeting, In Which He Outlined Tariff Strategy; Bank CEOs Asked Lutnick Questions About Tariff Strategy At Financial Services Forum Meeting

U.S. Bank Regulators Announce Plans To Rescind 2023 Updated Community Reinvestment Act Rules, Reinstate Prior Regulatory Framework

<a href="https://www.theinformation.com/articles/europes-banks-unlike-u-s-rivals-play-with-deepseek" title="https://www.theinformation.com/articles/europes-banks-unlike-u-s-rivals-play-with-deepseek">https://www.theinformation.com/articles/europes-banks-unlike-u-s-rivals-play-with-deepseek</a>

'Europe's Banks, Unlike U.S. Rivals, Play With DeepSeek' - The Information

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