Even as large banks outperformed expectations for the third quarter this week, regional banks fell dramatically as higher interest rates continue to cause anxiety across the board.
Regional Banking ETFs fell three percent even as specific regional banks fell as much as 10%.
The Dow Jones had its first losing week in three after previous sell offs, and the yield on the 10-Year Treasury also brought about uncertainty when it comes to the future of the United States Economy.
The 10 year surpassed 5 percent for the first time in over fifteen years. Higher interest rates projections are bad for regional banks from treasury yields to 30 year mortgage rates escalating beyond 8%. Overall, the Dow Jones dropped more than one percent for the week by Friday afternoon.
Texas based Comerica and Ohio based Fifth Third Bancorp were among the larger regional banks that warned a difficult fourth quarter ahead.
With political instability in both Europe and the Middle East, the markets are in for turbulence and it may have investors run to safety with higher yields with lower risk.