Not Believing Yellen, Regional Bank ETF Pops

Still not fully satisfied with the state of the U.S. economic recovery, Federal Reserve Chair Janet Yellen Wednesday assuaged skittish investors that short-term interest rates will remain near zero for a “considerable time.”

Various corners of the financial markets see things differently. For example, 10-year Treasury yields are up 1.2% today, perhaps an indication that some market participants are factoring in a surprise rate hike in the coming months.

A more overt signal regarding some investors’ views on the U.S. interest rate outlook comes by way of rate-sensitive regional bank stocks and exchange traded funds. The SPDR S&P Regional Banking ETF (NYSEArca: KRE), the largest dedicated regional bank ETF by assets, is higher by 2.1% today on volume that already looks poised to eclipse the daily average. [Regional Bank ETFs Still Have Upside]

Although KRE is one of the top-performing non-leveraged ETFs to this point in Thursday’s session, the ETF’s bullishness is not merely a one-day phenomenon. Amid a rebound in bank stocks and ETFs, KRE is now up more than 4% over the past month.

In another sign of not only the legitimacy of the financial services sector rebound but also investors’ interest rate expectations, KRE is the ninth-best non-leveraged ETF over the past month and half of the ETFs that have topped over that period are financial services funds. [Goldman Boosts Broker-Dealers ETFs]