Bank ETFs Surge on Strong July Job Report

SEE MORE: Financial Sector ETFs Plunge on Brexit Contagion

Consequently, with the economy chugging along, the Federal Reserve may be back on track to raising interest rates this year, which would help support margins on bank loans.

“The July jobs report certainly increases the odds of a September tightening, but I’d still keep them somewhat below 50 percent,” Dean Maki, chief economist at Point72 Asset Management LP and a former Fed staffer, told Bloomberg.

With a steepening yield curve, or wider spread between short- and long-term Treasuries, banks could experience improved net interest margins or improved profitability as the firms borrow short and lend long. Yields on 10-year Treasury notes rose 7 basis points to 1.573% on Friday.

For more information on banks sector, visit our financial category.

SPDR S&P Regional Banking ETF