Higher interest rates would help widen the difference between what banks charge on loans and pay on deposits, which would boost earnings for the financial sector. Regional banks are among the stocks most positively correlated to rising interest rates because higher rates improve net interest margins.
“…the Trump admin is prioritizing the easing of the regulatory grip on the U.S. financial system. As for direct benefits, details of the order are still limited, but could help drive an incremental leg up in capital deployment, both organically and via M&A,” according to an Evercore note posted by Crystal Kim of Barron’s.
Some critics assert that broad reach of Dodd-Frank and the slowness with which the law has been implemented are factors that could hamper Trump’s efforts to scale back the law.
The Trump administration has been seen as friendly toward Wall Street banks, especially as President Trump fills out his administration with members of Congress and Wall Street executives, including Cohn who retired as president of Goldman Sachs Group (NYSE: GS) to join Trump’s team.
For more information on the financial sector, visit our financial category.