Less aggressive traders can use the ProShares Short Financials ETF (NYSEArca: SEF), which takes the single inverse or -100% of financial stocks, and the ProShares UltraShort Financials (NYSEArca: SKF), which takes a leveraged -200% of financials.
Yields on benchmark 10-year Treasury notes were hovering around 2.98% Friday.
Mark Tepper, president and CEO of Strategic Wealth Partners, argued that the weakness in banks is attributed to the yield curve flattening where yields on the short end are rising, whereas later-dated Treasury yields remain depressed. The flattening yield curve depresses banks’ net interest margins and weigh on their company stocks.
“We are a believer in higher interest rates, we do think they’re going to go higher over the course of the next year, but we also have a contrarian perspective on what that actually means for bank stocks. Yes, rising interest rates can in theory help net interest margins, but they can also curb lending,” Tepper told CNBC.
For more information on the financial sector, visit our financial category.