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Banking on a soft landing

It’s perhaps surprising that financials have outperformed the S&P 500 during the recent bout of market turbulence. (See Chart 1.) After all, Treasury yields have fallen and the outlook for the US economy has darkened, both of which might have been expected to weigh on banks. Regardless, we think the future for them is reasonably bright as yields rebound a bit and a recession is avoided.

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