Funding Costs Increase While Bank Stocks Keep Climbing

Bank funding costs are rising again. The industrywide cumulative deposit beta, which measures changes in deposit costs relative to underlying interest rates across a cycle, rose to 36.3%, according to S&P Global Market Intelligence data. The increase comes as expectations for further Federal Reserve rate cuts have faded, with markets now rate hikes.

A separate S&P story notes banks stocks continue to outperform the broader market. The KBW Nasdaq Bank index rose 2.94% between the July 9 and July 16, sharply outpacing the S&P 500's 0.13% decline. The outperformance extended a trend in which bank stocks have beaten the broader market in five of the prior six weeks.