Higher Deposit Costs and Treasury Yields Pressure Banks

U.S. banks’ funding costs rose 2 bps in the second quarter to 2.09%, but analysts still expect loan growth and higher asset yields to support net interest income, S&P Global Market Intelligence wrote. Consensus forecasts for 74 banks above $10B in assets project median NIM expansion throughout 2026 and 2027.

Another S&P article discussed how the 30-year Treasury yield reached 5.31% on Aug. 17, its highest level since 2007. Strategists expect upward pressure on long-term yields to persist amid rising energy prices, the soaring national debt, and declining confidence in the Fed.