Financials have lost some luster recently. A drop in intermediate-term interest rates while the short-end of the Treasury curve remains high is not a great recipe for firms that borrow short and lend long. Still, being able to pay out low rates to depositors and invest in paper earning north of 4% is still a winning asset-liability strategy for financial institutions.
One niche of the sector that is generally insulated from those yield curve changes is insurance equities. This group benefits from higher interest rates with less emphasis on the shape of the yield curve. It’s also a somewhat