Investing.com – Financial stocks hitched a ride to lead the broader market higher as Treasury yields caught a bid on rising optimism over a progress on a U.S. and China trade deal thanks to President Donald Trump confirming that he would meet with Chinese Vice Premier Liu He on Friday.
The sector was easily the strongest in the S&P 500, up nearly 1.5%. Ten of the 11 sectors in the index were higher.
In the hours leading up to the trade talks, traders had to contend with a wave of conflicting reports, which had suggested the potential for progress on this week’s talks was murky at best.
But with Trump set to join talks on Friday, trade hopes were restored somewhat, prompting investors to move out of safe-haven Treasuries, sending yields higher, which move into the opposite direction to bond prices.
The United States 10-Year yield was up 8 basis points to 1.665% from Wednesday's 1.587% while the 2-year yield climbed 5 basis points to 1.52%.
Financials, mostly banks, rose in tandem with rising yields with Bank Bank of America (NYSE:GS) and JPMorgan Chase (NYSE:JPM) rising more than 2% and Citigroup (NYSE:C) up nearly 2%.
Rising Treasury yields are seen as a boon for banks, letting them boost their net interest margin, the difference between the interest income the banks generate and the interest they pay out.