Did you know that the “taper tantrum” in 2013, a term coined after the Federal Reserve hinted at slowing its pace of bond-buying, caused a sudden spike in bond yields?

This is a strong reminder to all investors how powerful banks can be in influencing the world around them.

In today’s edition of Equity Eats, we’ll take a look at the following:

• No Rate Cuts? First, with March's shockingly high inflation data pushing bond yields up to 4.63%, expectations for a mid-year rate cut by the Fed have disappeared 😳

• Bank Earnings Beat But Disappoint: Next, despite JP Morgan, Citi, and Wells Fargo reporting solid net interest incomes, the earnings didn't surpass expectations 👎

• Iran’s Attack Backfires: Finally, the recent conflict between Iran and Israel highlighted Israel's technological edge, causing a reassessment of war risks and contributing to a drop in Brent Crude prices ❌

Stay tuned as we dive deeper into these topics, giving you the insights needed to find your way through these chaotic times.

No Rate Cuts? 😳

March inflation data has been a shock to the markets.

Government bond yields have risen to 4.63%, which has led to a drawdown in stocks.

A June rate cut by the Fed is off the table and unless better news on inflation comes soon, July will be off the table as well 📅

Many economists now think that there will be no rate cuts at all this year.

That may be an accurate conclusion ✔️

Bank Earnings Beat But Disappoint 👎

Earning season kicked off with three big banks reporting—JP Morgan, Citi, and Wells Fargo.

Investors focused on a line item called Net Interest Income, which is a function of how much banks earn on the loans they made compared to how much they paid out on deposits and other money they borrow during the quarter.

This is a particularly important measure for banks in light of today’s high interest rate environment 📈

While JP and Citi matched or beat expectations on Net Interest Income and Wells barely missed, investors were disappointed because Net Interest Income didn’t handily beat consensus estimates.

Bank stocks performed extremely well during the first quarter so there was likely heavy profit taking on the earnings releases 💰

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Iran’s Attack Backfires ❌

International tensions have contributed to market volatility.

But following Iran’s attack on Israel, and Israel’s far more sophisticated attack on Iran, Middle Eastern countries understood Israel’s technological superiority over Iran.

Since then, the risk of a direct war between Israel and Iran has declined as Iran does not want to face such a confrontation 🙅🏻

Oil prices have declined from above $91 per barrel on Brent Crude to $83.50 as a result.

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