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Citigroup, Bank of America Feel Pinch of Interest-Rate Trends





If Bill Gross is right, we will need to live with flattened yield curve for a while.

From Wall Street Journal:

The results were the first indication of how interest-rate trends may hurt second-quarter financial performance of large U.S. banks. As short-term interest rates have risen in recent months, long-term rates have remained low, flattening the gap between the two, which is known as the yield curve. A flattened yield curve squeezes banks' net-interest margin, which is the difference between what banks pay to borrow money and what they charge to lend it.

...

"Our business faced challenging conditions during the quarter," Chief Executive Charles Prince said in a statement. "The capital-markets environment was one of the worst we have seen in years, and combined with a flattening yield curve, led to a significant decline in our fixed-income markets revenue."

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