Bank Profits Seen Buffeted by Rates Rising Without Growth

Rising bond yields are typically indicators of stronger economic growth and higher profits for banks. That might not be the case this time, as a 30-year bull market in U.S. government debt shows signs of coming to an end.

Higher long-term interest rates can discourage mortgage lending and cause losses in the securities portfolios of banks including JPMorgan Chase & Co. and Bank of America Corp. That could be offset only if the rate increases are driven by a growing economy and demand for new credit, rather than speculation about the Federal Reserve slowing its $85 billion-a-month bond-buying program.