Why does a steepening bond yield curve usually result in a price increase for stocks in the financial sector?

Steepening Yield Curve A steepening curve typically indicates stronger economic activity and rising inflation expectations, and thus, higher interest rates. When the yield curve is steep, banks are able to borrow money at lower interest rates and lend at higher interest rates.

What is U.S. real yield?

Real yield is calculated by subtracting expected annual inflation from a bond’s nominal yield, so a negative real yield means that inflation expectations are higher than bond’s nominal yield.

How is U.S. real yield calculated?

Example: TIPS Calculation

Suppose the TIPS were trading at $925 on the secondary market. The real yield calculation would use the secondary market price (like any other bond) of $925, but use the inflation-adjusted coupon payment of $42. The real yield would thus be: 4.54% (42 ÷ 925).

What is U.S. 10 year real yield?

Current 10 Year Real Interest Rate: 0.22% -4.00 bps. At market close Fri Jun 3, 2022. Mean: 0.84%