Can U.S. lenders keep up their momentum? Don't bank on it

• US banks, including JPMorgan, Goldman Sachs, Citigroup, and Wells Fargo, are set to report Q3 earnings following a 'stellar' Q2.
• The S&P Financials sector has significantly lagged Energy and Technology year-to-date, and the KBW Bank Index is in correction territory, down over 10% from its August peak.
• Barclays anticipates a roughly 20% linked-quarter decline in large-cap bank trading revenues for Q3, worse than the typical seasonal decline, and warns of pressure on tangible book values and capital ratios due to surging 10-year Treasury yields.

US banks are kicking off earnings season with a cautious outlook. While Q2 was strong, analysts expect a significant slowdown in Q3, particularly in trading revenues and overall financial sector EPS growth. Rising bond yields are also projected to pressure bank capital positions, suggesting a return to a more challenging reality for lenders.