SOURCE: Paragon Financial Limited
NEW YORK, NY--(Marketwire - Aug 29, 2012) - The major banks continue to outperform the market this year despite growing concerns of a global economic slowdown. The Financial Select Sector SPDR Fund (XLF) -- which seeks to replicate an index comprised from diversified financial services -- is up nearly 16 percent year-to-date as investors jump back into the sector after a major selloff in 2011. The Paragon Report examines investing opportunities in the Banking Industry and provides equity research on JPMorgan Chase & Co. (NYSE: JPM) and Morgan Stanley (NYSE: MS).
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Recent data from the Federal Reserve has shown that the gap between U.S. bank deposits and loans has expanded at the fastest pace since May 2010. For the two month period ended July 31 deposits have gained 3.3 percent to $8.88 trillion, while business lending has risen 0.7 percent to $7.11 trillion. Since May the gap has grown by 15 percent. Banks treasury purchases of $136.4 billion this year, an all-time high, are already double last year's total of $62.6 billion.
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"Bank deposits continue to explode and in turn they continue to buy Treasuries as the economy loses momentum, inflation is trending down, Europe continues to hang over our heads and political uncertainty reigns" said Michael Mata, a money manager for ING Investment Management Americas. "There is no reason for interest rates to climb in any meaningful way any time soon."
Bloomberg recently reported that the Federal Reserve will allow U.S. banks with over $10 billion in assets more time to complete internal stress tests required by the Dodd-Frank Act. Banks will now have until September 2013 to complete tests, the previous proposal required banks to conduct tests this year.
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