Higher Rates Put Large US Banks Back Under the Microscope

With Federal Reserve Chairman Kevin Warsh signaling a tougher line on inflation, large U.S. financial stocks are under scrutiny again. This shift in expectations means investors must reevaluate where their capital feels most comfortable.

The three Canadian and U.S. banks featured here - Royal Bank of Canada (TSX:RY), Bank of Montreal (TSX:BMO), and First Mid Bancshares (FMBH) - all have significant exposure to interest rates and the yield curve.

Royal Bank of Canada, one of North America's largest diversified banks, has a market cap of roughly CA$393.4 billion and generates revenue from a mix of personal and commercial banking, wealth management, insurance, and capital markets businesses.