The Federal Open Market Committee has repeatedly said it was likely to leave the federal funds rate in its current range at least until the U.S. unemployment rate moves below 6.5%. But top FOMC and Federal Reserve officials have given conflicting statements recently about the timing of a curtailment of the Fed's bond-buying. The market always anticipates monetary policy changes, and the recent rise in market rates on the 10-year could signal a policy change in the near-term.
In its quarterly 10-Q filing with the Securities and Exchange Commission, Huntington said a 200 basis-point parallel shift in long and short-term interest rates would increase its net interest income by 3.1%, based on its first-quarter numbers.
A Balanced Rate play
"For investors looking to add 'rate sensitive' names, we would point to HBAN, a less recognized rate sensitive bank which in our view trades at a reasonable absolute P/E (10.5x) and a discounted relative P/E (0.75x) [to peers], and offers relative margin defensibility today," Penala wrote.
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-- Written by Philip van Doorn in Jupiter, Fla.