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A sign outside the headquarters of JP Morgan Chase & Co in New York, in this September 19, 2013, file photo.
A sign outside the headquarters of JP Morgan Chase & Co in New York, in this September 19, 2013, file photo.
(Mike Segar/Reuters)

Defensive strategy against rising rates: U.S. bank stocks

Worried about the 120-basis-point rise in interest rates? Buy U.S. banks.

The U.S. 10-year Treasury yield has jumped from 1.63 per cent to 2.86 per cent since May of 2013. The resulting higher interest costs are a drag on profits for most market sectors with a constant need for new funding, particularly ones like real estate.