Some U.S. banks are hoping to bolster their bond portfolio yields in the upcoming earnings season.
Banks have steadily increased their exposure to longer-dated bonds in recent quarters and that could boost net interest income, at least in the near term, since those securities usually carry higher yields.
Expanding duration, however, can bring risk if interest rates rise notably. In that scenario, banks likely would hold onto below-market-rate securities for longer periods of time, while funding costs move higher.
