This article was written exclusively for Investing.com
The economic landscape is eroding quickly, and that’s causing inflation rates and the expectation for future inflation to plunge. It paints a murky picture for interest rates, and with traders betting on the possibility of negative interest rates out of the Federal Reserve in 2021, yields on the Treasury could be heading toward 0%.
Should that happen, the one sector that could suffer are the banks. This group has been pounded in recent weeks, with the Financial Select Sector SPDR® Fund (NYSE:) falling a stunning 11% since April 29. Overall, the year has been dismal for the group, with the ETF down by more than 30%. Yes, it can still get worse.
Inflation Reading Plunge
The latest reading for the and the both plunged in April. The producer price index fell by 1.2% year-over-year, its steepest decline since 2015. Meanwhile, the consumer price index increased by only 0.3% year-over-year, its smallest also since 2015. Even…