Most sectors have grappled amid various headwinds, one of which was the incessant rate hikes by the Fed to curb the stubbornly high inflation. Even though there are anticipations of a rate hike pause, a rate hike cut may be far away.
Generally, finance entities like banks, insurance companies, brokerage firms, and money managers benefit from higher interest rates. Against this backdrop, let us explore some financial stocks, EZCORP, Inc. (EZPW – Get Rating) and Regional Management Corp. (RM – Get Rating), which could be solid buys now.
Coupled with the banking sector jitters, the sky-high inflation, incessant rate hikes by the Fed, and the U.S. debt default crisis could aggravate the turbulence in the macroeconomic environment. In addition, the current economic scenario is feared to trigger a recession later in the year.
The Federal Reserve has once again hiked interest rates by 25 basis points, which brings the federal funds rate to a range of 5% to 5.25%. Even though the Fed has opened the doors of a rate hike pause, slashing it could be unlikely anytime soon since inflation remains well above the target range of 2%.
However, there are some industries, like the financial services industry, whose revenues positively correlate with the rising interest rates. Given the high-interest-rate environment, the borrowers would have to…
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