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Interest rate sideshow for JP Morgan could become relevant again

Admin || 13th January 2026

The decline in JPMorgan shares despite solid earnings points to the diminished role of interest rates in buffeting bank stocks, yet President Donald Trump’s proposed cap for credit card rates is reviving the importance of borrowing costs for lenders’ profit outlooks.

Investors appear to be less comforted by the banking giant’s upbeat net interest income forecast -- a metric highly influenced by borrowing costs -- and more focused on falling investment banking fees as a result of weaker-than-expected revenue from underwriting.

JPMorgan’s results speak to the broader shift in the relationship between bank stocks and rates, with the correlation between the KBW Bank Index and two-year Treasury yields seeing more divergence since 2022 after an extended period of moving in lockstep in years prior.

The shifting link is partly a reflection of how banks’ business models have come to rely more on trading and investment banking revenue in recent years.

Yet Trump’s push for a 10% cap on credit card rates is driving the impact of interest income back in the limelight, with the issue weighing on financial shares on Tuesday. JPMorgan has already warned on the adverse effect of such a move, and other lenders reporting this week are likely to do the same.

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