💰Big-6 Banks at ATHs: Rate Cut & Buyback Boost Rally to Q3 Earnings?

The Fed’s 25 bp cut on 17 Sep ignited a instant sector rotation:

• $JPMorgan Chase(JPM)$ +0.83% ATH $312.91, YTD +29.9%

• $Citigroup(C)$ +1.11% $102.21, YTD +45.5%

• $Bank of America(BAC)$ +1.46% $51.63, YTD +16.05%

• $Goldman Sachs(GS)$ +1.11% 2025-high $798.57, YTD +38.13%

• $Morgan Stanley(MS)$ +1.03% near $158.48, YTD +26.15%

• $MasterCard(MA)$ +2.08% $598.63, 1-step from ATH $601.77, YTD +14.59%

$KBW Bank Index(BKX)$ +1.27% to new record.

More “high-club” candidates under the cut-and-buyback combo:
$Wells Fargo(WFC)$ (cheaper deposits, loan rebound), $PNC Financial Services Group Inc(PNC)$ (NII guide +3%), $U.S. Bancorp(USB)$ (AUM >$1 trn), $Truist Financial Corp(TFC)$ (ROTCE >14% target), $Capital One(COF)$ (≥8% 2025 buyback yield), $Charles Schwab(SCHW)$ ($200 bn+/mo inflows).

Four engines beyond the rate cut:

1. NIM bottoming—10-yr 4.06%, curve re-steepening.

2. Mega buybacks—JPM $20 bn, BAC $25 bn, C ≥$4 bn.

3. Asset-quality beat—NCOs flat, CRE provision peak past.

4. CET1 >13%, ample ammo for divs/buybacks.

What kills the trade?

• Oct core PCE >3.5% → re-pricing of “re-hike”, -10-15% beta unwind.

• 10-yr <3.5% or >4.8% breaks steepener; sweet spot 3.8-4.3%.

• Credit—card delinquency +20 bp/mo or CRE vacancy +200 bp.

Strategy take:

• Valuation 1.2 σ below 10-yr mean, ROE 14-16% (decade high).

• 2025 cash return 6-10%; history: +12% in first 6 mo post-cut, only day-1 so far.

• Core: $JPMorgan Chase(JPM)$ , $Bank of America(BAC)$ (big buybacks, low beta).

• Cyclical: $Citigroup(C)$ , $Capital One(COF)$ (high cash return, rerating beta).

• Quality: $MasterCard(MA)$ , $Morgan Stanley(MS)$ (fee-based, asset-light).

Bottom line: banks switching from “recession” to “cash-cow + curve repair”; valuation/shareholder-return gap still early—buy dips into Q3 earnings (mid-Oct).

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