Why Coinbase, Upstart, and Nu Holdings Fell Today
Shares of three recently public fintechs -- cryptocurrency platform Coinbase (NASDAQ: COIN), AI-based lending platform Upstart (NASDAQ: UPST), and Brazilian digital bank Nu Holdings (NYSE: NU) -- all fell on Monday, down 8.2%, 6.5%, and 1.9%, respectively, as of 12:30 PM EDT.
The Federal Reserve has been raising interest rates to tame inflation, and, as of September 15, has accelerated its quantitative tightening. That means it's letting a lot of Treasury bonds and mortgage-backed securities roll off its balance sheet. That should have the effect of increasing longer-term interest rates, as those securities will now need to fetch a price that is attractive for private sector buyers. In fact, the 10-year Treasury bond yield touched 3.5% earlier today, briefly exceeding its June highs.
It had been a popular thesis that higher interest rates would benefit financial stocks, as they can earn more net interest income as they charge higher rates on loans. However, what we're seeing with these three fintech stocks is actually the opposite. Here's why.
Source Fool.com
