Gains eroded in April


Funds trading financial services equities suffered from a sudden spike in Treasuries and investor jitters over the Fed's potential rate hike - effects that were felt throughout all strategies, but particularly by this sector. Many firms were confident through March that short-term interest rates would hold steady, but reversed their thinking as oil prices reached historic highs. While the financial services sector had been strong due to the yield curve, generating returns based on the spread between short-term and long-term rates, anticipation that short-term rates will increase meant meaningful selling pressure on these stocks. Keefe-Rainbow Partners, a financial