Some thought the resolution to the Cyprus crisis would hurt the banks. But not bank investors.
Despite worries that bank contagion could spread throughout Europe in another banking crisis, the financial sector ETF (the XLF) has dropped only 1.5 percent over the past week and a half, and is still up 11 percent year-to-date.
But while the equities have been almost flat, the effect of Cyprus could certainly been seen in the credit market. Bond expert Lawrence McDonald notes that in the big U.S. banks like Goldman Sachs and Morgan Stanley, the credit default swap spreads—which essentially allow investors to buy protection against a bank failure—have gotten wider, reflecting greater concern around these banks.