Bond yields, already on the decline, are expected to drop even further. According to one trader, that's bad news for bank stocks—and one very big name in particular.
The yield on the 10-year Treasury note has fallen to the lowest level since February, tracking bond yields around the world lower. This has caused considerable trouble for interest-rate-sensitive bank stocks: Financials are now the year's worst-performing sector.
"Falling bond yields and interest rates will hurt the earnings capability of the financials due to their net interest margins, which is basically borrowing in the short term, lending in the long term," Todd Gordon of TradingAnalysis.com said Friday on CNBC's "Trading Nation."
Looking specifically at the exchange-traded fund (ETF) tracking the financial sector, the XLF, Gordon observed that the product "has failed to get up to $24 and has under-performed the S&P 500 Index over the last 12 months."