Why does a steepening bond yield curve usually result in a price increase for stocks in the financial sector?

Question

ARK Invest CEO/CIO Cathie Wood mentioned on 2021-01-08:

We're seeing the yield curve steepens, i.e. long rates are going up but short rates are not, because the Federal Reserve is holding them down. This is usually good for financial stocks.

Orange Coast- reinstate Monica · Answer

Banks' business is maturity transformation. Their assets (loans) are long-dated and their liabilities (deposits) are short-dated. A steep yield curve leads to high profits, e.g. receive 7% loan interest payments and pay 1.5% deposit yield.

Answered by Orange Coast- reinstate Monica on May 9, 2021

Why does a steepening bond yield curve usually result in a price increase for stocks in the financial sector?

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