Discount Narrowing Expected When the reward is improving over risk, the discount becomes premium. The core stocks here banks will pay up more dividend, that means higher cash flow for DFN. Oil price is hitting SU but dividend is not threatened. Its funny everyone says recession coming 2 years now, right on time for projected rate drops.
Canada and US both have a distinct risk protection keeping bank looses at bay.
Canada, elevated house price for years and in 2020 to mid 2022 accelerated very fast. This improved the banks collateral postion thats why arrears are not turning into losses. Now they are benefitting from rate increase on mortgages albeit at higher funding cost, immigration is putting a floor on home prices.
USA have longer terms than Canada so they are not feeling the rate increase until much later and have a longer horizon to pay down mortgage and plan for it.
Top all of this off with North American banks are most important GSibs