The Bank of New York Mellon Corporation is an American investment banking services holding company headquartered in New York City. Surging inflation expectations are now raising expectations of the Fed hiking interest rates.

The prospect of rising interest rates is usually beneficial for financials. Why? Because higher interest rates mean that banks can charge more for their loans. The Bank of New York Mellon is one of the oldest banks in the world with $2.2 trillion in assets under management. If the Fed increase interest rates to address inflation then this bank could potentially gain in value if the strong seasonal pattern is repeated again this year.

Over the last 15 years, the bank’s shares have risen 13 times between Oct 06 and Dec 06. The average rise has been 6.99% and the largest gain was in 2016 with a 18.02% rise. The largest loss was in 2018 with a -8.80% loss.

Major Trade Risks: The main risk to this trade is if there is a sharp correction in stocks generally on the problem the Fed face with surging inflation and slowing growth.