Major Banks Set to Report Earnings Amid Rising Yield Environment, UBS Says
MT newswire2026/10/05 18:1502:15 PM EDT, 10/05/2026 (MT Newswires) -- Third-quarter earnings for major banks will unfold against a backdrop of rising Treasury yields, with earnings estimates of Goldman Sachs (GS) and Morgan Stanley (MS) sitting well below Wall Street's views, UBS Securities said in a note Monday. Earlier this month, the 10-year Treasury yield hit the highest level since April 2002, hitting as high as 5.24%. The 10-year yield is seen as a proxy for rates on mortgages and other loans. "A key theme we expect to hear discussed on earnings calls this quarter is, of course, the current rate environment, in which we have seen long-term treasury yields reach their highest levels in years," UBS analyst Erika Najarian said. Banks have underperformed the S&P 500 by 9.3% since the 10-year yield hit about 5%, according to the UBS note. History suggests that a climb in the 10-year rate above 5% tends to have a negative impact on market multiples. "We think investors will be sensitive to any management commentary on how longer-term rates impact business momentum," Najarian said. "In the medium term, we think any signal that long-term rates have reached their peak will be supportive of bank shares." A higher rate backdrop puts deposit costs back in focus, Najarian wrote. Last month, the Federal Reserve raised interest rates for the first time in just over three years to combat sticky inflation. The central bank's so-called "dot plot" signaled that a further rate increase could happen later this year. The US big bank earnings season kicks off next week. UBS lowered its third-quarter earnings-per-share estimates for Goldman, Morgan Stanley, Bank of America (BAC), Wells Fargo (WFC) and JPMorgan Chase (JPM). It raised the outlook for Citigroup (C). Of the six banks, Goldman, Morgan Stanley, JPMorgan and Citigroup are likely to miss estimates, with Goldman and Morgan Stanley expected to see the biggest shortfall, according to the note. Bank of America and Wells Fargo are seen topping Wall Street's EPS views. UBS slashed Goldman's third-quarter
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The merged company’s total debt amounts to approximately $80 billion. David Ellison and co-CEO Ynon Kreiz face a $6 billion cost-cutting target. The senior management teams at CNN and CBS News will remain unchanged. Anzar Mehraj / Harshita Mary Varghese, Reuters, October 6 — Paramount-Skydance (PSKY.O) completed its $110 billion blockbuster acquisition of Warner Bros. Discovery (WBD.O) on Tuesday, giving rise to a Hollywood giant named Skydance and placing CEO David Ellison in charge of one of the world’s largest entertainment companies. The deal combines the studios behind “Mission Impossible”, “Harry Potter”, and DC Films with major TV and streaming networks such as CBS, CNN, Paramount+, and HBO Max, creating a massive entertainment company encompassing film, television, and news. On Tuesday, the merged company’s stock moved from Nasdaq to the New York Stock Exchange, trading under the ticker “SKYD”. A settlement agreement reached with a coalition of several US states and the Hollywood writers’ union (link) cleared one of the main legal obstacles to this landmark media merger. The move comes as Hollywood faces declining cable TV subscriptions, costly battles over streaming viewers, and ongoing union pressure regarding jobs and protections for creative workers. Last week, Ellison stated (link) that the choice of the name “Skydance” was intended to preserve the independent identities of the Paramount and Warner Bros. studios, rather than folding them into a new brand. However, analysts note that the name reinforces Ellison’s control, highlighting that some of Hollywood’s most iconic brands now answer to him and providing a platform for his own strategies and culture. In just 16 years, Skydance has evolved from an independent studio into a central player in one of Hollywood’s most powerful deals. Founded in 2010 by the son of Oracle co-founder Larry Ellison, it gained prominence as the financier and producer behind Paramount’s blockbuster “Top Gun: Maverick”. After merging with Paramount last year (link), Skydance set its sights on Warner Bros., not only engaging in a fierce bidding war with Netflix (NFLX.O) but also attracting interest from other potential buyers, including Comcast (CMCSA.O). Broader Hollywood ambitions Ellison has appointed former Mattel CEO Ynon Kreiz as Skydance’s co-CEO, responsible for day-to-day operations and integration, while Ellison will oversee creative direction and overall strategy. The two must consolidate the two giant companies while achieving the planned $6 billion in cost savings. Paramount stated that a significant portion would come from “non-labor costs”—specifically, integrating the streaming technology and cloud service providers of both companies. However, such wide-ranging cuts are expected to impact jobs across Hollywood. The merged company is projected to carry around $80 billion in debt, putting pressure on Ellison to develop streaming business, sustain cash flow from cable networks, and boost box office performance. CNN President Mark Thompson and CBS News Editor-in-Chief Bari Weiss will continue in their leadership roles at Skydance (link). (For the convenience of non-English speakers, Reuters automatically translates its reports into several other languages. As automated translations may contain errors or lack necessary context, Reuters does not guarantee the accuracy of automated translation texts and provides them solely for reader convenience. Reuters bears no responsibility for any damage or loss arising from the use of automated translation functions.)
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