I believe Lloyds can move higher as its net profits are leveraged to the sterling
money market yield curve and more Mark Carney base rate hikes.
The first generation product to obtain acceptance was adjustable rate preferred stock, a security with a dividend rate that is adjusted quarterly to reflect changes in
money market yields. Although it enjoyed a high degree of popularity early on, investor demand for adjustable rate preferred stock weakened when experience revealed that the shares retained a degree of price volatility that was incompatible with the objectives of corporate cash managers (Winger et al |13~).
Money market yields are now increasing, so even cash is becoming competitive with stocks, which has not been true for 10 years.
One can see from the figure that these four do not closely track the three
money market yields. No one uses these money market instruments to finance an investment project, a new house, or a college education.
Since elections we have seen lowering the
money market yields on long term instruments of 3-10 years upto 84bps to currently yield at 9.81-10.89 percent respectively.
Structured products offering capital protection and enhanced yield, to compensate for low
money market yields, are enjoying an under-writing bull market.Yet the end of super-cheap LIBOR-based funding is possibly upon us and rising commodity prices are the last thing central banks need now.
"Institutional profit-taking continued on economic uncertainty, security concerns in the country and rise in
money market yields."