What impact will rising U.S. bond yields have on bank deposits and loans?

Raising interest rates is good for banks because the interest rates they charge for lending typically adjust faster than the interest rates they pay on funds such as deposits.

In banking jargon, the proportion of a given change in the Fed's interest rate that is reflected in loan or deposit rates is called beta. If a bank's deposit beta starts to catch up with its loan beta, then rising interest rates become less and less net positive for profits.

Deposits will flow out of the banking system into higher-yielding assets such as money market funds because many banks are not passing on the benefits of sharply higher interest rates to savers.

Depositors who see their purchasing power eroded will be more motivated to look around for better returns on their savings.

More importantly, the demand for loans is the degree of national expectations for future economic prospects.

Producers are more likely to borrow money for capital expenditures if they believe future returns on investment will cover current borrowing costs；If consumers believe that future income can cover the cost of borrowing, they are more likely to overdraw their future income for early consumption.

（What indicators track credit capacity?Consumer credit card lending and revolving credit,+commercial and industrial loan growth in U.S. banking industry）