Angel Oak's Pate: End of the rate-hike cycle will pay off for banks in '23

Cheryl Pate, senior portfolio manager for Angel Oak Capital -- manager of the Angel Oak Financial Strategies Income Term Trust -- says that it's late in the cycle for rate hikes, mid-cycle for banks in terms of margin expansion and early in the cycle for credit, and she noted that the financial services sector typically goes through a profit-margin expansion that's a 'lagged benefit' that should show up early in the year when the rate hikes stop. She expects that benefit to show up late in the year or into 2024, but she says fundamentals -- including credit quality and default risk -- will be moving in the right direction and that financial services companies will experience the benefits they historically get from operating in high-rate conditions.