Investors keeping tabs on the financial sector probably know these banks face a major headwind right now. Although higher interest rates make lending a more profitable business, they also crimp demand for loans. They also tend to swell delinquencies and defaults because higher rates can curb economic growth while curbing inflation.

For a narrow sliver of financial stocks, however, the coming year could be much better than expected for one surprising reason. While mergers, acquisitions, and public offerings remain at subdued levels, that's likely to change in a big way very soon. That's great news for Goldman Sachs (NYSE: GS) and JPMorgan Chase (NYSE: JPM), both of which are key players in the capital markets and advisory business.

It's been a lackluster couple of years in dealmaking to be sure. The worldwide value of the third quarter's mergers and acquisitions was around $700 billion, according to numbers from Dealogic, mirroring 2022's Q3 tally that was well short of 2021's third-quarter pandemic-prompted M worth more than $1.5 trillion. In fact, Bloomberg reports year-to-date mergers and acquisitions are the lowest they've been at this point in the calendar year since 2013.

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Source Fool.com