U.S. banks showed a strong comeback over the past week on bullish fundamentals in the space amid market rotation into undervalued segments. The probability of Donald Trump returning to the White House has risen significantly along with a Fed rate cut in September. Both are favorable for the banking sector. The robust second-quarter results of the banks also added to the strength. Given the optimism, bank ETFs soared to a new one-year high. First Trust NASDAQ ABA Community Bank Index Fund (NASDAQ: QABA) was the biggest winner, jumping 16.2% in a week. This was followed by gains of 15% for Invesco KBW Regional Banking ETF (NASDAQ: KBWR), 14.8% for SPDR S&P Regional Banking ETF (ARCA:KRE), 13.3% for SPDR S&P Bank ETF (ARCA:KBE) and 11% for iShares U.S. Regional Banks ETF (ARCA:IAT). Trump Trade Resurge The banks are well-positioned to benefit from Trump's deregulation and lower corporate tax policies. One of the most notable potential benefits for banks would come from Trump's focus on deregulation. During his first term, Trump's administration rolled back several regulations that were imposed after the 2008 financial crisis. This deregulation reduced compliance costs and increased profit margins for banks. A second Trump term could see a continuation or even an expansion of these deregulatory efforts, providing a more favorable operating environment for financial institutions. Fed Rate Cut Bets The latest inflation data and Fed Chairman Jerome Powell's recent hints have bolstered bets that the central bank will act by September. Powell said the Fed wouldn't wait for inflation to get to ...