Six of the largest US banks, including JPMorgan Chase and Goldman Sachs, will report third-quarter results this week, and the numbers will offer the clearest read yet on how surging bond yields are working through the economy.

The earnings season opens against a backdrop of rapidly rising long-term interest rates. Yields on Treasury securities have climbed sharply in recent months, pushing up borrowing costs for households, corporations and the banks' own funding positions. Wall Street analysts, corporate treasurers and policymakers will all parse the results for evidence of where the strain is showing up first.

Bank shares have already reflected the pressure. Higher yields typically compress the value of fixed-income portfolios, raise deposit costs and slow lending volumes. At the same time, they can widen net interest margins on certain asset books — which is precisely why this week's reports matter: they will show which effect is winning.

Why do surging yields matter for bank earnings?

Yields affect banks through several channels at once, and the third-quarter statements should reveal the balance among them:

• Net interest income. Higher rates can lift what banks earn on loans and securities, but only if funding costs lag behind.
• Deposit costs. Customers increasingly demand better rates on deposits, squeezing the spread.
• Bond portfolio losses. Rising yields mark down the value of securities held on balance sheets.
• Lending demand. Expensive credit can slow mortgage activity, leveraged finance and corporate borrowing, hitting fee income.
• Trading and advisory. Volatility can lift trading revenue even as higher rates dampen dealmaking.

JPMorgan Chase and Goldman Sachs, the two most closely watched names in the group, sit differently across these channels. JPMorgan carries a vast consumer and commercial lending franchise, making its net interest income and credit-quality disclosures a proxy for the wider economy. Goldman Sachs leans on trading and investment banking, so its results will show how volatility and a frozen deal market are offsetting — or amplifying — rate-driven headwinds.

What does the reporting week change?

These results arrive at a moment when investors are actively repricing risk. The disclosures will feed directly into debates over the health of consumer credit, the durability of corporate balance sheets and the Federal Reserve's policy path.

Executives' commentary will carry as much weight as the printed numbers. Guidance on loan growth, provisions for credit losses and capital return plans will shape expectations for the sector into year-end.

For corporate leaders outside banking, the reports function as an early warning system. Bankers see borrowing demand and repayment behaviour before they show up in official statistics. A deterioration in credit metrics or a sharp slowdown in loan origination would signal that higher-for-longer rates are starting to bite.

Who should watch, and for what?

• CFOs and treasurers — for signals on refinancing conditions and credit availability.
• Investors — for the split between margin expansion and deposit-cost pressure.
• Policy watchers — for evidence of rate transmission into lending and credit quality.

The week's six reports will not settle the argument over where the economy is heading. They will, however, provide the first hard, company-level data on how the surge in yields is translating into profits, provisions and lending behaviour across the financial system.

JPMorgan Chase, Goldman Sachs and their peers report third-quarter results this week.