Yields
The U.S. 10-Year Yield has fallen below 4% this morning (chart 1). TPA has been telling clients that rates were heading lower and the first level; of support was 4%. We have always said, however, that rates would move even lower. The bear market in bonds that pushed yields from 1% to almost 5% occurred with historic speed. Chart 2 shows that the rapid march higher has left the 10-Year Yield with no proximate support.
Stocks
The FED had pushed rates higher to stem inflation. Inflation has moved much lower in the wake of FED hikes. The stock market had been concerned that this tightening would push the economy into a recession, but that worry has proved fruitless. Now, lower rates will continue to push stocks higher as recession worries continue to fade. TPA has been saying that the S&P500 would not only hit 4600, but move higher to reach 4800. Yesterday, the S&P500 closed at 4707 and futures are higher this AM.
Sectors
In the TPA-RRG reports, TPA has been explaining that the new leaders will be rate-sensitive stocks. Especially those that have been hit hard throughout the FED’s inflation battle. Those sectors have gained relative price and relative momentum – Home Builders, Regional Banks, and REITs. The losers will be the most volatile parts of the Energy sector (E&P and Drillers). Chart 3 shows the relative performance of Home Builders, Regional Banks, REITs, E&P, and Drillers recently, while chart 5 shows the relative performance of those sectors in the past 2 years. The positive sectors have a lot of catching up to do, while the negative sectors have room to fall.
Yields
The U.S. 10-Year Yield has fallen below 4% this morning (chart 1). TPA has been telling clients that rates were heading lower and the first level; of support was 4%. We have always said, however, that rates would move even lower. The bear market in bonds that pushed yields from 1% to almost 5% occurred with historic speed. Chart 2 shows that the rapid march higher has left the 10-Year Yield with no proximate support.
Stocks
The FED had pushed rates higher to stem inflation. Inflation has moved much lower in the wake of FED hikes. The stock market had been concerned that this tightening would push the economy into a recession, but that worry has proved fruitless. Now, lower rates will continue to push stocks higher as recession worries continue to fade. TPA has been saying that the S&P500 would not only hit 4600, but move higher to reach 4800. Yesterday, the S&P500 closed at 4707 and futures are higher this AM.
Sectors
In the TPA-RRG reports, TPA has been explaining that the new leaders will be rate-sensitive stocks. Especially those that have been hit hard throughout the FED’s inflation battle. Those sectors have gained relative price and relative momentum – Home Builders, Regional Banks, and REITs. The losers will be the most volatile parts of the Energy sector (E&P and Drillers). Chart 3 shows the relative performance of Home Builders, Regional Banks, REITs, E&P, and Drillers recently, while chart 5 shows the relative performance of those sectors in the past 2 years. The positive sectors have a lot of catching up to do, while the negative sectors have room to fall.
Jeff Marcus founded Turning Point Analytics (TPA) in 2009 after 25 years on trading desks and 13 years as a head trader to provide strategic and technical research to institutional clients. Turning Point Analytics (TPA) provides a unique strategy that works as an overlay to clients’ good fundamental analysis. After 10 years of serving only large institutions, TPA now offers its research services to mid and small managers, RIA’s, and wealthy sophisticated individuals looking for a way to increase their returns and outperform their peers.
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