When Pigs Fly

When the Pigs fly tends to be when interest rate dynamics say they fly. Rising long-term interest rates, as long as they don’t materially hurt the economy, are beneficial to the banks’ bottom lines. Yesterday we looked at Amigo #2’s lift off and today that has continued amid headlines like these (from Bloomberg)…

Here is the daily chart of the Bank ETF I have held all along, since becoming constructive on rising long-term yields.

kbe

Here is the daily leadership chart of KBE/SPY, which we review each week in NFTRH’s Market Internals segment. From NFTRH 481, accompanying the chart…

“The next segment will cover the 3 Amigos, and one of them is the 10yr yield, which has been diverged by the KBE/SPY ratio lately. I don’t expect the disparity to last. If this Amigo is to ride to 2.9%, the KBE/SPY ratio will play some catch up.”

kbe/spy

So far, so good.

Subscribe to NFTRH Premium for an in-depth weekly market report, interim updates and NFTRH+ chart and trade ideas; or the free eLetter for an introduction to our work. You can also keep up to date with plenty of actionable public content at NFTRH.com by using the email form on the right sidebar. Or follow via Twitter @BiiwiiNFTRH, StockTwits or RSS. Also check out the quality market writers at Biiwii.com.