Because certain sectors like Materials, Industrials (both of which I am short) and Financials (why am I not short?) tend to benefit when bond yields are rising. Others, like the Utes and Reits/RE tend to do better when yields are falling. There are plenty of qualifiers and conditions within that broad brush stroke, but today da Utes (which I am long) are conspicuous in their failure to get the bear memo.
Incidentally, I bought XLU after reading a mainstream financial media article highlighting an expert’s view that Utilities are going to get destroyed “when” 10yr yields rise above 3% (which is probably true, if it happens). That’s the media again, touting what is in real time and getting people worked up at the precise wrong time.
Not married to the position, but it’s helping on a day like today and the short-term daily pattern looks like it could have more upside. Functionally, the Utes are a more defensive sector. There’s that balance thing again.
I know, the posts are coming at a higher volume today. That’s what a market on the move does. It makes my life infinitely more interesting as volatility, which we’ve completely anticipated in NFTRH, returns.
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.