If you’re hoping for a rebound in equities here, utilities are telling you to expect otherwise. The one thing we haven’t really seen throughout 2022 that would signal stronger negative sentiment would be sustained underperformance from small-caps. The dollar index has only been this high twice before - the mid-1980s and the tech bubble.

Even though growth and high beta stocks took a step back last week, consumer discretionary is still hanging fairly tough here. Even as growth and high beta plays strengthened and weakened, utilities never really underperformed significantly in the same way that many defensive themes did from time to time. I wouldn’t say that the run for tech is over, but it’s being knocked back on its heels a bit.

We’ve already seen some major retailers issuing warnings during the earnings season, but the consumer has remained relatively sturdy up to this point. Tech took a bit of a backseat last week as cyclicals took over, but there’s still a lot of positive sentiment surrounding this sector. The latest bullish run for stocks has dampened the demand for government bonds.