Utilities relative to the S&P 500 is having its best 4-week stretch of outperformance in more than a decade. What just a couple weeks ago looked like a pure rotation within equities has quickly shifted into a stock-to-bond pivot. This isn’t a simple valuation unwind either. This is a massive deleveraging triggered by the reverse yen carry trade.

As market breadth expands, defensive issues are picking up some momentum again. Financials have very quietly become the best-performing sector of the year. Small-caps are understandably digesting some of their recent gains here, but momentum still looks like it’s on their side. A number of signs are still lining up for a flight to safety trade, but it’s been a very slow process.

I think outperformance of the utilities sector might be one of the stronger signals that the small-cap rally will fade in the near-term. This was unquestionably an historic rally for small-caps, but the issue now turns to sustainability. This broader stock market rally at the expense of mega-cap tech has not triggered a big move in Treasuries. I don’t think it's a coincidence that the decline in tech stocks correlated with the rally in the yen.