Based on high inflation and an aggressive Fed, I think the markets will continue favoring defensive assets. A beat on June retail sales expectations added a bit of a sentiment boost, but there’s little question that the environment is deteriorating. Tech could looking a bit better on a relative basis here. Last week was an encouraging sign if you’re a bond investor.

The utilities sector has suddenly gotten very volatile relative to the broader market. Treasury volatility remains historically high and yields continue to whipsaw on every latest development. The longer-term lumber/gold signal is still risk-off, but the ratio is definitely trending back in the risk-on direction. Growth and tech stocks enjoyed a nice bounce last week, but not enough to indicate a change in trend.

Healthcare continues its roll as one of the market’s consistent outperformers. Consumer staples have had a strong relative month as this ratio hits level not seen since the heyday of the COVID recession. Utilities stocks ripped last week, reversing what was looking like a move to risk-on conditions.