Leaders-Laggards

I think governments are nervous about sanctioning the Russian oil industry given how high prices already are. If you’re looking for signs that this is not a full-blown risk-off environment, small-caps could be exhibit #1. Treasuries have simply not been able to gain any ground on equities as would typically be the case if investors were moving away from risk. The demand for dollar liquidity has picked up once more.

Last week’s downturn could be explained at least in part to Russia/Ukraine uncertainty, but the overall trend remains decidedly bullish. A supposed easing in the Russia/Ukraine tensions eased some of the pressure around crude oil prices, but energy stocks weren’t impacted to an unusual degree. The materials sector relative to the broader market has been in a somewhat volatile, yet sideways pattern for about 8 months.

Healthcare has been in the headlines a lot lately because of vaccine approvals, but that hasn’t really moved the needle for healthcare stocks. Rising rates across the Treasury yield curve continue to make this sector one of the market’s strongest. Oil continues its unyielding drive towards the $100 mark on the heels of strong demand for energy and rising political risks.