Despite a notable risk-off swing last week, consumer staples continue to struggle getting any love from investors. Developed market foreign equities extend their recent underperformance streak that has been in place for most of 2021. Treasuries remain under steep pressure as the 10-year yield is nearly 100 basis points higher today than it was at its August low.

Small-caps are starting to get a little more volatile here as this 6-month uptrend relative to large-caps could be running into fatigue. Last week marked the first significant road bump in the TIPS bull market in nearly a year. The fall in Treasury prices over the past month has made junk bonds look comparatively more attractive, although absolute returns from this group are still relatively flat.

Crude prices continue to head higher, which has been bullish for the energy sector, but it’s worth wondering if the oil rally has gotten a bit overdone. Small-caps continue their impressive leadership as conditions remain favorable for further outperformance. Rising inflation pressures could compel the Fed to at least think twice about keeping conditions ultra-loose. That would likely be negative for risk assets, but positive for dollar strength.