Leaders-Laggards

Utilities is having its best run relative to the S&P 500 since the 2nd half of last year. The dollar strengthens to 5-month highs as Treasury yields stabilize and investors show preference for less riskier assets. The recent tech slump could be overdone and looking to make up some ground here. I’m still of the belief that things have gotten a little out of whack in the government bond market and Treasuries could be due for a rally here.

The materials sector hangs tough once again, but some underlying weakness could make the bounce temporary. That’s three consecutive weeks of the defensive-minded utilities sector outperforming the S&P 500, more than enough to flip this short-term signal to risk-off. Dividend stocks mirrored the pullback in cyclicals last week, but still look to be in pretty good shape overall.

TIPS are getting swept up in the current Treasury bear market, although they’re managing to fall less than the broader government bond market. Riskier debt is flat overall on the year, but the group is still outperforming Treasuries by about 350 basis points. A minor pullback in the dollar index last week, but the greenback is still looking pretty firm here.